PROPERTY portfolio managers are required to get the best returns for their landlords while at the same time meeting the demands of their tenants, who ultimately determine the level of income growth.

With net operating income in many office portfolios flat or having fallen, managers are under pressure to perform the difficult balancing act of cutting costs while keeping tenants happy. It calls for savings through the consolidation of operations, an understanding of economies of scale and technology benefits, while ensuring personal service to clients.

Andrew Teixeira, Gauteng property management director of JHI Real Estate, says some initiatives focus on wringing out costs across large portfolios while other programmes are designed to boost tenant retention through improved management efficiencies at each building.

"To make up for the bottomline losses in rental revenue, property managers must resort to an assortment of aggressive measures," Teixeira says.

These include renegotiating with service providers and streamlining administrative expenses through Internetbased and/or other property management software programs that track every cent spent on maintenance.

Other measures focus on securing better deals with vendors and restructuring staffing.

A reduction of vendors nationwide is also part of the strategy. Teixeira says that instead of piecemeal janitorial services and building supply contracts for each building or each market, JHI uses its size to achieve better pricing. "We are trying to manage our properties on a portfolio level instead of a building-by-building level."

JHI participate in Sapoa Online, a commercial property listing portal .

Teixeira says that critical mass is essential in order to achieve economies of scale.

Bruce Kerswill, MD of Spire Property Services, says that property asset managers are often asked to advise corporate clients on the best use of space in the buildings they occupy to maximise investment returns.

He says that many corporations own portfolios of properties that do not show the most effective use.

They represent a large-scale investment but are often not actively managed. They may not be the most effective premises or accommodation for the business's operational efficiency, Kerswill says.

This has led to the growth of corporate real estate consulting in SA, in line with worldwide trends, he says. These consultants analyse the property portfolio from two points of view: firstly, whether it is efficiently fulfilling a firm's accommodation and productivity needs, and secondly, whether their value is being maximised from an investment viewpoint.

Kerswill says the recommendations made can save costs while releasing value from under-utilised assets.

Feb 04 2004 07:13:48:000AM  Business Day 1st Edition