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Budapest New Property Policy

Learn how Budapest City Property Management Centre (BFVK) is using Key Performance Indicators (KPIs) to benchmark and improve the performance of new properties in Budapest. Overcoming challenges such as deteriorating buildings, missing drawings, and complicated legal situations, BFKV has developed KPIs to measure performance, reduce costs, increase income, and ensure tenant satisfaction.

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Budapest New Property Policy

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  1. Budapest New Property Policy Key Performance Indicators to Benchmarking Zsolt Ferenczy Property Director of BFVK – Budapest City Property Management Centre www.bfvk.hu

  2. IntroductionThereare no problemsatall! Justchallenges! • The assetvalue is unknown • The heritage: an old, mismanaged, deterioratedcluster of buildings • Missingdrawings • Complicatedlegalsituation • Tenantswithouttenancyagreements • Extremelylengthylegalproceduretovacateoccupiedproperties • Service usagenotmeasuredbyseparatemeters, sometimesnotevenmeasured • There is no linearcorellationbetweenthe service bills and themeasured m3 quantitiesduetohigh standing fees • Comfortablemanagers’ chairs, no innovation, „whytochange, whybother” attitude www.bfvk.hu

  3. Introduction 2 • Construction market sharply dropped • Limited number of new-built office complexes • Strong sensitivity of rental-fee at all companies • The rent is generally the third biggest cost to most companies • Internet give new type of access to each business: the corporate headquarter-look is not so important any more • Growing need for type B offices or lower grade storages • Old buildings get higher comparative values www.bfvk.hu

  4. Introduction 3 GKI – Economy Research Institue Report Property Indexfor 2001-2011 Residential index Office index Retail index Warehouse index www.bfvk.hu

  5. DevelopKPIs - 1 Anyvalue must be realistic and usefulforfurthercalculation. Whatvaluescanwemeasure? • performance of bdgs: publicutilities, feesofinsurance, security, cleaning, etc. • Performance of the management (outsorcing: is itworthor • Is theusageappropriateforitsintendedpurpose • Sustaniability? Dowecomplytonewrequirements? Energy saving, dustcollection, noiseprotection, etc. www.bfvk.hu

  6. DevelopKPIs - 2 Whatshallourmeasuredvaluerelateto? • Gross externalarea? (GEA) • Gross internalarea? (GIA) – availableonarchitectsdrawings • Net internalarea (NIA) or Gross leasablearea? • Net rentedarea • Commonuseareas: howtoincorporate? www.bfvk.hu

  7. DevelopKPIs - 3 Oncewecalculatedour KPI, where and howshallweuseit? • Internal benchmarking: schoolstoschools • Competition benchmarking: privateschooltomunicipalschool • Functional benchmarking: waitingroom of a hospitaltoamunicipaloffice • WorkProcess benchmarking: usedelectricity of an assistantinvariousworkplaces www.bfvk.hu

  8. The aims 1 • We must stop Propertyenthropy • Technicalobscolescence (deterioration) • Functionalobscolescence (newneedforsmallcubeofficesor „telex rooms”) • Locationalobsolescence („slumming”: a a shop in a 50 yearsagohigh-streetnow is notsoughtafter ) www.bfvk.hu

  9. The aims 2 Target 1increaseincome: • let out more, • increaselettablearea, • decreasecommonareas, • decreaseuselessareas • Findnewfunctions • Good marketing • Etc. www.bfvk.hu

  10. The aims 3 Target 2: decreasecost: • Use Benchmarking toidentifyweakness • Obtainlow service fees, a group of propertiesmayhavebetterrates • Rationalizelayouts, heating, etc. • Combineinvestmentwithlease: supporttenantfitoutformutualbenefits www.bfvk.hu

  11. Research Wehaveselected 5 differentproperties: Baross utca 61. Curia utca 3. Kassák utca 81. Gvadányi út 33-39. Lenkei utca 17-19. www.bfvk.hu

  12. Baross 61 (Office) 4000m2 officeblock, fullylet. Slumarea, 50 years old concrete/brick building

  13. Curia utca 3. (Office) 6000m2 officeblock, fullylet. Prime location, goodleasable/total ratio 80 years old brick building

  14. Kassák utca 81. (Residential) 6000m2 residential, 10-storey highplattenbau building, 80 flats. partiallylet. Mid-location, 40 years old concrete building. No insulation, old timberwindows

  15. Gvadányi út 33-39. (Office/storage) 30 years old prefabconcretepurposebuiltfacilitywithdistrictheating.

  16. Lenkei utca 17-19 100 years old complex, includinggarages, officebuildings, openstores, workshops, and even a kindergarden!

  17. KPIs Thistableshowssome of thecalculatedKPIs www.bfvk.hu

  18. Conclusion • Compareappletoapple • Usegoodjudgement of values, Theymaynot be right! • Eachproperty is different, butthetargetisthesame! • A happy tenant is theonlytenant: if a KPI sharplyriseordiminish, something is wrong and thetenantwillactionatonce! • Collect and collectdata • Torepeat Montecuccoli: Youneed 3 thingsfor benchmarking:Data, Data and Data www.bfvk.hu

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