This essay aims to define Property Management, Facilities Management and Asset management as well as comparing and contrasting the three management sectors. It begins with a description of the three management sectors, and then goes on to differentiate between them. The essay then goes on to draw conclusions based on the comparisons.

WHAT IS PROPERTY MANAGEMENT?

In order to fully understand the term property management we need to first define the word ‘property’ and what it refers to exactly. Property may refer to residential, commercial, industrial or special purpose property. Special purpose property as defined by Robert and Floyd (1998) would include property such as retirement homes, hotels, clubs, schools, resorts and so on. Hence the management of these various assets is essentially property management.

Robert and Floyd (1998) define property management as the management of real estate on behalf of the owner for compensation. According to their definition, it implies that the person managing the property is not the owner himself and that the owner will essentially compensate the manager for his services rendered.

Evans (2007) states that in the past century property management was never seen as a complex sector and was in fact never a complex sector, and that the term property manager was literally just someone who had the responsibility of collecting rent. Evans (2007) states that during the early 1900s the property manager was known as the ‘rent collector’ and he was feared and disliked by many and during these times, the property managers main role for decades after this was to collect the rent from tenants.

It was not until the great depression of the 1930s that events worked to transform the despised rent collector in to the property manager we know today (Evans, 2007). Evans (2007) believes that the harsh economic conditions of the depression put pressure on the property owners and hence, made it harder for them to make mortgage or tax payments on their property/s. Due to the depression banks as well as the local governments were forced to take over the ownership of these properties. Since the banks were unable to sell these properties, due to the scarcity of buyers and lack of cash flow, they were forced to keep these properties. (Evans, 2007) continues to state that the banks, who were too busy to deal with all the re-possessed properties, hired fee managers, to lease these properties in order to generate income rather than leaving these properties vacant. Fee managers later took on larger roles and grew into what we know as the modern property manager (Evans, 2007).

There is currently a misconception around the term ‘property management’, mainly due to the origin of property management; most individuals see it as a landlord or someone that collects rent and grants leases, however the job entails far more than this. Property management is mainly operational and ensures the following functions are completed:

• Every space is leased out,
• Rent is collected,
• All utilities are paid,
• Revenue is focused and,
• It attempts to maintain relationships with clients.

A property manager does not only collect rents or manages leases, he/she now requires specialised skills such as, communication skills, technical expertise, and knowledge is essential in order to be a dynamic decision maker therefore it should be seen as a science.

Robert and Floyd (1998) see it as a managerial science and believe that it is the fastest growing area of specialisation within the real estate industry. Property management involves the responsibility of managing only the common areas of the building for example, managing a multi tenanted building- i.e. residential apartments, shopping malls. Here the scope of the team is to manage only the common areas such as lobbies, parking, gardens, open spaces, roads and various engineering related assets commonly used like lifts, escalators, fire systems etc.

According to Beirne (2006) he believes that even investors do not have a firm grasp on how property management can actually improve the value of the real estate. He states that in many circumstances property management is treated as a ‘necessary evil’ and that if the business and art of property management is truly merged with the investment it can have a huge effect on the end result. Implying that there needs to be a change in the mind set of particular individuals with regards to property management, and a greater understanding of the sector needs to be established in order to experience the true benefits the sector can bring to an investment.

Robert and Floyd (1998) regard the property manager as the individual who attempts to generate the greatest possible net income for the owners of an investment property over that property’s useful life. They continue with stating that in the same way that there are various types of property, so too are there different classifications of property managers. Although the specific management duties and attributes will vary, the main duties and responsibilities remain the same, some would include, planning, negotiating leases, screening tenants, advertising, maintaining the premises, collecting rent, supervising security, keeping accurate records and making periodic reports to the owner or asset manager (Robert and Floyd, 1998). Hence from the extensive length of duties and responsibilities of the property manager one would automatically tell that the property manager that existed 50 years ago, does know longer exist today and that they are essentially very much needed in the industry.

WHAT IS FACILITIES MANAGEMENT

As with property management, there is a common misunderstanding as to what facilities management actually is. In the old-fashioned sense it is as cleaning, repairs and maintenance, however it is now more established (not fully yet) and hence includes the management of estates, finances, change management, human resource management etc in addition to building and engineering services maintenance.

In understanding what facilities management entails, it is important that one looks into the history of Facilities management and how it came about over time. Krumm (2001) suggests that prior to the industrial revolution many organisations had limited space on which to operate and as a result there was no real need for specialist space. However, after the industrial revolution there was a large increase in the demand for space to house highly specialist processes. This led to a greater need to manage real estate more efficiently, and the need for more management staff. Krumm (2001) also outlines that in the past the small scale of production and enterprises meant that the role of ‘Facilities Manager’ was taken on by the senior management in the organisation. As processes in enterprises became more complex, the role of the facilities manager required more effort, resulting in the job being handed over to other individuals. Krumm (2001) It has also been suggested that the decentralization of various processes within an enterprise has also led to the greater need for management. This led to the development of facilities management as a profession. (Krumm, 2001). Over time this alias evolved to what we know as a facilities manager today.

After having looked at where facilities management originated we can now go on to define it. Barrett and Baldry (2003) define facilities management as “an integrated approach to operating, maintaining, improving and adapting the buildings and infrastructure of an organisation in order to create an environment that strongly supports the primary objectives of that organisation”. Alexander (2005) also defines facilities management interestingly, it’s a process by which an organisation ensures its buildings, systems and services support core operations and processes as well as contribute to achieving its strategic objectives in changing conditions.

Atkin and Brooks (2005) state that it is imperative to state the importance of integrative, interdependent disciplines whose overall purpose is to support an organisation in the pursuit of its business objectives. They also believe that the proper application of facilities management techniques enables organisations to provide the right environment for conducting their core business on a cost effective and best value basis. (Atkin and Brooks, 2009). [“TOTAL FACILITIES MANAGEMENT”]

In practise, facilities management can cover a wide range of services including the following:

• Real estate management
• Financial management
• Change management
• Human resource management
• Health and safety
• Contract management
• Building maintenance
• Domestic services
• Utilities supplies

Atkin and Brooks (2005)

Alexander (1996) believes that we need to look at facilities management at four levels: corporate, strategic, tactical and operational.

Corporate level:

Managers must contribute to service planning, devise policies and undertake scenario planning. In this level a full understanding of corporate culture is highly necessary.

Strategic level: Managers carry responsibility for effective business planning of the facilities, services, leadership of the team and development of proposals for developing facilities management. Strategic facilities management is the management of a company’s activities in order for the company to achieve its future objectives. It mainly concerns the decisions planning for the future and the development of existing practices.