Should companies outsource their property function?

Posted On Friday, 24 February 2006 02:00 Published by eProp Commercial Property News
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Cost cutting, as well as operational issues, are fuelling the continuing movement to outsource non-core functions, including human resources, purchasing, facility management, property transaction services and lease administration.

Michael Schirnig“Your real estate functionality within a business needs to be flexible, and in order to do that, you need to have access to the best and brightest people, whether they’re inside or outside (your organization),” says Michael Schirnig, director of one of SA’s few dedicated 3rd party tenant advisory firms.  “You need to recognize that the workflow inside the organization is going to have its ebbs and flows, leaving an in-house team over-worked one week and idle the next."

Companies turn to outsourcing in the hopes of driving down costs, while also allowing outsiders to perform tasks that are outside their realm of expertise.  “You want to outsource to someone who can offer you world-class services,” says Schirnig.

In South Africa the 3rd party administration of companies lease commitments (administration, rental payment, lease renewals) is almost unheard of. In the USA , by contrast, almost half of top companies outsource lease administration, though they do tend to keep higher-order functions like Strategy Development almost exclusively in-house.  

Should you outsource? Take this test.

1 Are you concerned about controlling occupancy costs, and would like to cut these by 15-20%?
2 Does it take too much time to open a new office/shop?
3 Are you concerned that you'e using more space than you need?
4 Is your operational/management team spending too much time on property issues versus core business issues?
5 Are you concerned about money lost in cross-representation conflicts?
6 Do you want to build brand equity and minimize design decisions through a corporate standards program?
7 Are you looking for ways to reduce transaction costs?
8 Are you concerned about reducing administrative costs and minimizing corporate overhead?
9 Do you have the real estate management system in-place to get the portfolio information you need on a timely basis?

If you answered yes to three or more of the questions above, you should consider talking to Alchemy Corporate Property Advisors. Says Schirnig: “Property is our passion, so we’re aware of market dynamics and we know the ins and outs of property negotiations. We use industry ‘inside knowledge’ on behalf of the tenant rather than the landlord.

What we do is provide a just-in-time and expert service exactly when a company needs it – we come in and resolve the problem, work on an ‘alliance’ principle that ties our remuneration to the tenant’s success and then get out of the way until the next property problem needs to be dealt with.”
Should you need assistance with any property related matters, Alchemy Corporate Property Advisors would be happy to get involved. We look at property from the tenant’s point of view, only representing occupiers of space, not landlords, in a bid to help you make the most of your property dealings.


Last modified on Sunday, 25 May 2014 16:27

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