O1 Standard was recently acclaimed “Property Management Company of the Year” at Russia’s Commercial Real Estate (CRE) Awards 2021 (the “Golden Brick” awards). The prize is testimony to the quality of our work and the confidence our clients place in us. What exactly is office real estate management? How does property management differ from facility management? And how does a management company build the best-possible relationship with a property owner? Dmitry Sveshnikov, the Managing Director of O1 Standard, explains.
What is the difference between property management and facility management?
A management company is responsible for day-to-day operation of the building or office that it manages. Its main task is to ensure that the building users spend their time there as comfortably as possible. The management company should carry out that task while remaining invisible to the building users.
It’s usual to distinguish between the concepts of property management (commercial management of buildings) and facility management (ensuring proper functioning and technical support for a building).
- Facility management includes everything necessary to ensure the technical functioning of the building and its engineering systems, as well as reception services, vehicle parking, cleaning, etc;
- Property management concerns improvements to the building, its infrastructure and the services it provides, as well as work to enhance investment value of the building, communication with tenants and response to tenant requests.
Some companies offer their clients both property and facility management, while others specialize in particular niches. The pandemic has upset the status quo in a lot of ways. In particular, we are seeing a clear trend towards management on a “one window” principle, where the management company takes on the full range of services for building functioning and maintenance of individual offices of tenants. The reasons for this change are shortage of personnel and the desire of owners to minimize social contact by limiting the number of contractors working in their buildings. This means that management companies are doing jobs today that they would not have done before, such as managing the fit-out of tenants’ offices.
Management companies may also offer consulting on management and operational issues, technical audits of a building (perhaps as part of property purchase and sale transactions) and specialized tasks such as environmental audits and certification.
If the work of the management company important for making a building attractive to tenants?
– Not all of the parameters that a tenant considers when looking for an office depend on the management company. The main criteria for firms choosing an office in Moscow have been and remain lease rate and location. Obviously, the management company cannot adjust either of those. However, quality of building management is certainly in the Top-5 criteria for tenants, particularly if we are talking about large and medium-sized firms and class-A business centres.
What is “quality of management” for a building?
– It is the first impression a visitor gets when they walk in. Cleanliness, navigation, appearance and friendliness of the security staff, how well reception does its job, visitor traffic around the building, even smell. An office building, especially a premium facility, should have its own atmosphere, it should put people in the mood for work and make the staff of tenants proud of working for a firm that has its office in that building.
Then there is the issue of professionalism: how well employees of the management company answer questions about how the building operates, their knowledge of its engineering systems, etc. Client focus and ability to respond quickly to a tenant’s request are very important.
Growing awareness of environmental issues means that more and more tenants are interested in sustainability and application of environmental performance standards in building management – responsible purchasing policy, steps to reduce carbon footprint, and other things. A management company with sustainable development expertise and understanding of the environmental agenda makes a building more attractive.
What should the management company agree on with the owner before making a contract?
– The first thing is to understand the owner’s priorities and his short-, medium- and long-term plans for the building. Understanding that will help the management company to design a pipeline of projects to achieve the strategic goals of the owner and offer a relevant set of services at every stage of the work.
It is important to agree how often the work of the management company will be assessed and key performance indicators (KPIs) for the assessment. That ensures that discussions with the owner will be on an objective basis as the partnership progresses. For example, in our work we focus on the level of tenant satisfaction with the service we provide. The owner carries out regular surveys of tenant satisfaction and audits of properties to ensure that the management quality matches the owner’s standards.
It is also important to clearly define areas of responsibility: is the management company only responsible for technical operation or is the client ready to let it make improvements to the infrastructure of the property? A clear understanding of the client’s expectations means that the management company can work more efficiently in the partnership.
What sets management companies apart from each other?
– Their approaches to management and, let’s say, their philosophy – the way they see their target audience, the ultimate goal of management and the tools for achieving it.
The ultimate goal, usually, is to maintain or increase the investment value of the site under management.
At O1 Standard, we believe that our job goes beyond proper functioning of the building. We shift the focus from real estate to people, and work to ensure maximum comfort of the end-user. We want our team to see not the building, but the people who spend most of their working day in it. Satisfaction of building users is the basis for tenant loyalty, which, in turn, is the key to maintaining and increasing the investment value of the building.
What are management standards?
– Management standards are a formalized approach to service delivery and management principles, which we implement at all the sites where we work.
Our property management standards combine several aspects:
- high-quality operation (regulations and work execution plans, reporting forms and frequency of their completion, schedules for planned preventive work, algorithms for what to do in an emergency);
- service and maintaining a comfortable environment (maintenance of common areas, requirements for the appearance of staff, communication rules, etc.);
- improving the environmental performance of buildings, managing buildings to “green” principles.
Having a standard means that owners can form expectations about the service we will provide. They know beforehand the quality of the team we will assign to the property, and what they can expect to see when they enter the building that we are managing. For us, having a standard simplifies the process of taking on a new property and means that we can rotate personnel when necessary without wasting time on their adaptation.