A Great Recession… For Accountants!
The Great Recession has seen property values plummet, and commercial vacancy rates soar along with the anxiety of brokers, landlords and developers. But one part of the commercial real estate industry in New York, essential but often overlooked, has continued to flourish: the accounting firms. Real estate clients represent only a fraction of the workload of most firms–including top outfits like Marks Paneth & Shron LLP, Eisner LLP, Rothstein Kass, Anchin Block & Anchin, Friedman LLP, Citrin Cooperman, Rosen Seymour Shapss Martin & Company LLP, Deloitte and Weiser LLP–but their real estate sectors have seen growth.
Why? Simple: Their clients need help, especially when it comes to cost-cutting and revenue-raising.
“Things have been wonderful,” said Ken Weissenberg, a partner and co-chair of the real estate services group at Eisner LLP. “They need me in good times because I can help make them money. They need me even more in bad times because I can save them money.”
Eisner does accounting, taxes, deal structuring and litigation for about 35 real estate groups, handling about 750 commercial properties totaling 5 million square feet, including public companies like First New Jersey, said Mr. Weissenberg. Twenty-five accountants are involved in real estate, only about 5 percent of the overall staff–but there was no dedicated real estate group five and a half years ago. The firm expects 30 percent annual growth in its revenue and client base each year, over the next five years.
Others among the aforementioned top accounting firms with real estate practices expressed similar anticipations of future growth, with or without the Great Recession.
Part of this growth can be attributed to the expanded role of accountants in commercial real estate. Instead of merely balancing the books, some accountants are now involved in the day-to-day operations of various New York buildings.
“The business model for accountants has sort of changed,” said Victor Mizzaro, partner and co-chairman of real estate at Citrin Cooperman, which has about 30 partners involved in real estate. “We’re still doing the basic services-tax returns, auditing. Now we’re more involved in consulting stages. It expanded our role within our clients and made us more valuable for our clients. We’re busier with different consulting projects.”
WHEN IT COMES TO consulting, commercial real estate clients are most interested in two things: cutting costs and increasing revenues-and there are unique approaches that real estate companies take into, um, account when doing so.
Rosen Seymour Shapss Martin & Company LLP, which works with commercial brokerage Newmark Knight Frank, as well as residential ones like Prudential Douglas Elliman and Brown Harris Stevens, prides itself in seeking innovative ways of cost-cutting. They look at payroll and rent expenses and renegotiate insurance rates, and tell clients to use electricity from third parties with cheaper rates and to seek energy credits. They also track labor credits for security guards, which refund $6,000 per guard per year, according to Martin Greenberg, a managing partner, and Neil Sonenberg, the senior partner in charge of real estate operations.