_The property management industry needs reinventing - but at a cost
The days of just doing the basics of collecting rent, managing service charges, maintaining buildings and basic property accounting are long gone.
Today’s investors and owners want to engage with their customers in a way the property industry has rarely done before, and their ‘people on the ground’, their property and asset managers are key to this evolutionary change.
As Head of the Knight Frank PAM team and chair of the firm’s Technology Board I am actively engaging innovators and potential disruptors, most of whom are now becoming collaborators and are wanting to work with property managers who control large amounts of real estate across the UK.
We are already working in partnership with Equiem, Australia’s largest occupier engagement platform and customer engagement business.
By working together we are providing a really exciting platform which ensures experts in customer engagement and creating communities focus on looking after occupiers, effectively becoming ambassadors for the broader building management team and the coal face representatives of the investors and owners.
"Today’s investors and owners want to engage with their customers in a way the property industry has rarely done before, and their ‘people on the ground’, their property and asset managers are key to this evolutionary change."
The industry must change and this change is gaining pace; as a business we are already trialling and close to adopting other initiatives that utilise AI and/or machine learning including:
- A virtual concierge to handle and process the more mundane and easily resolved FM issues
- Lease reading software which is rapidly advancing in it’s accuracy and efficiency
- The use of drones for inspections and, in the future, deliveries.
This is all in addition to the £2 million the firm is investing in our property management systems, processes and procedures over the next 18 months with up to eight pieces of software being integrated into a single platform including incorporating accounting, FM, compliance, reporting, P2P and helpdesk all of which can connect into our clients’ own systems if required.
These types of technologies will all do one thing - automate the more menial, albeit still essential, elements of the property manager's/FM’s role so that they can spend more of their valuable time with their occupiers, improving and creating consistency in the level of service and, as a result, developing and strengthening relationships with those customers.
Talented property managers should become ambassadors for the broader building management team and the coal face representatives of the investors and owners
However change and innovation does come at a price; they involve significant capital investment and whilst I share Bill Hughes’ view that the property management industry needs to step up, there also needs to be some appreciation of this investment from the investor/owner community.
For far too long the property management industry has functioned on low fees, with many investors prepared to accept a below average level of service on the basis that the fees are low.
I am constantly reminding my team of a quote by 19th Century visionary John Ruskin:
"It’s unwise to pay too much, but it's worse to pay too little. When you pay too much, you lose a little money - that's all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do.
"The common law of business balance prohibits paying a little and getting a lot - it can't be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better".
Too frequently managing agents are appointed on the basis that they propose the lowest fee. And given that parts of a property management role can be unrewarding and mechanical, this low fee is unlikely to inspire the commitment of skilled, forward-thinking individuals tasked with driving occupier engagement, extracting value and smart initiatives. As the adage goes, 'if you pay peanuts, you get monkeys'.
"Change and innovation does come at a price; they involve significant capital investment and whilst I share Bill Hughes’ view that the property management industry needs to step up, there also needs to be some appreciation of this investment from the investor/owner community."
We are all now governed by prolonged procurement processes when pitching for large management instructions, and in many cases e- auctions are being put in place with the lowest bidder winning the role.
It’s time for both managing agents and investors/owners alike to realise the value that can be created through working ‘in partnership’ and rewarding excellence and innovation, whilst also allowing the very best property managers to develop into true asset managers.