Taxing economic times have a way of forcing folks to refocus on the fundamentals rather than the speculative froth. For the real estate industry, that means maximizing the value of buildings through efficient operations, which in turn means relying on the skill sets of facilities professionals rather than financial sorcerers.
The point was underlined by panelists at a general session I attended last month at the BOMA 2010 Conference. In the years leading up to 2008, private equity and hedge funds plunked down billions in momentum bets, driving up building values using a strategy built on debt. Now that those sand castles have washed away, successful asset managers will be looking at building operation basics to maximize values.
Panel members agreed that this direction changes the skill sets that are in demand. Whereas many business school graduates are still eager to pursue development, the real estate industry has no current demand for that skill. Asset managers need to have a background in the basics.
"The career path that comes off the property is the best path for an asset manager," says David Sears, managing director, JP Morgan Asset Services. Traditionally the growth path for an asset manager and the path for a property manager have been different paths that never meet, but that is changing too. "The property manager is more of a CEO/CFO of an operating company rather than the COO of just the operations of a building," says James Arce, executive managing director of client solutions for Cushman & Wakefield of California.
Sears notes that when he hires freshly minted graduates, he requires them to sit down with a chief engineer and learn the basics of HVAC operation. "Those who are most successful in this industry know how to operate a property and know how that operation affects the financial performance," Sears believes.
That kind of sentiment is refocusing attention on the underlying asset known as facilities professionals.