5 Mar 2018
The property management industry doesn’t need to evolve, it needs reinventing
A common misconception in the real estate industry is that outsourcing Property Management activities to third party managing agents is more efficient, saving both time and money. However, with the significant changes in how buildings are operated and occupied (and the increase in consumer needs), the existing presumption of outsourced property management is no longer fit for purpose and needs to change.
The decision to outsource property management is commonly propelled by the property owner requirements to reduce costs and save time. In reality it’s left with a managing agent in the middle who, very often, does not have the motivation or skillset to look after the needs of the occupier or run a building efficiently.
With a growing body of legislation covering energy consumption, waste and its reduction, there is an increasing burden on the managing agents to provide services that they are not equipped to offer. The Property Manager function now needs to actively participate in customer service, facilities maintenance and engineering, sustainability and CSR strategic thinking – not to mention rent collection and day-to-day maintenance. The emergence of these areas for property owners shines a spotlight on the existing industry skills gap.
The sustainability credentials of a property have become a central feature in the ownership of a building. An occupier wants to know that they can save money on their energy bills whilst limiting their carbon footprint by operating the building to its optimum efficiency. They want to know that they are only using energy services when they are required and they have the option to monitor their consumption on a regular basis.
Sustainable performance of a property is arguably one of the most important changes to property management in recent years. Managing agents would ideally play a critical role in improving environmental performance, however many third party agents do not have the technical skillset to operate buildings efficiently, nor the incentive.
Many multi-let offices are not operated in a way that provides the most effective environmental conditions for the occupiers. This is down to poor maintenance and a lack of technical skills within the building operation which means the actual performance of the building falls short of the designed intent. For the occupier, the incentive to have lower running costs and an opportunity to make meaningful changes has been lost and the owner rarely knows if there is a problem with the building’s performance.
There needs to be a commitment from property owners to work closely with the occupiers, a transparent relationship and a deeper engagement that has a ‘hands on approach’ to help establish what the consumer wants. We are constantly looking to create a new approach in the industry – challenging the convention and defining our own regime. Whilst we still have more to do, positive steps have been made in our Build to Rent schemes which has open dialogue with our residents. The strength of these direct relationships between owner and occupier is a part of providing a new standard of service to positively respond to the ever changing market requirements.
Thought within the industry suggests that at present, property managers are falling short of occupier expectations, stemming from a lack of communication between agent and occupier (including the vast skills gap that exists within the property management function). Improvements need to be made to standards across the real estate management sector, starting with more transparent and consistent levels of service.
So what’s the solution? Transparency to build customer trust, employment to fill the skills gap in property management and innovation to future proof our assets. Companies need to develop cutting-edge business practices and advance the use of technology as a means of measuring, monitoring and maintaining consistent standards. Disruptors and innovators have an opportunity to make a positive and significant difference in the sector.
We are constantly looking to create a new approach in the industry – challenging the convention and defining our own regime.
Bill Hughes, Head of Real Assets for Legal & General