The Future of Asset Management: The Demand of the ‘hands-on’ Asset Manager for Developers

Sustainability, technology, working from home, and the ever-changing economy have all shaped the future of asset management in development businesses.

Traditionally a more ‘hands-off role’, Asset Managers often relied on the value of a building naturally increasing in value over its lifetime.

However, capital growth in real estate is no longer a given as the needs of the occupier are much greater than they were pre-pandemic. Therefore, it’s the responsibility of the Asset Manager to not only ‘manage’ the buildings they own, but to proactively think of new ways to make sure it’s generating value.

From leveraging data and technology to better understand tenant needs, to incorporating ESG practices and government policies to appeal to the increasingly eco-conscious occupier, the Asset Manager’s role is central in the ongoing success and profitability of the asset.

Consequently, employers must reconsider how their existing teams address evolving requirements, particularly in assessing the readiness of their Asset Managers to navigate these changing dynamics.

Although the familiarity of sticking to what you know can be tempting, the challenges faced in 2020 brought about a need for change. By adopting a forward-thinking mindset and integrating innovation, strategic thinking, and adaptability into their organisations, Asset Managers have the potential to thrive in organisations in 2024 and beyond.

The Future of Asset Management for Developers

The traditional role of an Asset Manager in development businesses was previously centered around entering the process once a building was completed and managing it.

However, this role has evolved into a more diverse landscape. As highlighted earlier, the assumption of automatic capital growth in real estate is no longer valid. In the past, buildings were expected to appreciate over time due to demand from various occupiers, whether that was for offices, shops, or restaurants.

However, the pandemic altered this dynamic significantly, prompting a widespread shift to remote work, online shopping, and food ordering. Practically every part of our lives migrated home, where we have the most control and customisation. This shift has a knock-on effect for the role of Asset Managers, as they must provide a similar level of comfort and customisation within the properties they oversee.

For instance, the inconvenience of commuting, arranging childcare, and the impact on personal commitments such as going to the gym makes the concept of going into an office less attractive.

However, by leveraging this insight, Asset Managers can strategically plan spaces that cater to these changing needs. Collaborating with a nursery and incorporating childcare facilities on-site is an example of how they can improve the attractiveness of their assets.

Moreover, it’s crucial to create flexible and adaptable spaces that can easily accommodate evolving work trends. Designing communal areas, incorporating technology to support remote collaboration, and providing amenities that promote a healthy work-life balance are all ways Asset Managers can ensure their properties remain valuable and desirable.

The key is to optimise spaces, providing incentives for people to return, or else these areas remain dormant, losing value over time.

Proactive Commercial Understanding

There is a growing importance for Asset Managers to not just manage investments effectively, but also to have a deep and forward-thinking understanding of the commercial environment in which they operate.

This involves keeping up to date with market trends, economic indicators, and the broader financial ecosystem to make informed decisions that maximise investment returns.

There is also a greater demand for Asset Managers with skills across different asset classes and the sub-categories within each which we’re exploring below.

Employing a Multi-Asset Strategy

Gone are the days when an Asset Manager could specialise in either commercial, residential or retail.

Now each of these categories are branching out, introducing sub-categories and unique demands by their owners and managers, with each necessitating a bespoke management approach to serve its users.

As the market for living spaces diversifies into increasingly specific usage categories, the expertise required for managing these spaces must also evolve.

This results in talent gaps and supply and demand challenges within the sector. Consequently, for Asset Managers to thrive, they must expand their knowledge to cover a variety of asset classes rather than focussing on one.

This need is further heightened by the adaptability of spaces, as offices can transition into residential areas and vice versa, supporting our earlier point regarding the improvement of workspaces with additional amenities such as gyms and childcare facilities.

Moreover, the theme of ‘hotel-isation’ is gaining traction. This concept, applicable to both residential and office buildings, sets an expectation for a certain level of service including concierge, who are capable of fulfilling a wide range of personal tasks, from laundry to pet care.

This gives people an even greater incentive to go into the office, reinforcing the need for Asset Managers to adopt a broad and inclusive approach to asset management.

Adapting to Market Trends – Example Case

Following on from the discussion on the necessity for Asset Managers to have cross-disciplinary skills due to the evolving nature of multi-use office spaces, companies like WeWork are a prime example of this trend.

WeWork and similar co-working entities have transformed the traditional office space model by offering a blend of amenities that cater to a range of professional needs and lifestyles.

This emphasises the importance of understanding multiple asset classes, as such spaces combine elements of commercial real estate with hospitality, retail, and community services.

The co-working model is built around creating flexible, shared workspaces that not only provide desks and internet access but also improve the work experience through community events, wellness programs, and various on-site facilities.

These amenities might include:

• Community events: Facilitating connections between different businesses and professionals, encouraging collaboration.
• Wellness and fitness classes: Offering yoga classes, meditation spaces, and even gyms, highlighting the importance of health and well-being in productivity.
• Retail and restaurants: Incorporating cafes, restaurants, and retail outlets within the workspace, catering to the day-to-day needs of occupiers.
• Leisure and recreation Areas: Providing spaces for relaxation and social interaction, such as games rooms, outdoor terraces, and lounge areas.

Asset Managers looking to succeed in this diversified market must broaden their expertise and adapt their strategies to cover the multifaceted demands of modern workspaces.

This includes being proactive in identifying emerging trends, understanding the changing needs of the workforce, and implementing solutions to meet these demands.

Future-Proofing Skills Required in Asset Manager’s for Developers

Companies must future-proof their asset management team by investing in the skills needed to remain competitive in this changing market.

Two of the most important skills that the future of asset management holds are being aware of sustainability practices and being able to use data to make informed decisions.

Without these skills, Asset Managers will not be able to perform their role effectively as they are essential moving forward.

Let’s start with the need for understanding sustainability practices, something that is being spearheaded by the government.

Knowledge of sustainability

By 2030, all buildings must conform to new minimum energy efficiency standards (MEES) set by government regulations.

Currently just 8.3% of office spaces in the UK meet these environmental criteria, amplifying the challenges faced by Asset Managers.

Since the 1st of April, the MEES regulations have rendered it illegal to lease properties with an Energy Performance Certificate (EPC) rating below ‘E’, and the government intends to raise the minimum to ‘C’ by April 2027 and ‘B’ by 2030.

Research by Jonas Carter delved into the sustainability and energy efficiency of the UK’s office infrastructure, and its suitability for today’s workforce. The findings showed that only 31.6% of the current office stock is rated ‘C’ or higher. Conversely, 17% fall within the least efficient bands ‘F’ and ‘G’. Additionally, 55% of the stock is over 30 years old, with nearly a quarter being built before 1950.

For Asset Managers, this demonstrates an urgent need for strategic planning and investment in upgrading existing properties to meet the escalating MEES requirements.

They must navigate these complexities by adopting innovative solutions AND investing in sustainable technologies such as installing solar panels, upgrading to LED lighting, and implementing smart building systems.

The ability to use technology and data

Technology gives Asset Managers deeper insights into tenant behaviours and how they interact with the buildings they oversee.

Using this information, Asset Managers can refine space utilisation, make more informed decisions, and customise the environment to improve the tenant experience.

For example, technology can be applied to track occupancy levels, including:

• Real-time occupancy monitoring: Installing sensors and IoT devices to monitor how and when spaces are being used, allowing for real-time adjustments to heating, lighting, and air conditioning, therefore optimising energy use and improving comfort.
• Foot traffic analysis: Using Wi-Fi tracking or camera analytics to understand the flow of people within a space, identifying high-traffic areas that might benefit from additional amenities or services.
• Workspace utilisation tools: Deploying software solutions that analyse desk and meeting room usage, helping to adapt the workspace layout to match actual needs and preferences.
• Environmental sensors: Monitoring air quality, temperature, and humidity to ensure optimal conditions, which can improve tenant satisfaction and productivity.
• Feedback platforms: Implementing digital platforms that collect tenant feedback on different aspects of the building, from facilities to services, providing actionable insights to improve the tenant experience.

By harnessing technology and data analytics, Asset Managers can not only improve the physical space to better suit tenant needs, but also anticipate and respond to changes more quickly.

The Future of Asset Management: The Demand of the ‘hands-on’ Asset Manager for Developers

The future of asset management will position this role at the forefront of both the operational and strategic aspects of building management, ensuring properties not only succeed, but also adapt to the evolving needs of occupants.

In the wake of the pandemic, relying solely on capital growth in real estate has become a risky strategy. Spaces must be carefully considered and aligned with the shifting priorities of tenants.

As discussed in the blog, making buildings appealing to tenants is crucial. While office spaces are mostly affected, a lack of strategic vision from Asset Managers will also impact other businesses due to reduced foot traffic.

Therefore, Asset Managers must be innovative and think out of the box when it comes to increasing the value of an asset, ensuring they meet these dynamic needs.

For employers, understanding the gaps in your current asset management team and knowing what to look for in future hires is key. Whilst it can be tempting to retreat to what you know, the market is changing and will continue to do so. It’s important to protect your business for the next 10, 20, 30 years and beyond, ensuring your team has the right skills to succeed. Get in touch with our consultants that are experts in this field and find out more about how we can help.