The so-called co-management agreement has Secured California Investments' Las Vegas property management team setting up shop in the Vegas offices of CBRE. In exchange for its space, oversight and resources, CBRE gets 25% of SCI's management fee. Technically, SCI's management team will be CBRE employees, but SCI will be reimbursing their salary.
"We created a way that as an owner we could retain management of our portfolio, which our investors want, while at the same time benefit from the oversight and support of a national provider," SCI General Manager Mark Wittcoff tells GlobeSt.com. "CBRE now plans to go into other markets and offer this relationship as a new prototype for owners."
For CBRE, the new arrangement could give it a new revenue stream in markets like Las Vegas where a majority of the space is managed by owners rather than third-party providers. John Records, senior managing director of asset services for CBRE's Western and Central regions, tells GlobeSt.com that, based on the success of this new relationship, CBRE will consider offering it up to others who are interested.
"We've designed a product that appears to be working for us," says Records. "It's something we are looking at."
Wittcoff adds that the arrangement also saves SCI money at a time when its Vegas portfolio is expanding from 700,000 sf to 1 million sf. For one, the company no longer has to lease office space for its property management team. As well, instead of as many as seven employees, SCI now needs only a three-person team at CBRE and one chief engineer on site at one of its managed properties there.
"We had a 6,000-sf office in Las Vegas," says Wittcoff. "We've leased it out to an engineering firm.
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