The good old times of low to zero interest rates in the commercial real estate sector are over. Besides increased cost of debt, decreased supply and stricter loan terms, there are three forces that are shaping the industry: 1) rising operating costs, 2) declining occupancy, especially in the office sector due to permanently decreased demand, and 3) increasing pressure to comply with strict environmental regulations. Properties that do not meet ESG standards and modern user services, in particular, have difficulty finding tenants, leading to even more vacancy.
Once the party of low interest rates is over and the hangover is here to stay, the focus now shifts to the actual properties – you got to have better grip on the assets and what’s going on with an emphasis on asset management!
I will address four points of effective asset management:
Data management is key to effective asset management. It is important to have all relevant data in one place to have a complete picture of the status of your properties. This includes financial data such as rental income, operating expenses, and capital expenditures, as well as performance data such as leased areas, tenant retention rates, and occupancy rates. By consolidating this data, you can identify bottlenecks and opportunities for optimizing your properties’ performance. Here integrations and automation to underlying legacy systems play a decisive role.
Monitoring and evaluating the performance of your properties continuously is of most relevance. The use of key performance indicators (KPIs) and dashboards can help you achieve this. KPIs provide insights into the profitability and performance of your properties, allowing you to identify potentials. Dashboards provide a quick way to monitor your properties at a glance.
Financial planning is an essential tool for effective asset management. It provides a long-term perspective on your property investments and allows you to plan future cash flows. A well-thought-out financial plan typically includes budgets for operating expenses, capital expenditures, and financial costs. It is important to regularly monitor progress against the financial plan and make operational corrections as needed.
More and more investors and property owners are demanding more sustainable construction and the use of environmentally friendly technologies. Sustainability planning can help you meet these requirements while reducing operating costs and increasing the profitability of your properties. This can be achieved through measures such as energy efficiency improvements, waste reduction, and water management. To facilitate this, it is advantageous to have all activities and projects in a tabular view so that you can create and track sustainability plans for your properties. There are many dedicated applications that can generate ESG plans from your real estate data and then be used as part of your asset planning. This is made possible through an API that enables data exchange between applications.
Once the happy times of low interest rates are over, the focus now shifts to the actual properties, with an emphasis on asset management!
How can all these four points be implemented to achieve effective asset management?
One could rely on assembling a massive set of Excel files to manage a portfolio, but that would be tedious, cumbersome, and error-prone – and therefore very risky. Moreover, it would not meet the need for traceability, which is essential for quality assurance, auditing and compliance. Not to mention the frustration it creates for employees. That’s why we created Assetti – an asset management software that helps you implement effective asset management.
Co-Founder & CEO of Assetti
Hannu is a co-founder and CEO of Assetti.
Before founding Assetti, he worked for over 10 years as a member of the management team in a property asset management services company, where he was involved in data management and IT matters.
The article was originally published in German on https://gpti.de/asset-property-management/weg-zu-effektivem-asset-management/