My friend, the manager

The days have gone when the work of a building administrator was restricted to small breakdowns
and looking after common areas. A landlord today expects an asset manager to increase the property’s value

Zuzanna Wiak

Supervising repairs and renovations, monitoring internal systems, finalizing contracts with tenants and suppliers, negotiating prices and administering the building are just some of the duties of a property manager set by the building’s owner – that is, which began to be set and enforced only a short time ago. Partnership contracts are now being agreed with increasing frequency, allowing a wider scope of duties to be ceded to the building manager. Under the terms of such agreements, the subjects work as partners whose operations cross over in working for the common goal of the best possible administration of the building. The greater number of duties ceded also comes with greater authority.

What are the legal instruments?

The type of contract signed depends on the requirements of the building’s owners. There are no standard agreements. Łukasz Mazurczak, Cushman & Wakefield’s property manager, remarks that: “The contracts that are usually signed are those which strictly define the scope of a manager’s work, which the property’s owner can check up on during weekly or monthly meetings. The second type of contract are those in which relations between manager and owner are more of a partnership. Their activities start to mesh and cross over. The property’s owner delegates a number of duties to the manager, for instance the power of attorney to agree contracts in the name of the mandatory – in effect, the managing company assumes the function of mandatory.” His company has entered into such an arrangement with Europolis Real Estate Asset Management. Although it has managed several of the investor’s buildings for some considerable time, the manager was only this year allowed greater freedom of operation. Łukasz Mazurczak adds that: “The main powers granted in contracts of this type include the power of attorney to sign contracts or orders in the owner’s name, powers of representation in external matters and to have the right to spend a guaranteed sum of money according to a set of purposes defined by the owner.”

Changes, changes and more changes É

Changes in the approach to owner-manager contracts have resulted, above all, from growth in the market and economy. According to Wojciech Zawierucha, an operations director at DTZ Polska: “The statutory definition of property management is to undertake such decisions and activities which maintain the property in an undeteriorated state, and to carry out the investment needed to maintain or improve the value of the property. At present, owners’ expectations are much greater and tend more towards asset management services, which are much wider since they include activities to improve the real estate’s value. In recent years, when more investment funds acquiring properties have appeared on the market, investment in a building is important since their owners expect greater rates of return. To them, a professional manager
is one which not only takes the care to maintain
a property in a decent state, but can also offer such additional services which raise the value of a property to a higher than expected level.” One of the companies his agency works for is ING Real Estate Investment Management, managing four shopping centres and three office buildings. Mr Zawierucha adds that: “Our cooperation with the company and the powers we have been granted are much wider than simple real estate management. Having said that, we do not have unrestricted access to their finance for the maintenance and management of their properties, since – naturally – payments require their approval.”

A little control can do no harm

The reason for such an arrangement is that real estate owners are not so ready to cede all their powers to building managers. Tomasz T. Jaroszewski, asset manager of Europolis Real Estate Asset Management, points out that: “We shift some of the responsibility to our managers, but this does not mean we don’t control what they do. The standard rule is that we meet them once
a week to discuss the current situation. Whenever we purchase existing buildings where managing companies already operate, we also try to establish partnership relations to ensure the cooperation is at the most effective level. Furthermore, we systematically implement our way of managing properties by signing contracts with partners for a very similar range of duties.”

However, a real estate owner should not live in fear
of excessive costs. For this sort of cooperation, a manager is bound by a budget strictly defined in his contract, which also regulates the scope of work that must be performed, including such requirements as changing the floor finish or the door handles. The kind of building managed in this way is not important, The system of delegating powers, reporting, budgeting and ordering is similar for all types of building. Tomasz T. Jaroszewski adds that: “We must trust the companies that manage our properties, since we are handing over for management assets with an enormous value. It is hugely important to have known our associates for many years. Continuity in business is crucial.” ν

To be a success, developing a magnificent office building simply isn’t enough. You’ve still
got to rent it well – as quickly as possible and ideally all in one go, like the Europolis Lipowy Office Park. Although it is still under development, all four of the buildings will be occupied next year by Bank Pekao. It is the largest office transaction ever signed in Poland, with the bank to occupy more than 39,000 sqm. It is said that success has many fathers, but this time they – the fathers of the success – were led by Piotr Stark, managing director of Hochtief Development Poland, the developer of this Warsaw office complex.