Koll Launches New Unit to Sell Office Tenants Goods, Services

NEWPORT BEACH — Hoping to boost its market share and revenue in the competitive property management industry, Koll has launched a new division to market discounted products and services, including furniture, office supplies and telephone service, to Koll’s 20,000 office tenants.

Apartment managers have been marketing cable and telephone services to their tenants for years. But commercial landlords have been slow to pick up on the trend, instead offering tenants entertainment-related perks such as discount movie tickets.

Koll officials say its new program should boost the company’s bottom line as well as help lure tenants. “In the next 12 months it’s a break-even business, but after that it’s a profit center,” said Michael Merk, chief operating officer of the new unit, which has been named Koll Direct.

More than 10 companies have agreed to pay annual franchise fees of $10,000 to $50,000 for the opportunity to sell to Koll’s tenants, who could place orders or arrange service calls through a toll-free number. The companies include Office Depot, GTE Supply and copier supplier Danka, said Merk.

“It’s cheaper for them to sell through Koll direct than hire salespeople to make cold calls,” Merk said.

Koll test-marketed the program in its Southwest division beginning in February. It hopes to roll it out nationwide in the next 120 days. Eventually, Merk said, he hopes to sign up 20 vendors.

The program cost Koll about $500,000 to start, including administrative and advertising costs. The unit currently has a staff of 10.

But industry observers say the program is not without risk. If vendors provide sloppy service or treat tenants rudely, it could backfire, turning perfectly happy tenants to angry ones. Merk said the company screens its vendors and will cancel vendor contracts if problems arise.

He said CB Commercial Real Estate Services Group’s pending acquisition of Koll will likely not affect the program.

Indeed, Merk said, large property managers such as Koll are under pressure to gain market share by aligning themselves with firms who will offer their services to tenants, at little or no cost to the landlord.