Active asset management drives asset value
A more active approach to asset management can successfully increase the value of an asset by increasing occupancy rates, says Jayson Egan, TH Real Estate’s Head of Asset Management.
When TH Real Estate took over the management of 20 Hunter Street (pictured), an A Grade boutique office building in the heart of Sydney’s CBD, its occupancy was a low 71 per cent – well below the market average for Sydney CBD prime offices.
However, after 12 months of intense management, and with the right marketing strategy, dedicated team and appropriate asset investment, it now boasts an occupancy rate of 98 per cent.
The asset, with a diverse mix of tenants from the technology, travel and finance sectors, comprises 16 storeys of office space, with a total net lettable area of 9880 sqm.
“The aim of asset management on any property is to maximise its return” says Jayson Egan.
“Active asset management is key to our investment management approach. This has become increasingly important in a multi-channel world to differentiate our office assets from competitors, and is essential to drive future rental growth, which in turn increases valuation.”
According to Egan, the establishment of TH Real Estate’s Australian business and local on-the-ground team resulted in a better understanding of the local market and tenants’ needs to facilitate faster decision-making.
“Fostering relationships with the leasing agency was an important starting point. It allowed better understanding of existing and prospective tenants’ needs and interests,” he says.
A key component of TH Real Estate’s asset management approach is to stay ahead of trends in order to anticipate tenants’ needs, he adds.
“We implemented a new marketing campaign and a targeted leasing strategy to capture the right tenants for the building. We also removed the existing fitouts – which were old and dated – and created new renders to give potential tenants a better idea of what their new office place could look like and what they could do with the property. This was a very simple process, but one which gives the prospective tenant a visualisation of what the space can become.”
When talking about tenant expectations, Egan says end-of-trip facilities have become a “must have” in modern offices, especially in Australia. Installing these has been a cost-effective way to make the asset more attractive to tenants.
“Tenants are now placing more importance on facilities such as showers and changing rooms when choosing CBD office property – it has now become an expectation among employees. Although we had limited space to install new facilities, we used smart design to maximise the area available.”
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