Revamped property management aims to maximize investor profit

Tier 1 property managers tap international expertise, latest technology to boost rental income for Canadian landlords and investors

By
Western Investor
September 25, 2017





B calgary office
JLL's new Calgary-based property management division hopes to help commercial investors get the most out of their assets amidst a lacklustre market.

 

It is the strength of JLL’s international network that allows Ron Fiell to run the company’s new Canadian property management division from Calgary.

“Why Calgary? Everybody asks that question,” joked Fiell, a career property management professional in Alberta who was named manager of JLL’s national property management services group this year.

Certainly, the Calgary environment should sharpen Fiell’s approach to managing the 58 million square feet of commercial real estate that JLL currently controls across Canada, in both property and asset management.

“It’s a horrible market downtown [in Calgary] right now,” Fiell said of his hometown, with office vacancy rates in the mid-20 per cent range and the industrial sector struggling.  He said the Calgary imperative of retaining both tenants and asset cash flow could help in other cities that may experience challenges. But Fiell added that JLL, which manages four billion square feet of space globally – 400 million square feet in the U.S. – has property management experts in each major Canadian city who can tap into JLL’s worldwide expertise for assistance, advice and technology.

“JLL has an exceptional platform. In my 20-plus years in the business, I haven’t seen anything like it,” he said. “It is very client focused. It is very sophisticated and collaborative.”  For example, during recent negotiations on a complex, mixed-use Canadian project, JLL flew in management professionals and engineers from its Boston office, with specific experience, for the client meetings.

“The key,” Fiell said, “especially for third-party investors that we often deal with, is making sure they don’t lose value, keep their tenants happy and build on that.”

JLL is strictly focused on commercial real estate. “We don’t do residential,” Fiell said, explaining that even on mixed-use projects that involve condominiums or apartment rentals, the company will turn the residential management over to other companies. He agreed that this stance could prove a handicap in the Vancouver market, where mixing residential with virtually every form of commercial and industrial real estate is common.

“We are concentrating on Alberta and Ontario,” he conceded. “Vancouver is a difficult market to get into. There are some very good property management firms out there.”

Among its Tier 1 Vancouver competitors is Colliers International, ranked second in B.C. behind Bentall Kennedy as the biggest commercial property management firm in B.C.

Colliers manages 55 million square feet of office, industrial and retail space across Canada, including 5.3 million square feet in Metro Vancouver.

“More than half of our portfolio is managed on an integrated basis with leasing and other service lines such as project management and tax consulting,” explained Lesley Heieis, Colliers vice-president and head of its B.C. property management division. “Our asset advisory services is a unique offering that fully integrates the service lines and provides the client with a single point of contact at no additional cost.”

Heieis said Colliers keeps a tight focus on increasing rental income for its clients. “Everything we do is geared toward maximizing asset performance.”

This can include recommending renovations or adding amenities to generate higher rental rates, energy management to reduce operating costs, and even “a complete repositioning of the asset in the marketplace.” Colliers provides a 24-7 service centre so it can react to any after-hour calls or emergencies, she noted.

Colliers also leans on the latest technology to boost asset performance. Modern management can’t get bogged down with “slow, outdated tools and processes,” she said.

“There are many opportunities for technology to be used in the buildings, such as new parking technology including licence plate recognition, digital directories, building automation systems, smartphone apps for occupants, and emergency communication systems. We are always exploring ways to use technology.  Many new tenants entering the Vancouver market are high-tech businesses so they have an expectation that modern technologies will be used in the buildings they occupy,” she explained.

Heieis said the complicated nature of modern commercial real estate has led to a shortage of property management professionals and building operators in B.C. To this end, Colliers University offers staff training at no cost.

 As for the fees associated with commercial property management, Fiell said they are well below the 8 per cent to 10 per cent range seen in the residential sector, and are often negotiated on a project-by-project basis.

Fees are typically a percentage of gross or net revenue depending on the size and type of property, Heieis said. But “in many cases we are flexible. For example, a new development might have a phased fee structure as it transitions from being under construction to an income-producing asset.”


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