More businesses outsourcing real estate services to specialists
‘It is critical to know how to manage basic utilities, like electricity and water, as well as lease management’
AGROWING number of companies worldwide are updating the management of their real estate assets to avoid significant wastage and unnecessary expenses, according to studies by global real estate firm Jones Lang LaSalle (JLL).
Gerard Dizon, JLL head of asset and multisite management, stresses that among the most strategic steps a company can undertake to curb real estate management costs would be to regularly track utilities and maintenance related expenses. These real estate costs refer to the management and maintenance of offices, stores, branches and other properties.
Studies show that on the average, air-conditioning accounts for 34 percent and clearly the lion’s share of a company’s energy bill, one of the highest real estate expenses. When companies such as banks with hundreds of branches prioritize preventive maintenance, this translates to energy savings, and the benefits can be multitiered and enormous.
Another recent global study by Jones Lang LaSalle reveals that more companies, particularly those with multiple locations, are choosing to outsource the management of the offices, stores, and other real estate assets they own to property specialists to better rationalize real estate spending. In a 2013 survey covering 630 companies in 39 countries, 92 percent of the firms practice some form of real estate outsourcing.
Berna Santiago, JLL Head of Property and Asset Management, asserts that knowledge from across a number of disciplines is required to competently manage real estate assets. “It is critical to know how to manage basic utilities like electricity and water as well as construction and lease management, to name a few. Rather than delegate these additional functions to a bank or store manager, it makes practical and good business sense to simply outsource these to specialists. Practical, because this allows your key personnel to focus on your core business and key function, while the property specialists take on the premises maintenance and management, leading to lower overall cost of service through economies of scale.”
Asset and multisite management is a core service offering of Jones Lang LaSalle in the Philippines. It manages a total gross floor area of one million square meters on behalf of corporations and other entities. Most businesses rely on multiple vendors for the air-conditioning, electrical, plumbing and other needs of their premises. JLL offers a cross-functional approach on a single platform to ensure the integration of services and accountability.
Santiago adds, “This way we avoid irritants like back-job for a service just rendered, worst a facility interruption like air-con system failure. This scenario can be confounded by fingerpointing among the various vendors who serviced the premises during/within the same time frame.”
Santiago further relates that when managing multiple branches/sites, JLL identifies the key driver of that business. A gasoline station operation with hundreds of branches, for instance, puts safety on top priority; a chain of banks, security and safety; a chain of fast food kiosks, sanitation and hygiene plus efficient cooking equipment. JLL will also identify business disruptors and craft service level standards around these. The most common objective is for JLL’s asset management group to deliver two million man-hours without incurring any lost time or injury.
Besides servicing corporations and businesses, JLL also services individuals. Dizon discloses that JLL currently manages the residential condominium units of absentee owners, clients who live abroad or elsewhere. JLL’s tasks range from collecting rent, and paying real estate taxes on behalf of the owner all the way to sending a repairman to fix a leak. In other words, JLL takes over what an owner of a real estate asset would do, generating efficiencies the individual owner himself would not be able to achieve independently.
Another key benefit to clients is the close monitoring of expenditures, benchmarked against those of neighbors or similar companies. A fashion retailer for example can compare its spend on electricity per store with that of others in the same industry. It can also pinpoint which branch within a chain of stores incurs higher costs and look into the reasons for this.
“With complete data on real estate expenditures, we can identify the top ten spend of a client, analyze such spend and benchmark that against standards and best practice. We then recommend measures aimed at process improvement, cost savings, re-engineering of people mindset—all toward a competitive advantage for our client. We are not just vendors, we are our client’s business partner,” says Santiago.