Union Bank of California building in Long Beach, California.

Property management has often been seen as the “stepchild of the real estate industry,” says John Combs of RiverRock Real Estate Group, a commercial real estate management and leasing firm started in August.

Well, not for long, if Combs has anything to say about it.

Combs, founder and principal of the Irvine, California-based firm, plans to use his new company’s unorthodox management and operational strategies to shake things up in the sometimes stale property management industry and, more importantly, to make property managers indispensable to property owners.

“I started RiverRock because I felt that, in the current marketplace, building professionals were not happy with their choices of employment and property owners weren’t happy with their choice of service providers,” says Combs.

For his employee-based solution to these problems, Combs looked not toward the real estate industry for his inspiration but to other companies that had, with unconventional strategies, shaken things up in their respective industries — FedEx, Jet Blue Airlines, Enterprise Rent-A-Car and Southwest Airlines. “None of those companies give you gifts or have lunches for you, which is what is typical for client relations in the property management sector,” says Combs. “They don’t do any of that, and yet they have very high customer service ratings.”

Southwest Airlines attracts flight attendants because they offer a fun, dynamic working environment, says Combs. “They allow people to have character and they make fun of all the FAA standard announcements. I mean, they do them, but they add jokes in there.”

Unlike many companies in the property management sector, which have compensated for reduced rents and operating budgets by cutting personnel costs, Combs’ business model for RiverRock is fundamentally based on the idea of cutting costs without sacrificing employee talent. One method of cost-cutting that Combs espouses is outsourcing human resources, legal and accounting functions. “You get the best of the best by outsourcing rather than hiring that person or firm, and because you don’t need them fulltime, you’re only paying for what you need,” says Combs.

Operating on the theory that happy professionals attract happy customers, Combs sought to create a platform that gives people the respect and rights they deserve, which he felt had been eroded over time due to mergers and acquisitions throughout the industry. “Companies that can accommodate and attract the best talent always beat everyone else out,” he says.

Just as many of Jet Blue’s employees take reservations from customers while working from their homes, Combs is adamant about accommodating his employees “at the different phases of their lives, so we don’t lose them. I don’t have this huge infrastructure so that I have to cut costs and take things away from the employees in order to stay in business.”

“We have managers that work both in their houses and the office,” says Combs. “As long as they are available for the client 24/7, we don’t really care where they sit. We’re just trying to create a people-oriented environment.”

While this may be a rarity in a sometimes work-obsessed industry, Combs says he sees the value of his employees having a life outside their work. And the principal practices what he preaches. The 44-year-old father of three is an accomplished competitive equestrian, who is also involved with his community, attends church and serves on charity and real estate-industry related councils and committees.

But Combs emphasizes that he not only wants happy employees but also well-prepared ones. Continually training and educating employees is a benchmark of RiverRock’s strategy. RiverRock’s employees attend an introductory training program — called “Rock U” — and are also given a $1,000 allowance for supplemental training wherever they want to spend it. After their initial training, employees are constantly evaluated on their level of client service and must meet standard objectives in order to receive incentives.

With his employee framework in place, Combs is already realizing the next goal of his business model — client-centric and hassle-free service for property owners.

“When I was with a big company,” says Combs, the former president of U.S. Property Services for Insignia/ESG, “I was constantly having to tell the client why we couldn’t do something or why we couldn’t sign that agreement.”

“And at the end of the day we always caved and they won, but in the meantime I had made the client unhappy,” continues Combs. “So I decided, why don’t we just do what they want and not argue it? I tell people we’re paid to make their ideas work.”

All RiverRock employees begin their days by reviewing client objective cards for each of their clients and listing the property owners’ key objectives, which must be accomplished that day. “That’s what we’re trying to zero in on with a razor-sharp focus,” says Combs. “What are the objectives of the owners which will increase the value of the property?”

“Most of the time, managers approach the buildings as ‘here’s what we need to do — formulate the budget, get tenant leases and collect the rent,’ but they rarely try to find out what the investment objectives are for each property,” he says.

Making the hassle-free service objective a reality also involves RiverRock’s centralized call center — a 24-hour-a-day, seven-day-a-week call center located in the company’s Long Beach office, which receives all tenant and owner service requests. An automated system monitors RiverRock’s response times to these requests. Simplicity is also manifested in RiverRock’s standard four-page management agreements — documents that are usually upwards of 30 pages.

And while critics would probably like to believe that Combs and his associates are renegade novices, the opposite is in fact true. Both Combs and his senior managing directors — Mickey McClune and Lyle Randles — have years of experience in the property management industry. Before forming RiverRock, Combs operated a leasing management portfolio of 280 million square feet for Insignia/ESG. Prior to that, he was CEO of O’Donnell Property Services.

McClune and Randles are former senior managing directors for Newmark & Co. Real Estate Inc. “Some of their clients have been with them more than 15 years and their employees have been with them between 10 and 15 years as well,” says Combs of the two directors. “They proved over time that they could have long lasting relationships with their employees and customers.”

So far, clients seem to be responding favorably to RiverRock’s new style of management. Starting the company with a portfolio of 1 million square feet, “we’ve been growing at about half a million square feet a month of new assignments and our clients have come in either because the owner wanted a new service provider or the people wanted to join us because they wanted to be on our platform and the properties followed them,” says Combs. RiverRock now has more than 3 million gross square feet — spread throughout Los Angeles and Orange Counties — in its management portfolio of office, industrial and retail properties.

Current management assignments include the Union Bank of California office tower in Long Beach, the Playboy buildings in West Hollywood and Los Nietos Industrial Center in Santa Fe Springs. Combs hopes to open an L.A. office this year to supplement the business generated by RiverRock’s Irvine and Long Beach locations. Next year, RiverRock will open a Northern California office in San Francisco, San Jose or Sacramento.

“We are growing at exponential speed and this is just the start of it,” says Combs. “So, the theory seems to be working. The key to our growth is going to be flexibility and doing exactly what our clients want, not just what we think they need.”

©2003 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.