The costs of maintaining office spaces are kept under control by the economic crisis
The crisis has taught office building owners to be efficient in managing their buildings. “The competition between the owners is reflected not only in the negotiation of the rent but also in the efficiency of the costs with the maintenance of the office spaces. Since 2008, several owners have revised their contracts with service providers and managed to reduce costs by 20-30%. Others, even if the costs do not decrease, are fighting to at least keep them at the same level, given that utility bills (gas, electricity) have increased this fall as well “, says Alexandru Petrescu, manager of the real estate company ESOP Consulting.
BEFORE THE CRISIS AND AFTER THE CRISIS Before the crisis, all the price increases of services (such as security, cleaning, repairs, etc.), but also of utilities immediately rolled into the maintenance bills of the buildings, like a snowball, the one who bears being the tenant. Today, the owner has a greater empathy with him and is attentive to this aspect as well, trying to be competitive on the market and through a maintenance cost kept under control. Owners have had to renegotiate with service and utility providers and reduce many of these costs.
For example, in 2007, many owners of spaces in the business center signed rental contracts which provided for maintenance costs of 3 euro/sqm/month, a tariff which then at the first regularization (during 2008) was increased to 4, 5 – 5 euro/sqm/month. In the autumn of 2012, such a tariff of 4.5-5 euro/sqm/month for maintenance is charged only by class A ++ buildings, with generous reception facilities, numerous integrated service areas (such as commercial spaces, lobby bar, cafeteria), etc.
When choosing a location, a tenant must not only find out about the maintenance costs but also what they include. Why? Because two buildings can have the same level of expenses – for example, located at 3.5 euro/sqm/month, but one of them should include some services, and the other should not be paid separately.
“Significant variations in the amount of maintenance costs from one building to another must be analyzed in terms of whether or not to include the consumption of utilities in these values (the most important being electricity and gas for heating and cooling the rented space and the share of common spaces,” says Alexandru Petrescu, manager of the real estate company ESOP Consulting.
What services are included in these rates:
I. Spaces in villas (and small office buildings) 1.5 – 2.5 euro / sqm / month
The spaces in the villa require direct administration by the tenant. They are usually limited to cleaning and payment of utilities to suppliers. The resulting cost, reflected per sqm, is between 1.5 – 2.5 euro/sqm/month.
II. Business centers class B +, B (and C): 2.5 – 3.5 euro / sqm / month
What services include cleaning and consuming utilities on common areas, facade cleaning, maintenance and service of elevators, building installations, security? Some buildings may also include a property administration fee (when done by a specialized company and not directly by the owner), building insurance, and a property tax. This amount does not include the consumption of utilities in the rented space (electricity, heating, cooling).
III. Upper class business centers (class A and A +): 3.5 – 5 euro / sqm / month
In addition to the services mentioned above, there are also the maintenance costs of green spaces in all situations, the property administration fee (specialized property management companies provide the management of these buildings), building insurance, and property taxes.
The service package must be adapted to the building
An owner who owns a 1,000 sq m office building and wants to provide all the complex maintenance services of a 10,000 sq m building will have higher costs, reported per square meter. “It depends on the size of the building. Contrary to many people’s beliefs, a smaller building is more expensive to maintain per square meter. Certain services, such as security, cleaning, property management, and some technical services, are relatively constant. As a result, on a larger building, compared to sqm, they become cheaper “, says Victor Anastasiu, partner of Facilitec Romania, which has as object property management activity.
What owners do to reduce maintenance costs:
- In smaller buildings, security services with two or three employees at the entrance are replaced with card-based access and monitoring system to reduce costs;
- In the case of large buildings, they also negotiated with utility providers, such as electricity;
- Renegotiates in blood the services performed by specialized companies – cleaning, security, technical services;
- I put automated doors at the entrance to the underground parking lots of large office buildings, which are activated with a sensor-based locking system, to avoid heat loss from the building during the cold season;
- Uses lighting based on motion sensors, both outside the building and in the underground parking lot;
- Change the property management company if more than half of the tenants are dissatisfied (clause included in the lease).