We have developed our own know-how called CNC (Cream NOI Control) - it is a set of tools and processes which not only reduce costs and increase savings in commercial facilities, but first of all, they operate without a decrease in quality, and in many cases increase it - says Grzegorz Mroczek, Vice-President of CREAM Property Advisors.
Commercial buildings are facing many problems, but some of the biggest ones are currently the growing deficit in operating costs and the following decline in property value. Why this stratification?
Grzegorz Mroczek, Vice-President of CREAM Property Advisors: A few years ago, properties, especially commercial ones, were samograms. The insatiable market needed galleries and almost every investment of this type brought the expected profit. However, the situation has changed: commercial competition has appeared, the buildings have started to age and need to be modernized, and thus financial outlays. At the same time, rents and maintenance fees began to fall, which in turn translated into an increase in the shortfall, i.e. the deficit in maintenance costs. These tendencies are still deepening for many reasons. One of them is certainly the fear of change and introduction of innovative solutions, which significantly modify the model of current, conservative management. Additionally, the price of utilities is rising. The situation is also not improved by the pandemic and its impact on the retail property sector. Unfortunately, the decline in the value of commercial real estate is strongly visible and very problematic, e.g. in the case of planned sales.
What can be done to stop the downward trend in commercial real estate?
CREAM Property Advisors has long worked on a solution that effectively minimises non-transferable costs, increases savings and reduces the maintenance costs of commercial buildings and consequently increases their value. We have developed our own know-how called CNC (Cream NOI Control) - a set of tools and processes that not only reduce costs and increase savings in commercial buildings, but above all operate without compromising quality, and in many cases increase it. They also increase the value of the property and to a considerable extent.
What is the CNC service?
In CNC we put emphasis on completely new solutions in the field of asset management and technical building management. The development of this project is linked to our observations so far, which clearly show that the existing management models do not work in the current, very demanding reality. In a nutshell: CNC is based, among other things, on the simplification of the management model, changes in the principles of building servicing, technological innovations and changes in the way of settling operating costs with tenants. All this, as I have already mentioned, without any loss of quality. We take into account many factors in the functioning of commercial real estate, including among others: technical maintenance with particular emphasis on technological innovations, taxes, media, or insurance. I do not want to reveal all the details, because this is our know-how and ideas developed over the years of valuable approach to property management. The changes that we propose in the CNC do not only consist in negotiating the conditions and the amount of fees, but go much deeper, they concern technological innovations and new ways of building management.
Has the CNC service already been tested on the market?
The CNC has so far been implemented in 6 commercial properties (office buildings and shopping centres) in Poland and abroad. Each of the buildings has generated significant savings. Depending on the object and its specificity, the savings reach from 350 thousand PLN to 1.4 million PLN, which gives 4 to 17.5 million PLN of NOI growth. For us, the most difficult part of implementing the CNC service is the resistance on the part of managers, which results from the fear of novelty and introduction of non-standard solutions. However, those companies that have trusted us so far are very satisfied with the results. In the department developing the CNC service there are high-class specialists, engineers who have been connected with the market for years, taking advantage of many technological novelties and opportunities to deepen their knowledge in the field of property and facility management. Our service is also based on a succes fee - we earn on the effects of our own work.