The challenges of everyday property management

What are currently the greatest challenges facing players on the property management market within this ever-changing micro and economic environment? How might a facility (FM), property (PM) or asset management (AM) company respond to problems such as non-paying tenants, increasing energy costs, fierce competition, and general pressure to cost-cutting coming from the tenants’ side?

Gabriella Fábri, MRICS, Head of Property Management, ConvergenCE

The challenges have not changed. It still remains our primary objective to acquire and maintain satisfied clients. The competition has clearly grown stronger and cost became an increasingly important factor. To this end, clients’ sense of comfort needs to be increased, while at the same time keeping costs at an optimum level. Proactive client contact is now a high priority, as is the continuous monitoring of services, the improvement of quality, and the management of energy costs in one package. In many cases, retaining tenants is possible only if the monthly rental costs (rental fee and operating costs together) do not increase significantly. In class „A” office buildings, rental rates and operating costs were usually set in Euro (or, in some cases, USD), which may have caused an extra burden due to exchange rate fluctuations. Nowadays, it is increasingly important that service fees remain somewhat within an anticipated range. Purchasing energy should currently be dealt with very carefully. Significant energy savings can be achieved by the prudent purchase of energy trough certain tenders and by taking advantage of the benefits derived from working with larger consumer communities. Tenants may experience its effects directly (with their own consumption) or indirectly (in terms of the building’s common costs). Energy costs make up a significant part – around one third – of operating costs. The conscious behaviour of operators and tenants, in addition to the adoption of energy-saving technical solutions or systems, will ensure further energy and cost saving effects. Competition, the basic pillar of every healthy market economy, is essential and it is what moves the entire economy forward. We need to provide quality services, work more efficiently, and maintain realistic costs. It is no longer enough to operate a property well. We need to constantly monitor its quality and provide value-for-money. We know that there is property where price reduction is the primary concern, however, we should not fall into the trap of reducing prices at the expense of quality. On the other hand, it is still possible to find quality property, where the real estate’s prestige and high standards were the main reasons the lease agreement was signed; here, besides keeping costs at optimal levels, quality has remained the primary concern. The overall cost reduction pressure experienced now is not something new. However, it became more intense because of the crisis, of course. We constantly need to make concentrated efforts in order to fit operating costs into the previously agreed prices. High standard services are only important for tenants in high-quality offices, while tenants in average buildings are willing to compromise in order to reduce costs.