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edition 10 (184)
October 2013
Facility Management

Managing to find a place

The challenges faced in a growing property management sector

Ewa Andrzejewska

Managing to find a place

Across Poland there exists almost 8 mln sqm of warehouses, around 10 mln sqm of modern retail space and over 6.5 mln sqm of offices. These are the millions that property managers are fighting over. Who is winning the battle?

Knight Frank has recently enlarged the portfolio of properties it manages in Wrocław, bringing the number up to six. Wrocław-based developer Archicom, the owner of West House 1B, which has an area of 6,000 sqm, is one of the property owners that has placed its trust in the agency, it revealed to us in mid-September. A day earlier, Colliers International was able to boast that the 43,700 sqm Mokotów Nova complex in Warsaw had been added to its management portfolio at the beginning of that month, whereas Hines informed us that it will manage its Sterlinga Business Center office building (13,400 sqm) itself, while also revealing that it had acquired more logistics properties – a combined area of 70,000 sqm leased by Raben. By doing so the company has extended the property portfolio it manages to 340,000 sqm. Meanwhile, Cushman & Wakefield has started managing the North-West Logistic Park in Szczecin. It has also been announced to the media that Michał Muc has left DTZ to join Savills and strengthen the property management department of his new employer. News like this from just one month (September) gives us a snapshot of the intense competition in the PM services market.

One-man band
“It is true that our portfolio has recently been modified,” explains Aneta Rogowicz-Gała, the director of the property management department at C&W, “and there are two reasons for this: the first is connected to the sale of properties. A new owner often decides to change the manager for various reasons, such as adding the facility to a portfolio managed by another company. The second reason is the expansion by developers and property owners of their own property management departments. This was the case with Hines, which in the process of extending its portfolio created a department to deal with the Sterlinga Business Center project in Łódź – a property we looked after for three years. Hines chose one of our former employees to be the director of the new department. Our team consists of professionals who actively advise our clients and provide them with the best property management practices. As a result some of our clients have decided to carry out such business on their own. This represents a change on the market, which has possibly been more visible of late, but it is not out of the question that the trend may reverse and the benefits of outsourcing building management services, including international know-how and the need not to spend considerable money or time on creating your own team could prevail,” believes Ms Rogowicz-Gała. Cushman & Wakefield currently manages 410,000 sqm of properties, most of which is office space. Hines, meanwhile, is making its debut as a property manager on the Polish market after deciding to set up a special department in the course of acquiring new properties. This owner of a number of office buildings and quite a large portfolio of warehouses (over 280,000 sqm) is not the only one to have adopted such an approach. Companies that manage their own warehouses include Panattoni Europe, Prologis (over 1.9 mln sqm in Poland and a combined area of 3.5 mln in the CEE countries – Poland, the Czech Republic, Hungary, Slovakia and Romania), CA Immo (250,000 sqm) and Segro (nearly 800,000 sqm in Poland). CA Immo has a more modest warehouse property portfolio – 250,000 sqm in Błonie and Piotrków Trybunalski, which were included in its portfolio after acquiring Europolis in 2011. “We have a special team of managers dedicated to warehouse space. I believe that independent property management has a lot of advantages. Admittedly it would be hard to argue that it is a cheaper solution compared to outsourcing the service, but on the other hand the owner is not focused on making profit out of this business. It is the control over a property that is important, whereas in the case of outsourced property management some information might be filtered or reach the owner with a delay,” says Andrzej Mikołajczyk, the managing director of CA Immo Real Estate Management Poland. The company also has the Lipowy Office Park complex in Warsaw (39,400 sqm) and a small office building on ul. Wspólna in Warsaw (7,200 sqm). The remaining buildings in its Polish portfolio (app. 90,000 sqm) are managed by the C&W team.

Rivalry between agencies
The last few months have been marked by a reshuffling of personnel. The shift of key DTZ employees (including the strategic director) to BNP Paribas Real Estate has caused quite a stir in the industry. In addition to this the managing director of the property management department of DTZ decided to join Savills. “It was mainly the organisational culture and proactive approach to business development at Savills that influenced my choice,” says Michał Muc, the new director of Savills’ management department, about changing his job at the beginning of September. “I have taken on the responsibility for developing the property and asset management department and increasing its share in the market. Our twenty-person team of excellent and well-known market specialists employs modern property management systems and platforms. In the next few years we want to be in the top three largest property managers among independent companies. We lay a great deal of emphasis on our growth on the shopping centre market, but the office market is still very important to us,” reveals Mr Muc. His team currently manages a number of Warsaw office buildings, including Tulipan House, Harmony Office Center and Iris. Savills’ property management department is to offer a high quality and individual, partner approach to clients. It seems that the new boss has set high standards for the team. Currently the top three agencies in reverse order are Colliers International (over 810,000 sqm), DTZ with a portfolio of more than 1 mln sqm, while at the top of the podium is Knight Frank with a portfolio of 1.2 mln sqm. The latter established its property management department in 1996 and now has a team of 55 employees directed by Bartłomiej Łepkowski. “Our goals for the next few months or years? Obviously – to keep our current clients and win new ones. We specialise in property management for funds rather than developers, who after completing a project try to sell it as quickly as possible and then the new owner often changes the property manager. In my opinion, a management contract should be concluded for a minimum of two or three years because such a period makes it possible to develop and implement comprehensive solutions together with the owner, which enables them to increase the value,” believes the head of the property management at Knight Frank, which specialises in office buildings – it is in charge of almost 900,000 sqm of office space. The factors that have helped them build such a strong position in Poland include, according to Bartłomiej Łepkowski, a good familiarity with the commercial property market and its presence in key regional towns, as well as the synergy in the cooperation of the property and asset management departments that Monika A. Dębska-Pastakia, the chairman of the board of Knight Frank, is responsible for. “For institutions from Austria, for example, that do not have any people responsible for the purchased properties here, a comprehensive approach to the portfolio as well as to the increasing of its value is important,” explains Mr Łepkowski. Which sector does he consider to have the best prospects? “I think that we still have a chance to strengthen our position in the office sector and grow together with the market. Shopping centres are also an interesting sector,” declares Bartłomiej Łepkowski, in agreement with Michał Muc. This is also the opinion of Aneta Rogowicz-Gała, who is focusing on regional and sector diversification. “This means that we try to secure new contracts outside Warsaw. We have also been consistently strengthening our position in the retail sector and are planning the further development of services for warehouse and logistics properties. Another element of our development strategy involves extending the scope of our offer to a full bookkeeping service, increasing tenants’ ecological awareness through educational campaigns, as well as consultancy for building certification. As far as the last issue is concerned we already have the first few successes under our belt. These include the Metropolitan building in Warsaw, where we advised our client on building certification, resulting in the award of a BREEAM-In-Use certificate at the ‘Very Good’ level. Now we are also certifying two other office buildings in Warsaw,” says the head of the property management department at Cushman & Wakefield.

Great hopes, even greater competition
But it is not only agencies that have taken a fancy to retail properties. Others are also joining the fray, such as MM Consulting, a small company operating as an agent in the commercialisation of smaller shopping centres, which informed us in the middle of September about its new employee, Marcin Raczyński, who is to take on the development of the property management business. Meanwhile, Caelum Real Estate Management (CREAM), which was established in March out of the property management team of Caelum, currently services a portfolio of over 170,000 sqm with two clients (so it is no longer just working for Caelum). “We have great human capital – more than 70 people who have been working together since the beginning, that is, for 7–8 years. They are located all over Poland, which provides us with flexibility, guarantees and a good speed of reaction. We have also invested money in an IT system that provides us with many new possibilities, such as fast reporting, which is important for clients. Our main service is general asset management, but because of the fact that we do nearly everything internally and in-house – which sets us apart from the majority of similar companies – we are flexible and can service projects with a narrower scope, such as leasing, management, marketing, bookkeeping, and financial and legal services. There have been a lot of enquiries about strategic consultancy for acquisitions and new retail and office projects. And why will we succeed? Because we have an owner’s approach in terms of the property value. On top of this there is the benefit of scale. CREAM’s other development path that we have been working on is the investment platform, which will provide opportunities for investing in the Polish market to foreign investment funds,” explains Grzegorz Mroczek, the vice-president of the board of CREAM.
ECE Projektmanagement, a developer with German roots, has also been strengthening its position on this market. In September it took on the management responsibilities for the gigantic Silesia City Center in Katowice (app. 85,000 sqm of leasable space). Leszek Sikora, a member of ECE Projektmanagement’s board, insists that his company mainly wants to remain active on the investment market as a property manager for the ECE Prime European Shopping Center Fund and also for other investors. It now offers leasing, recommercialisation, conversion and extension services to external partners. And is there much to fight over? The Polish Council of Shopping Centres has calculated that at the end of June there were more than 400 shopping centres operating in Poland and a combined gross leasable area of 9.42 mln sqm, with 57.8 pct of the retail space located in the eight largest conurbations (5.44 mln sqm gla). In addition to this, a retail area of nearly 900,000 sqm is still under construction. The management of a certain proportion of this area (15,500 sqm) is to be performed by WeCare, which is to property manage the Plac Unii complex in Warsaw, which is being developed by Liebrecht & Wood and BBI Development NFI. The subsidiary of Liebrecht & Wood informed us that it would deal with the management of the entire property, which has an area of 56,800 sqm including offices. “Property management operations have been carried out since the beginning of the company’s entry on the Polish market and started with our first project: Green House on ul. Hankiewicza, which was completed in 1993. In principle we do not hand over buildings to be managed by others, because we are convinced that only we will take the best care of our properties. One person is in charge of one or two properties at most. This allows us to solve any problems in a maximum of a few hours, rather than in days or weeks,” explains Kamila Zębik, the managing director of WeCare.

Who ate all the bigger pie?
According to Colliers International there is now a total warehouse area of 7.55 mln sqm in Poland, and developers are currently working on the construction of more halls with an area of 283,000 sqm. However, property managers have little room for manoeuvre here because the major players have rolled up their sleeves to manage their facilities themselves. Some smaller projects are available and properties acquired by funds that do not have staff in the country. The Warsaw Research Forum reports that in the middle of the year the office stock exceeded 4 mln sqm in Warsaw alone. There seems to be more room to manoeuvre here, but how much of this market will be swallowed up by the agencies’ property management departments? Property management does not generate tremendous profits, but it stabilises the current operations of a company – something which has been much appreciated by agencies after the credit crunch and the long dry spell on the investment market, which has left the consultants in their capital markets teams twiddling their thumbs. Comparing the data published by the agencies at the end of 2010 with the current figures it is clear that the majority have increased the square meterage under their management, but it is nevertheless hard to find any spectacular growth, despite the fact that new buildings are continuing to go up.

The best of the best
Which companies provide the best service on the market? This is something that you can find out on December 5th at the Eurobuild Awards Gala. A jury of experts will select the best management company. Candidates can be firms specialising in the property management business or individual departments, such as those of real estate agents. If you are the tenant of an office building or shopping centre, make sure you take part in the voting process. The polling will be supervised by Millward Brown.

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