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Budapest New Property Policy

Budapest New Property Policy. Key Performance Indicators to Benchmarking Zsolt Ferenczy Property Director of BFVK – Budapest City Property Management Centre www.bfvk.hu. Introduction There are no problems at all ! Just challenges !. The asset value is unknown

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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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