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The benefits of active asset management

The needs and requirements of both property owners and users are continuously changing. These changes are driven by advances in technology and an increased understanding of the importance that a working environment plays in the success of an organisation. Commercial property has arguably been the most susceptible to these changes.

Over the years commercial spaces have been shaped by changing needs, from layouts to environmental awareness and topical issues. Office layouts have seen a significant change to a more open plan flexible space; more recently the green building trend has flourished as the world begins to acknowledge the benefits that can be derived from green building features and initiatives. Currently South Africans specifically are adapting to the changing requirements dictated by water restrictions, sky rocketing electricity prices, increased pressure on the grid and load shedding.

In times of changing tenant requirements active asset management remains vital in order to ensure that landlords remain relevant and spaces remain lettable.

The focus of property management should not be on the investment itself, but rather the business of property – rent, management and operating costs. It is no longer sufficient to just be an investor, one has to be smart. With rising operating costs such as electricity, security and municipal rates, it is critical that property investments are managed effectively to retain value. The successful performance of a property portfolio largely depends on how well it supports a tenant in achieving its objectives financially, socially and environmentally.

Horizon Capital, a boutique property firm specialises in local and offshore property investment, management and development. Established 11 years ago, Horizon Capital has become an expert in commercial property. Their recently constructed flagship commercial property, Ibis House, was the smallest 4-star Green Star SA rated building in Africa, which pioneered the way for environmentally sustainable development, proving that green building can be financially feasible on a smaller scale. Horizon Capital looked to green building as a means of accommodating tenants and their desire to reduce costs, improve the operating environment and remain relevant.

In addition to dealing with the ever increasing operating costs, businesses have had to operate under the constant fear of load shedding. This has created an increasingly hostile environment and as a result, landlords have again been put under pressure to adapt their properties to the changing needs of the tenants. This is why Horizon Capital made the decision to retrofit Ibis House with a generator. While not considered to be particularly environmentally friendly, active asset management calls for approaches that ensure that tenants operate in an environment that best assists them in achieving their triple bottom line objectives, not just their environmental goals.

The ability to adapt quickly and efficiently means that Horizon Capital’s clients currently experience a vacancy rate of 1.34%, well below the national average of 11.8% and the Cape Town vacancy rate of 7.2% for the fourth quarter of 2015. By carefully managing the balance between environmentally friendlier office spaces and the changing environment of the property industry, Horizon Capital has been able to ‘future-proof’ its client’s properties against increases in utility costs, energy and water supply problems, costly retrofits and more importantly, vacancy.

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