Negotiating A Management Agreement Is A Multi Family Development And Property Management Company

1455 WordsOct 19, 20156 Pages
Negotiating a Management Agreement In 2015, Carmel Partners came to the decision that it could no longer sustain the operations of its management company. Carmel Partners is a multi-family development and property management company. The company operates through funds that are raised through investors. Carmel Partners takes the investors’ money and will either buy land, and develop a new apartment building, or they will buy an existing property and rehab it. Part of the agreement with the investors is that the investment money has to be returned in a certain time frame. A majority of the new investments were in new development that takes several years to develop and build. As the company had to sell previous buildings to return the…show more content…
Carmel had committed management teams, solid processes and one of the lowest employee turnover rates in the industry. Carmel properties were always managed by Carmel, as Carmel was the owner; this type of management is considered an owner managed property Management Company. Greystar is the largest third party management company in the United States, and they manage over 385,000 units (Awards and Recognition, (2014). They manage apartment communities for several owners and have a vast ability to provide services for the owner at a lower cost due to economies of scale. In addition, due to the size of the company Greystar has a large platform using the latest technology for managing apartment buildings. Power in Negotiations As the two companies came together to negotiate the management agreement, there were different types of power that each company had. Carmel had hired a consultant with a vast amount property management experience to be the negotiating representative for them. Greystar has an in house executive whose main job was to solicit new clients and negotiate the terms of the management agreement. Power in the negotiations was very important. People have power when they have “the ability to bring about outcomes they desire” or “the ability to get things done the way they want them to be done” (Lewicki, Saunders & Barry, 2011). Both Greystar and Carmel had informational power. They had the expertise of two very tenured
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