Overcoming the Crisis of Small and Medium-Sized Buildings with Strategic Asset Management [Kim Yongnam's Real Estate Asset Management]

The small and medium-sized building rental market is facing difficulties. Increasing vacancy rates and falling rents are leading to deteriorating profitability for building owners, and the gap with large buildings is widening. Vacancies in small and medium-sized buildings are increasing even in major areas of Seoul, and there are almost no rental inquiries. This is the result of a combination of factors, including a lack of management mindset among building owners and a failure to respond to the changing needs of tenants, going beyond a simple economic downturn. To overcome this crisis, a strategic approach is needed to increase the value of buildings and strengthen their competitiveness, rather than simply filling vacancies.

Successful Building Operation Strategies

- Tenant-centric management: It is necessary to recognize tenants as business partners, not just renters, and to make efforts to build long-term relationships. Active management is needed, such as operating regular communication channels to increase tenant satisfaction, providing customized services, and developing community activation programs. For example, you can improve the common areas in the building by collecting tenants' opinions or provide business cooperation opportunities by holding networking events between resident companies.

- Securing differentiated building competitiveness: It is necessary to attract tenants and increase the value of the building through differentiation from surrounding buildings. For example, you can attract sole proprietors or startups by providing shared office space, or you can encourage environmentally sensitive companies to move in by obtaining eco-friendly certification. In addition, expanding amenities such as rooftop gardens, fitness centers, and cafeterias to enhance tenant convenience is also a good way. Recently, there has been an increase in cases of upgrading building management systems and establishing smart office environments by incorporating IT technology.

- Utilization of professional asset management: A professional asset management company provides systematic management of the overall building operation based on its extensive experience and expertise. It can reduce the burden on building owners and contribute to increasing profits through various services such as market research and analysis, tenant attraction and management, rent negotiation, facility management, and legal and tax advice. For example, it can calculate the optimal rent through professional market analysis and support the rapid attraction of high-quality tenants in the event of a vacancy. In addition, it saves the owner's time and effort by handling various administrative tasks necessary for building operation and management.

Professional Asset Management Should Be Recognized as an Investment

Entrusting professional asset management is no longer an option but a necessity. This should be recognized not as a simple expense, but as an investment to increase the value of the building and secure stable profits. It is possible to create greater economic benefits in the long run through systematic tenant management, market research, and strengthening building competitiveness.

However, not all professional asset management companies provide the same service. To select the optimal partner that matches the building owner's goals and the building's characteristics, the following criteria should be considered.

- Experience and expertise: You should check whether the company has experience in managing various types of buildings for a long time and whether it has sufficient professional manpower. It is especially important to choose a company with extensive experience in managing small and medium-sized buildings.

- Performance and reputation: You should check whether the company transparently discloses its past management performance and whether it has a good reputation in the market. It is also a good idea to refer to the reviews of other building owners or to visit the company in person for a consultation.

- Customized services: You should check whether the company provides customized management services considering the size, location, and characteristics of the building. You should choose a company that can provide professional services in various fields such as rental marketing, facility management, and tenant management.

- Transparent operation: You should check whether the company has a system that transparently discloses management costs, rent receipts, and expenditure details and reports them regularly.

You should carefully compare and analyze based on these criteria to select a professional asset management company that can maximize the value of the building.

An Active Attitude to Respond to Market Changes

The market is changing rapidly. Now is the time for building owners to move away from their existing methods and move on to new strategies. They must identify the changing needs of tenants, analyze the operating strategies of competing buildings, and continuously learn about market trends. If you establish and execute an optimal building operation strategy in cooperation with a professional asset management company, small and medium-sized buildings can have a value that is not inferior to that of large buildings. \"Overcoming the Crisis of Small and Medium-Sized Buildings with Strategic Asset Management\" will be a guide for survival and growth in today's market.

<Korea Economic The Moneyist> Kim Yongnam, CEO and President of GlobalPMC Co., Ltd.