Asset management: overcoming staff shortages with tailored services
External asset management services allow personnel requirements to be covered quickly and decisive expertise to be procured.
Temporary support in the field of asset management is becoming an increasingly sought-after service. While the client company’s core competence remains in-house, external support services from the real estate sector are procured for rapidly growing property portfolios in particular.
Although there is also demand for comprehensive outsourcing of asset management, in many cases the focus lies on covering temporary staff shortages. This is performed through interim management or secondment, i.e. the assignment of the service provider’s employees to the contracting company. The principle of the “extended workbench”, in which individually tailored work packages are assigned to the asset management service provider, is also applied.
Portfolios are growing, but there is a lack of staff
The current climate in the real estate sector provides fertile ground for external support in asset management. Because today’s low interest rates continue to drive investment in the real estate market, property portfolios are growing at a sometimes breathtaking speed – faster than companies can find new personnel on the labour market. Indeed, after a decade-long boom in this sector, such staff are in scarce supply; experienced generalists and specialists are both difficult to find. Real estate professionals with special expertise are in particular demand, as investors and the asset management companies commissioned by them are branching out into unknown areas increasingly often: alternative property and unfamiliar asset or risk classes are becoming more and more attractive to companies in the light of falling yields in their respective real estate métier.
Special knowledge for alternative real estate and markets
For instance, some real estate investors specialise in offices, but now wish to acquire logistics assets. Niches such as the increasingly popular healthcare properties or the development of special funds are also becoming ever more popular. In order to be successful in these areas and realise outstanding asset management, companies need special knowledge that they themselves do not possess. The obvious solution is therefore to buy in external expertise when it is needed.
Even in the large, traditional asset classes, however, it is often no longer possible to get by without external support, for example when larger portfolios are taken over at short notice. In many cases this is associated with the entry into new geographical sub-markets. Outside the established real estate strongholds, it is primarily institutional investors that are on a major shopping spree – and as a result they also need the required specialists. “A certain geographical proximity is needed in order to provide effective asset management. Only knowing properties and regional requirements on paper is the worst possible basis for sustainable value creation,” explains Uwe Dieterich, JLL Senior Team Leader Asset Management.
Asset management close to the property
But how can such new assets be managed appropriately? By establishing new regional locations? For most companies, the protracted search for new staff means this is not a realistic approach, as investment cycles have become shorter. In many cases, the period of time until the asset is sold again does not justify establishing new branches solely for management. In addition, it is not prudent to engage permanent staff in the light of the uncertain length of the respective market cycle. It therefore makes sense for companies to place their trust in external services.
However, it should not be forgotten that many established investment and asset management companies are not altogether comfortable with the idea of procuring external services. Are they not ultimately providing competition for themselves by doing this? After all, this is the core competence that they sell to end investors as their USP.
Asset management services are varied
Such fears can be put into perspective: the asset management services in question are specialised and modular, and are geared towards expanding and supporting the client’s own competence. Furthermore, the real estate sector is far more flexible than many others in this respect, and it is not rare even for competitors to cooperate in many aspects and disciplines.
“Traditional, full outsourcing is not really in demand. Instead, companies are looking for creative, flexible solutions oriented towards their own individual needs: short-term services, an ‘extended workbench’ at a specific location, specialist knowledge, market access, market transparency and many other aspects,” comments Dieterich, describing the latest development. The core competence of an investment or asset manager is not what is being outsourced; instead, they are bringing support and cooperation partners on board. This allows them to generate added value as a team and be more efficient, profitable and flexible together. Such cooperations can take many forms, e.g. as interim management services, joint ventures, shadow managers, an “extended workbench” or consultancy contracts in connection with secondment. This also allows shortages due to factors such as parental leave to be covered. Flexible solutions are even possible for capital management companies subject to strict regulations.