{"id":1004193277,"date":"2017-10-09T06:52:14","date_gmt":"2017-10-09T14:52:14","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004193277"},"modified":"2021-05-15T06:32:58","modified_gmt":"2021-05-15T14:32:58","slug":"9-ways-the-best-cre-properties-operate-differently","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/9-ways-the-best-cre-properties-operate-differently\/","title":{"rendered":"9 Ways the Best CRE Properties Operate Differently"},"content":{"rendered":"<p>By Phil Mobley<\/p>\n<p><a href=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2017\/10\/Headshot-small-version.jpeg\"><img decoding=\"async\" data-attachment-id=\"1004193279\" data-permalink=\"https:\/\/www.commercialsearch.com\/news\/9-ways-the-best-cre-properties-operate-differently\/headshot-small-version\/\" data-orig-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2017\/10\/Headshot-small-version-e1507560727217.jpeg\" data-orig-size=\"427,344\" data-comments-opened=\"0\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;1&quot;}\" data-image-title=\"Headshot small version\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2017\/10\/Headshot-small-version-e1507560727217.jpeg?w=427\" loading=\"lazy\" class=\"alignright wp-image-1004193279 size-medium\" src=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2017\/10\/Headshot-small-version-e1507560727217.jpeg\" alt=\"Headshot small version\" width=\"300\" height=\"242\" srcset=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2017\/10\/Headshot-small-version-e1507560727217.jpeg 427w, https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2017\/10\/Headshot-small-version-e1507560727217.jpeg?resize=300,242 300w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a>Even when capital markets are at their frothiest, commercial property values are still linked to the underlying net operating income (NOI) produced by occupancy and rental rates. It can be tempting to think of these factors as fixed, mere functions of market conditions and a property\u2019s physical features.<\/p>\n<p>Real estate professionals intuitively know better. But establishing a rigorous link between operations and NOI is difficult. What does \u201cbest-in-class\u201d operations look like, and how does it affect the bottom line?<\/p>\n<p>To answer these questions, <a href=\"https:\/\/www.buildingengines.com\/\" target=\"_blank\" rel=\"sponsored noopener\">Building Engines<\/a> launched a comprehensive study of over 500 commercial property management teams. The inaugural <a href=\"https:\/\/www.buildingengines.com\/landing\/the-state-of-commercial-real-estate-operations-2017\" target=\"_blank\" rel=\"sponsored noopener\"><em>State of Commercial Real Estate Operations 2017<\/em><\/a> identifies the specific operational practices most associated with strong financial performance and reveals the ways high-performing commercial properties operate differently than their peers.<\/p>\n<p>Here are nine operational practices exhibited by high-performing commercial real estate teams:<\/p>\n<h2><strong>1. They prove tenant service performance<\/strong><\/h2>\n<p>Properties identified as High Performers\u2014those with above-market occupancy and rental rates\u2014are 1.6x more likely than their peers to track performance against lease service level agreements (SLAs). Teams at these properties are not afraid to be held accountable with documentation of their tenant service delivery. Crucially, however, this documentation can also work in their favor when a demanding tenant or skeptical asset manager asks to see evidence of market-leading performance.<\/p>\n<h2><strong>2. They staff appropriately <\/strong><\/h2>\n<p>It would be easy to assume that high-performing properties generate more value because they are resourced more generously. But our study found that staffing levels are not the key to competitive advantage. High Performers report a similar property management staff profile as their peers, and they are only very slightly more likely to have fully dedicated maintenance and engineering personnel onsite.<\/p>\n<p>Rather than throwing more people at operations, High Performers achieve more with the teams and technology they have in place.<\/p>\n<h2><strong>3. They benchmark expenses<\/strong><\/h2>\n<p>High Performers are 1.7x more likely than their peers to benchmark operating expenses to an external market source like the <a href=\"https:\/\/www.boma.org\/research\/pages\/eer.aspx\">BOMA Experience Exchange Report<\/a>\u00ae or <a href=\"https:\/\/www.irem.org\/resources\/income-expense-analysis-reports\">IREM\u2019s Income\/Expense Analysis<\/a>. This gives them important context in budgetary decisions so they neither over- nor under-spend. It also gives their managers leverage in negotiations over lease terms, vendor contracts, or management fees.<\/p>\n<h2><strong>4. They communicate frequently, on multiple channels<\/strong><\/h2>\n<p>Whatever the means\u2014from traditional vehicles like online tenant handbooks and periodic newsletters to dynamic tools like broadcast messaging and digital signage\u2014High Performers are more likely to employ it in the effort to share information with building occupants. This kind of steady information flow is a key part of the office building\u2019s transition from <em>place of business<\/em> to <em>workplace experience.<\/em><\/p>\n<h2><strong>5. They use technology effectively<\/strong><\/h2>\n<p>The overwhelming majority of commercial properties have technology in place to facilitate basic jobs like maintenance notifications, task tracking, and mobile inspections. High Performers are leading the way toward adopting more cutting-edge capabilities, such as tagging equipment with QR codes for fast access to digitized maintenance history and service manuals. Market-leading teams are ahead of the technology curve.<\/p>\n<h2><strong>6. They choose amenities thoughtfully<\/strong><\/h2>\n<p>For many types of commercial property, amenities do <em>not<\/em> offer value-driving differentiation, according to our research. Trophy assets already have superlative location and name recognition, and Class B\/C buildings are limited in what they can offer. But among Class A properties, a hyper-competitive market, an investment in amenities sets High Performers apart. These properties are much more likely than peers to offer a wide variety of amenities, especially tenant-reservable event spaces, fitness centers and discount programs.<\/p>\n<h2><strong>7. They manage energy consumption<\/strong><\/h2>\n<p>ENERGY STAR\u00ae certification reflects conscientious stewardship in that it signifies performance in the top quarter of similar commercial properties. It has also become a competitive necessity at the top end of the market. More than seven out of 10 Trophy office buildings are certified, as are over half of Class A buildings, meaning it is now a market standard.<\/p>\n<h2><strong>8. They prioritize tenant satisfaction<\/strong><\/h2>\n<p>Our research found tenant satisfaction to be top-of-mind for all commercial real estate professionals, especially those in onsite roles. Today, more and more tenants look to their workplaces to help them attract and retain talent. Keeping these tenants satisfied requires new and different efforts from property management teams. Responsive service and studious relationship management are now prerequisites, not differentiators.<\/p>\n<h2><strong>9. They operate with a proactive outlook<\/strong><\/h2>\n<p>Management teams at High Performers report spending their time more proactively than their peers. This focus can make them more effective at creating value through operations rather than getting bogged down by constantly putting out fires. It is also likely that having solid processes and technology in place prevents the fires from starting in the first place, enabling more opportunities to be proactive.<\/p>\n<p>Commercial property management is no commodity\u2014buildings with market-leading NOI really do operate differently. The <em>State of Commercial Real Estate Operations 2017<\/em> Report highlights many of the methods used by winning organizations as they seek a sustained and measurable advantage.<\/p>\n<p><em>Phil Mobley has been a consultant to the commercial real estate industry for over a decade, telling stories with data that help building owners and managers better serve their customers. He is a prolific writer on industry topics and a frequent speaker at educational conferences. At Building Engines, he is leading efforts to capture and share new insights gleaned from operational and tenant sentiment metrics.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Establishing a link between operations and NOI is difficult. What does \u201cbest-in-class\u201d operations look like, and how does it affect the bottom line?<\/p>\n","protected":false},"author":1214,"featured_media":1004508148,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21684],"tags":[],"class_list":["post-1004193277","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-viewpoint"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v24.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>9 Ways the Best CRE Properties Operate Differently - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/9-ways-the-best-cre-properties-operate-differently\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"9 Ways the Best CRE Properties Operate Differently\" \/>\n<meta property=\"og:description\" content=\"Establishing a link between operations and NOI is difficult. 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