Until recently, the definition of management was regulated by the Act of governing property. It defined 'managing a property' as ‘making decisions and undertaking actions to provide the right economic and financial management of a property; maintaining security of its use and proper exploitation, including ongoing property management; as well as maintaining the property in unimpaired condition in line with its purpose, and at a justified investment in the property’. The definition was valid until 2013.
Today, the definition of property management can be found in the global guidelines set forth by the Royal Institution of Chartered Surveyors (RICS), which only states that the property manager is a company or an individual employed to manage matters related to the property on behalf of its owner.
Responsibilities, but which exactly?
Every property manager’s scope of responsibilities set out in the property management agreement, is the basis for undertaking any actions. Due to the lack of legal definition of property management, it is market practice that prevails on the Polish market. It is because of market practice that the line between the responsibilities of a property manager and an asset manager is blurred. At the same time, new legal regulations, rising client demands and the changing character of investment funds have resulted in even greater expectations for those involved in everyday property management.
In turn, the property manager’s duties in administering the property constitute a lot smaller part of their work than in the past. A far more crucial part is now focused on the property’s development, its positioning, and maintaining its technical structure on a level required by the building class. The Polish market is special in this respect, as many new office properties are being completed (also in city centres). As a result, properties constructed just five to ten years ago are often considered ‘old’. A good property manager needs to constantly monitor ongoing changes and recommend the necessary investments to the owner while bearing in mind the necessity to optimise the use of available assets. This requires from them a lot of competency, experience, knowledge, long-term thinking, market knowledge and the ability to read their client’s needs.
Changes in the pace of communication led to an almost complete shift from printed quarterly reports to online reporting. The owner can expect monthly reports or even weekly reports with data from the previous day. Additionally, the property manager will draft reports on behalf of the owner for third parties. Complex subject reporting relates to environmental reports such as those sent to KOBIZE (Krajowy Ośrodek Bilansowania i Zarządzania Emisjami, the national emissions centre), the voivodship marshal’s office or any other entities, and those reports sent to the National Bank of Poland. Reporting also takes place in correspondence with tenants, who expect a reply in real time.
Up until a few years ago, marketing activities were reserved for shopping-centre managers who organised various events, promotions and client incentives there. Today, marketing has become the standard also on the office market. It serves to create the image of a property on the market and to position it. Marketing is one of the additional responsibilities of a property manager. Christmas fairs, food-truck events, art and culture, even sport challenges are the everyday reality of property managers. We compete with new ideas and strive for them to create an atmosphere in which tenants can feel in the centre of attention of the property manager and the landlord, and perceive their workplace as a friendly space that lives up to their expectations. Laundromats, cash machines, kiosks, cafes and canteens are the must-haves of any major respectable property. Today, an office building isn’t just a workplace but also a meeting spot and leisure centre where you can take care of your basic everyday chores and, more often, spend some weekend family time.
Internal management or outsourcing?
In recent years we could observe the advantage of global companies in management as they serviced the majority of the market. Today, we see that many companies, developers and funds, decide to open their own departments to manage the properties they own.
Each of these solutions has its pros and cons – the scale effect, international know-how and organisation culture should lead to choosing external organisations: large, global management companies active on the market. On the other hand, an internal manager may focus solely on managing the company’s property, build better relationships with tenants and seem more engaged. Both types of management have existed on the market for many years, with one winning advantage over the other in a long-term changing cycle. Choosing the right management type should relate to character of the portfolio and property owner.
An external company can provide in depth-knowledge on management, comparison with other real estate portfolios, multi-dimensional knowledge of experts from various departments – so helpful in the everyday management of the property – as well as access to analyses and market research, access to subsequent legal regulations, internal audits and controls. Very often, the cost of internal management may be higher than the service of a professional, global real estate advisory.
Similarly to the evolution of property management, the type of entities investing in office properties on the Polish market have changed. So far, they were mostly funds investing for a period of at least five years or even longer. Currently, we see more entities on the market investing for a period shorter than three years. The last couple of years brought a major change in the character of investors and entities using management services. Until now, they were mostly foreign pension funds making long-term investments in stable property. Nowadays, properties change owners more often.
For property managers this means a lack of stability and sudden change – both for the managers and their owners. This requires maintaining the property in a constant ‘ready-to-sell’ condition and organising data rooms with documents. As a result, funds for modernisation and raising the standard of the building are limited, which may lead to uncertainty among tenants. In such cases, a way to build tenant trust and stability is to use the professional services of major management companies. It is the property manager in the eyes of the tenants who guarantees the expected high quality and continuity of a professional service.