Property management critical as recovery gains strength

IT HAS been an active nine months for Ireland’s commercial property market, with further increased transactional activity anticipated between now and year end.

The residential, office and hotel markets witnessed investment at pace earlier in the year, with increased focus now moving towards the retail sector.

The backdrop to this recovery, finds its basis in a much improved labour market and the expectation of a more neutral budget. At a national level, consumer confidence is running at its highest level in seven years, retail sales are up 4.8% versus last year and the latest annual increase in employment to 1.88m has resulted in unemployment levels falling to 11.2% as of the end of August.

The associated consumer reaction to these improvements has resulted in greater confidence and a perceived increase in disposable income, which has had a knock-on effect on all sectors, particularly the retail element. The Irish investment market has attracted new entrants in the form of US and EU investors who see our market as one that can maintain its steady rate of recovery and are attracted to our competitive property environment.

Examples of some assets attracting the attention of these investors include The Acorn Portfolio, comprising of three provincial Irish shopping centres, which has recently traded at a level well above the intended guide, and the recently launched The Spectrum Portfolio, consisting of six shopping centres, an office building and development land. These portfolio sales are symptomatic of the offers that entice investors to our market. Aside from granting entrance to the retail landscape here, they also represent an opportunity for investors to add value to an asset.

Property management is critical in helping to achieve this goal. Traditionally, property management represented a basic model of collecting rents and service charges, and administering payments to contractors. The service offering has drastically changed with an emphasis on adding value for landlords and tenants. The key to this is by facilitating a successful landlord and tenant relationship, working with all stakeholders to enhance the letting and development prospects for a building. It is increasingly important that an asset is maintained and enhanced, in order to remain relevant and appealing as an offering for tenants. A good property manager understands the needs of both the owners and occupiers of a property and the importance of delivering value for money and service quality in the management of an asset. The range of property management services provided ranges from consultancy advice (pre & post acquisition), rent and service charge collection, liaison for tenants and third parties, to procurement and contactor management, service charge budget preparation as well as value-add services such as service charge reviews and specialist tenant turnover analysis, mall income commercialisation and marketing services.

An absorbing finish to 2014 lies ahead, with Nama and various banking institutions ready to deleverage numerous assets. The conclusion of these sales will present an opportunity to add value to all assets traded on a proactive basis, something that property management firms can positively contribute to.

* Karen Nolan is associate and head of the property management division at Savills, Cork.