Focusing on the cost structure

Posted On Friday, 22 February 2002 02:00 Published by eProp Commercial Property News
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The trend by institutions and large property owners towards the outsourcing of non-core business functions is demanding new standards of technical skill and service levels from property managers.

Andrew Teixeira Capital Property FundThis in turn is producing new growth opportunities for the property management industry.

Andrew Texeira, JHI Real Estate's regional manager: property management for Gauteng, says that outsourcing is already well entrenched overseas.

'A property owner's main focus is return on investment and not the nitty-gritty running of a property portfolio,' says Texeira.

He says with increasing competition from other investment lines the pressure to improve property returns has resulted in a focus on overheads and cost structure.

'We are seeing a growing trend towards incentive schemes as opposed to flat fees, with both parties motivated to add value and keep returns low.'

Texeira says there is a blurring of the line between property management and asset management.

'The property manager is no longer just an administrator but needs to advise clients on the best management practices to improve and enhance the return on a property.'

For this reason, he says, the need for specialist, focused skills in managing property is essential.

JHI's structure has teams headed by a portfolio manager which focus on no more than two to three clients to ensure constant monitoring of a property's performance while providing feedback and advice. Individual team members focus on different aspects of management technical, administrative and leasing.

'Each team member is a specialist. For example, our technical managers are in the main building science graduates, while the portfolio manager provides overall management focus.'

Texeira says technology will become all-important for improving management efficiencies to ensure high levels of service, despite pressure on fees.

There will be an increased focus on training and specialist skills in a highly competitive industry.

In addition, the development of increasingly sophisticated management systems will be essential to allow greater time to be spent on tenant and landlord needs and less on administration.

Ken Gerber, corporate account executive of RMB Properties, says most of the bigger SA corporations tend to respond to property in times of crisis. Although fundamental to the running of a business, property is not seen as a core competency.

'Very few organisations have a fully automated, central, real estate database. This reduces their understanding of the property portfolio and hence places them at a disadvantage in terms of procurement of new or additional premises, lease renewals and negotiation of optimum terms and conditions. Knowledge of true market rentals, operating costs and property values is not thorough.'

RMB Properties' corporate accommodation management division focuses on being the single voice intermediary between its clients and the real estate market, says Gerber.

Last modified on Thursday, 22 May 2014 16:29

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