Large property portfolio holders face major challenges post-lockdown

14 April 2020
While people will return to offices and shops at the end of the national lockdown, there is general agreement that the way we work and shop has changed forever. The Covid-19 pandemic has accelerated the wide-scale adoption of telecommuting, working-from-home and the use of digital distribution channels.
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Apart from the short-term impact of empty office and commercial spaces, this shift will have significant implications for owners of large property portfolios over the long-term. Commentators agree that we can expect that overall demand will reduce. So how can property owners respond to this fundamental shift in the market? Joubert advises the following will be required:

Understand what you have and what it really costs

While property owners have extensive knowledge of their assets, they will also need a thorough understanding of the future costs associated with their portfolios. These costs not only relate to rates, taxes, insurance and bond-repayment costs, but the total cost of ownership. Therefore, it must include ongoing maintenance, asset-value loss and asset-renewal costs. Getting a handle on these costs will be critical as margins tighten.

Extend the life of assets while maintaining the required service levels

As funding becomes constrained, it will become ever more important to defer expenditure for as long as possible, while maintaining service levels at a standard that keeps a property competitive in the market, and tenants satisfied. This requires a more strategic approach across the entire property portfolio, rather than the typical ‘fix-it’ approach of facility managers who grapple with these issues on a daily basis.

Take informed decisions to optimise your portfolio

To answer these questions, you need an overview of your entire portfolio, including management information on the total cost of ownership, to be able make informed decisions about minimising costs and maximising margins in a tough market.

Aurecon has developed a rapid assessment methodology that can answer the above questions for owners of large property portfolios. For example, we recently assessed over 1.2 million square metres of floor space, in a portfolio spread across South Africa, within two months. We can assist you with rapidly obtaining a whole portfolio overview to facilitate the strategic choices that you will be required to make.

Francois Joubert, Principal, Asset Management, Aurecon (currently branding as Zutari)

Ends

Notes to the Editor
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