Cost No Longer The Key Driver Behind Outsourcing, Says CBRE

A new CBRE Viewpoint suggests that reducing cost is no longer the key consideration for owners looking to outsource their property and facilities management functions.

The Viewpoint highlights that owners are also placing a growing emphasis on how outsourcing can help them deliver the best organisational outcomes for tenants in areas such as employee satisfaction, productivity, retention and attraction.

“Traditionally, the decision to outsource property/facilities management has largely focused on cost, given that outsourcing typically delivers procurement savings of 10-20%. However, the focus is now broadening, as owners recognise the level of asset services required to attract and retain tenants and deliver competitive advantage," CBRE Head of Research, Australia, Stephen McNabb said.

The Viewpoint points to a growing recognition that property management adds value through its tangible impact on tenant attraction and renewal, particularly when it is informed by an understanding of occupier needs and priorities.

It focuses on a recent CBRE study in EMEA, 'To Stay or Not to Stay', which identified that a building’s facilities and attributes as well as the quality of the technical services provided by the building management team could be the “tipping point” for tenants when considering whether to relocate.

“Our research showed that the percentage difference between renewers and movers was highest for buildings that offered premium facilities, first class maintenance and cleaning and a high quality, responsive building management team.

"Rent was not as big of a differentiator between movers and renewers,” Mr McNabb said.

A number of other areas that are influencing landlords’ decisions to outsource include the need to have a better understanding of workplace strategy in the light of retaining and attracting employees.

“Our recent Occupier and Millennial research showed that, beyond a pure focus on cost savings, occupiers’ agendas are being driven by the interaction of real estate with human resources and financial objectives," Mr McNabb noted.

"Hence, factors which drive employee retention, attraction and productivity promote higher levels of collaboration.

Mr McNabb added that these factors are equally if not more important than cost savings alone as they add to a building’s amenity through the provision of services such as childcare and health and well-being facilities.

“In this environment, the ability to draw on global best practice and expertise is becoming increasingly important for property owners looking to drive income growth and asset values," he said.

CBRE National Director, Asset Services, Suzette Lamont said the Viewpoint highlighted that scale in systems, access to a wide and experienced talent, and the drive for best practice was leading a growing number of owners to outsource their property management functions and seek higher value from the relationship with the management team.