Crisis Management

The question arises of how these two companies have fared, especially after being buffeted by the unforeseen waves of Covid-19? Do the decisions of these two companies to forsake outside managers foreshadow other companies going it alone? And how has the property management market been reshaped by the current pandemic?

Going it alone

For Globalworth, the choice to bring its management in-house had nothing to do with costs. “With our management-ownership model, the priority is to assure the highest service standards, so it’s rather difficult in this case to talk of cost savings in comparison to outsourcing. At Globalworth, the general rule is for each manager to be responsible for one building. As a landlord we are closer to our tenants. This is something that no-one from an outside company would be able to replace. Because our managers work within the Globalworth structure, they have ready access to the wide know-how of the company, all the data and our internal software systems. They attend meetings with other departments such as with asset and leasing managers and this means that they have the best knowledge of their properties on every level,” explains Maciej Kamiński, the head of property and facility management at Globalworth Poland (on the photo below)..

CPI PG also cited similar reasons for taking over their own properties. “From the owner’s perspective, decision-making and communication are streamlined, and the heads of individual departments and teams can focus on working on their own tasks rather than on coordination. Since we communicate and circulate documents within a single environment, we are also able to make decisions quickly, which is invaluable in the current situation. The second aspect is building up relationships with our tenants. Managing your own properties builds up a lasting relationship between the owner and the tenants. We have become the face of the properties we own, so a completely different and much deeper sense of responsibility had been created. Using our own resources significantly lowers our employee turnover and gives us a better knowledge of each individual building. To sum up – having a stronger bond and identifying with a building can bring very measurable benefits in a period of 3–5 years,” claims Marcin Medrzycki, the head of asset management at CPI PG.

External property managers are clearly not going to be quite so attached to their buildings but at BNP Paribas RE, this is not considered to be a disadvantage. Indeed, the company makes a point of moving their managers around every two to three years. “If you crossed a room every day for fifteen years, would you be able to spot a dot on the carpet? You’d miss it. That’s why managers need to change. It’s a learning curve,” points out Michał Pszkit, the head of property management at BNP Paribas Real Estate.

All change now

With the advent of Covid-19, almost no business operates in exactly the same way that it once did and this truism is no more evident than in the retail sector and the changes have taken place at lightning speed. “We’ve learned that it’s no good waiting to be told what to do. By having a switched-on team with good tenant relations we’re able to put measures in place before regulations come from authorities. It’s in everyone’s interest to stay open – customers, retailers and us running the centres - and by being a bit more prescriptive than others in what happens on our sites, has ultimately resulted in better outcomes,” says Peter Truscott, the head of facilities management at Fashion House Group. And surprisingly, he claims that the changes have not entirely been negative:

“We’ve always had very good communications with our tenants and now it’s even better. The tenants are asking us for advice more often. We’re also seeing more regular customers coming in because it’s a safe environment. We have put extra emphasis on ensuring the centre is cleaned very frequently to provide maximum reassurance for our customers. Shoplifting has reduced by a significant degree too and the belief is that thieves see our centres as a more secure, controlled environment and try somewhere else,” he points out. However, in other sectors less affected by Covid-19 restrictions the changes have been more an acceleration of current trends: “What we’re seeing is something that was inevitable. And yet the changes were supposed to take a decade, but now they’ve taken just a year and in some cases just three months,” says Michał Pszkit. This, he says, is especially true when it comes to digitisation. BNP Paribas RE has a protocol for signing contracts online and since the outbreak of Covid-19 almost all its contracts are signed this way. Indeed, he goes so far to say that “today we are a tech company with a licence for management services. I wouldn’t even call it property management, but management services. This is what we provide as a solution to our clients.” And he’s not the only property manager to stress the importance of rapidly changing technology in property management.

No one could deny that such times have been difficult. “Before the Covid-19 epidemic, every day there would be over 110,000 people in our buildings in Poland – the employees of many hundred companies and their guests,” points out Maciej Kamiński of Globalworth, who adds: “Taking effective action in 22 centres across six cities was therefore no easy task. This applies not only to our organisational efficiency but also to optimising running costs, which we adapted to the occupancy of the buildings. Covid-19 showed us that it is always worthwhile to prepare procedures and operating models that will allow you to cope with difficult times. As a responsible owner and the market leader, we have always treated the responsibility of protecting the health of our tenants and the users of our buildings as our highest priority. Even before the announcement of the first coronavirus case in Poland, we had put into place extremely rigorous cleaning and disinfection practices for the communal areas in our buildings. On the basis of our experience so far, we have prepared an internal policy document to counteract the spread of Covid-19 in our buildings. We’ve also set up a special action and reaction team responsible for all matters regarding the implementation of safety measures. From the beginning we have acted in accordance with government guidelines and applied a host of preventative measures, from rigorous sanitary and disinfection procedures in our buildings to updating our current action plans and continuously talking with our tenants. As a result, since the beginning of the pandemic, we have been able to continue with our business activities in safe and comfortable conditions.”

Your flexible friend

What CPI PG stresses in its reaction to the pandemic the need for flexibility: “The current situation continues to be unpredictable. Back in the summer, we expected mass returns to offices, but these plans were thwarted by the second wave of the pandemic. It is therefore difficult to draw any firm conclusions. For the time being, based on developments, we continue to work on improving our formal procedures and our communication. The most important lesson in management and our mutual relations is the importance of quick reaction time, as well as having a certain flexibility in decision-making,” says Marcin Medrzycki.

This need for flexibility is also key to how BNP Paribas RE has reacted to the crisis. “Agility is the key to our future success. We need to adapt to situations when we don’t even have a basis from which to do that,” claims Michał Pszkit.

Frequently the boundaries between asset management and property management seem blurred. Who would be ultimately responsible for a modernisation or refurbishment project? However, all the companies we talked to still made a strict difference between the two forms of management. “The boundary between property management and asset management is very clearly defined for us,” says Marcin Medrzycki of CPI PG. “Asset management focuses on increasing the value of a portfolio of owned properties by coordinating all activities and applying systematic solutions. The owner-management model is for managers to work closely with tenants on a day-to-day basis in specific properties assigned to them. The manager-tenant relationship is our priority. Property management also entails keeping tabs on a building’s daily and ensuring the quality of all services, starting from the entrance, i.e. managing the reception, security and cleaning services. The main reception and the lobby are what gives a building its first impression. Everything must work perfectly in this respect. Property managers are also responsible for all maintenance issues and managing potential break-downs,” he adds. Even with its focus on providing management solutions, BNP Paribas RE, does not believe that the distinction between an asset manager and a property manager can be fully eroded. “For years property managers were the teams on the ground and were managed by asset managers from abroad,” says Michał Pszkit of BNP Paribas Real Estate. “Asset managers jump from priority to priority, while property managers need to stay with their hands on the ground on a daily basis. Asset managers will not be able to go down there to become property managers, and some property managers, due to the limitations of knowledge, strategy and conflicts of interest, will not be replacing asset managers. But the tasks that they perform right now will overlap,” he adds.

What the new normality will be once Covid is over, nobody knows and in such uncertain times managers can only be cautious. “We are constantly monitoring the situation, but only once the restrictions are lifted and the pandemic subsides in the long run, will we be able to talk about the changes and how sustainable they will turn out to be,” concludes Marcin Medrzycki of CPI PG.