Serendipity ... on the day that the Better Buildings Partnership publishes the latest report outlining the energy performance of UK real estate assets, this article by Bill Hughes of Legal & General highlights the importance of sustainability to major real estate owners "... the sustainability credentials of a property have become a central feature in the ownership of a building."
More importantly, it highlights the difficulty of delivering value to owners and occupiers in a fragmented industry. Property owners are increasingly waking up to the fact that in order to deliver value to their investors they need to be closer to their customers and the communities in which they operate. This is challenging when, in many cases, the management of assets is outsourced, in the first instance to managing agents, but then also to wide range of Facilities Management (FM) providers. And sadly, for those familiar with the concept, the ‘vicious circle of blame’ still pervades many relationships between those who should be accountable for the performance of assets (the occupier blames the managing agent, the managing agent blames the owner, the owner blames the investor, the investor doesn’t really know who to blame).
To manage buildings well requires a wide range of skills from engineering, to energy management to community engagement. But, these skills have been systematically eroded over the past few decades with ‘on the ground’ skills significantly undervalued and suffering from long-term underinvestment across the industry. This has created the space for disruptive businesses that prioritise customer satisfaction to thrive, indeed even the fact that tenants or occupiers are now referred to as customers has been a revelation. Customers want buildings that work well for them, it shouldn’t be that hard.
The property management industry faces a significant challenge from such business models. In 2015, the Better Buildings Partnership established the Managing Agents Partnership to enable property managers to share sustainability knowledge and develop best practice guidance for the industry. This initiative has achieved a lot in a short period of time, but there is still some way to go.
And, let’s not forget the important role of the client in specifying what they want. If contracts are configured in a way that prioritise rent collection over performance, then that is what property managers will deliver. So, it’s great to see Bill Hughes call for a new approach in the industry, to challenge conventional ways of working. If the property management industry chooses to hang on by its fingernails to ‘traditional’ ways of working, it’s going to fall off the cliff at some point. As Bill says …"The property management industry doesn’t need to evolve; it needs reinventing."