Many commercial real estate (CRE) asset managers are facing new challenges as the industry continues to shift. From the evolving workplace where remote and hybrid work have become the norm, to a strain on property teams grappling with labor shortage, to a new focus on ESG reporting and sustainability initiatives – and everything in between – CRE asset managers have more on their plates than ever before.
Read on for the top asset manager goals for this year complete with resources to help as you strategize for the year ahead.
1. Acquire and Retain Tenants
When it comes to increasing occupancy in commercial buildings, taking a tenant-centric approach is more crucial than ever.
First, asset managers need to improve the tenant experience by creating a solid tenant engagement strategy. It’s important to communicate with tenants on their terms – meaning the channels they want to engage with you on. That means asset managers will look to communications tools this year that are easy to use for both tenants and property teams and that are available across various mediums to encourage interaction and provide real-time updates to resolve issues.
Tenant comfort – including indoor air quality and temperature – is also a big part of the tenant experience. In fact, in the recent State of Commercial Real Estate Building Operations for 2023 report, 67% of CRE property teams said tenant comfort issues are the most common tenant request. Tenant comfort has always been a top issue for the CRE industry, but today it’s table stakes. People simply won’t tolerate working in an uncomfortable office. That means uncomfortable spaces translate to empty spaces.
Top Resource to Help You: How to Create Commercial Buildings that Attract and Retain Occupancy
2. Optimize the Tenant Experience
2023 is the year asset managers not only have a solid tenant engagement strategy but also optimize it for the best business outcomes. This is the year to stand out from the competition with a laser focus on the tenant experience.
One way that can happen is to think outside your building’s four walls. The tenant experience doesn’t just begin and end with your building. You need a way to connect tenants not only to the building but also to surrounding neighborhood amenities. This can be done via a fully branded tenant app. For instance, this sort of technology can enable users to communicate updates, share details on local events, or request services from other tenants through an easy-to-use mobile platform.
But what’s especially key for asset managers is the data about your tenants you can pull from the app. It all comes down to real-time data on tenant preferences and behaviors. When harnessed correctly, it can directly boost net operating income (NOI). For example, if there is inconsistency in what tenants say they want (sentiment) and the space and amenities they use (usage) throughout the year, you can use this insight to improve tenant satisfaction and increase NOI. This way you are making smarter CapEx decisions and investing in things that truly impact tenant experiences.
Top Resource to Help You: 3 Ways to Make Your Office the Place Tenants Want to Be
3. Minimize Risk
Managing and minimizing risk is always a top goal for asset managers. But this year, as the stock market plays with its ups and downs, minimizing risk for commercial real estate assets will be more important than ever.
Certificate of insurance (COI) management is a good place to start. Over the past two years, CRE property teams have pointed to COI management as one of their most time-consuming tasks, according to research. And, unfortunately, most CRE firms have a COI compliance rating under 50%. The problem is that when you’re out of compliance, you risk multimillion-dollar claims.
Due to the many moving parts of compliance — such as expiring and missing COIs — it’s difficult to know everything that’s going on at any given time. Much less real-time updates. And if you aren’t aware of outdated certificates, you’re more likely to be faced with a costly claim.
Compliance is complicated, time-consuming, and ever-changing. But 2023 is the year asset managers make finding a solution a top priority.
Top Resource to Help You: Easy Ways to Simplify Certificate of Insurance Tracking
4. Drive Business Plans for Properties
As an asset manager driving the best business plans for properties, you need:
- a digital, real-time, holistic view of your real estate portfolio to support data-driven decisions that will yield better overall performance and experiences
- to track equipment performance and maintenance to maximize longevity and properly plan for capital expenditures
- to track compliance at-a-glance to ensure your tenants to keep up with required maintenance obligations
- to intelligently automate work orders and other CRE processes with prioritization
- to reduce operational expenses, such as energy consumption (i.e., optimize HVAC management)
To successfully drive business plans for properties, asset managers need to tap into data and relevant reports. Take stock of your reports. Are they giving you the information you need to make the best decisions? Is the data accurate? What other data might you need? Do your building operations systems easily present data and insights so you can make quicker, more informed decisions? Can you easily share the data between teams and systems?
Top Resource to Help You: 10 Must-Have Capabilities for Your Next Building Operations Platform
5. Maximize Revenue and Reduce Costs
It all comes down to increasing NOI by maximizing revenue and reducing costs. There are several ways asset managers can do this, including:
- Streamlining building operations to increase efficiency, saving your teams time and saving you money
- Centralizing your data to make smarter business decisions
- Mobilizing your property teams to complete work faster
- Leveraging tenant experience data to focus investment on the areas that drive ROI
To capitalize on these opportunities, it’s important that your tech stack isn’t fragmented. Here’s what a fragmented tech stack may look like: You might have a solution for operations, a solution for leasing, and a solution for bid management. And those things are all separated and individually managed.
But when you standardize your systems, you can bring all those solutions together in one place that is easily accessible and readily available when needed. Simply put, you should expect tech partners to provide solutions that centralize your data. A complete solution with as few logins, browsers, and windows as possible is crucial for success.
Top Resource to Help You: The CRE Tech Guide to Boosting NOI
6. Add Value to Your Property
First, you need to capture all billable services to add property value. It’s crucial to make sure you have all billable services and materials associated correctly with tenant work orders. Then, properly invoicing tenants is key. Ensure that you’re sending accurate invoices and no billable services or products are missing.
This can vary based on the tenant. Even in the same building, leases can be different depending on what the broker negotiated. Get all teams on the same page. Make sure your property management teams understand how to manage what their cost basis is. Be certain they understand what they’re allowed to charge for a margin, in a markup, and corporate things like taxes. Then, build a process and a workflow so property teams can make sure they capture every billable item and track it as they service the building and tenants.
Asset managers can also maximize property value by understanding the latest measurement standards from BOMA or REBNY to ensure every rentable square foot (RSF) is accounted for. You need to know the latest rules and regulations so that you understand the size of your buildings, what tenant spaces looks like, and how they are organized. And you need the data centralized in a convenient view. You’ll want to easily see space occupancy and get recommendations on how to add or change floor plans to extract more revenue from the building. This data can also be used to shorten lease deal time by keeping the floor plans and square footage in a centralized location so agents don’t have to consult building architects before negotiating deals.
Top Resource to Help You: Space Measurement Checklist for CRE Due Diligence
7. Meet Sustainability Goals
Sustainable buildings have become more of a focus for the commercial real estate industry in recent years. In fact, governments have been increasingly implementing sustainability rules and regulations for CRE buildings. A few things to keep top of mind as we move into a new year include:
- The U.S. Securities and Exchange Commission proposed requirements that would require public U.S. companies to begin disclosing greenhouse gas emissions and climate-related risks as early as 2024 for calendar year 2023 operations.
- Local governments have announced sustainability regulations for CRE buildings, including New York City’s New York Local Law 97, Boston’s Building Emissions Reduction and Disclosure Ordinance, and California’s Net Zero Energy code revisions, to name a few.
That means asset managers must make buildings more sustainable and ensure they are in line with their organization’s sustainability goals and you must ensure your buildings comply with new and evolving rules and regulations. Non-compliance could lead to significant fines in the near term. If you haven’t started strategizing for sustainability, now’s the time.
Top Resource to Help You: The CRE Playbook for Maximizing ROI on Sustainability
Planning for 2023 and Beyond
What other goals are on your list for 2023 and beyond? To shine a light on what CRE property teams are focusing on as they face a rapidly changing industry, we recently surveyed more than 250 CRE asset managers and owners, property managers, engineers, and more. Respondents answered questions about their current portfolios and their expectations for building operations in the year ahead. Download the free report for valuable insights as you plan for the coming years.