Facility management market buzzing

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There is hardly any activity in development and the outlook for the property market can only be perceived with tentative hopes. But the management segment, meantime, is abuzz with activity and an increasing number of players want to grab a piece of the cake.

The lack of any significant space coming to the market means that companies managing the office buildings are putting all the more effort into keeping their clients, who are, in turn, all the more active to seek out the best deals.

“Companies may achieve significant savings when renegotiating their lease, helping them through this tough economic period,” said Judit Varga, head of the office agency at property consultant CB Richard Ellis.

Accordingly, the facility management segment is highly active with intense competition and several new players appearing. “Since this is the segment of the property market where the most action is and the most tenders are being called, it is unsurprising that several new players are entering the scene,” said Lászó Vágó, CEO of Strabag FPS.

These include property consultants, other real estate companies that have launched management departments, or even smaller businesses, like cleaning companies.

Since tenants are becoming more conscious and have an increased range of providers to choose from, pricing has become highly competitive. In the case of small portfolios, for instance a single building, price is everything. In this segment clients don’t necessarily care about the credentials or the available capacities of the service providers, only the cost they come at.

However, as Vágó pointed out, In the case of bigger, or even national portfolios, clients are very circumspect in how they select a provider. “For such a commission, there are only a handful of companies that come into consideration,” he said.

Cost and energy

He added that the conscious tenant approach is also becoming more apparent in how tenders are called with an increased level of professionalism and precision, something that is now also being seen in the public sector and public precedents.

When choosing an office, the main factors remain unchanged: location and cost, the latter being highly dependent on energy use.

“The main aspects besides the preservation of the building are energy-efficient operation, sustainability, environmental awareness and reducing cost,” said István Rezsó, operating manger of the Bank Center complex in central Budapest.

“Tenants are continually asking for the optimization of costs. The best opportunity to achieve this is through energy. Although price levels have largely settled, calling tenders for energy services still holds further savings margins,” Vágó said. This is all the more important since energy costs more than the service fee paid to the management.

Tenants also tend to appreciate additional facilities like the availability of parking or the manager’s readiness to cater to individual requirements.

“We offer very flexible, tailor-made conditions for our partners, which allows us to maintain an almost 100% tenant retention rate,” said Attila Madler, IVG Hungary’s asset manager of the Oktogon Ház office complex.

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