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Corporate property management outsourcing on the up

By Grace Ormsby
21 August 2024 | 12 minute read
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Until someone cracks the one-system technology solution, property will remain a people business, and outsourcing will drive best practice, according to an account director.

Cushman & Wakefield’s Ray Sharp, an account director, has penned an op-ed exploring the benefits and imperative of property outsourcing in 2024, noting that “in today’s fast-paced business environment, maintaining a competitive edge requires a laser focus on core activities”.

Remarking that for most companies, managing office spaces and industrial facilities is not within their core competencies, he posed the question: “How many CEOs start their day thinking their office or industrial facility should be their main priority?”

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For most CEOs, that would be “strategic self-destruction”, Sharp said, pointing out that executives would be better placed to consider “putting something safe between your business direction and that detonate button”.

Property management outsourcing is not necessarily new – with Sharp outlining that no one’s “ever heard of McDonald’s Property Management, KFC Leasing, or Subway Facilities”.

“The truth is successful businesses focus on their core activities and outsource non-core functions like property management to experts,” he stated.

“Core business activities provide competitive advantage, while non-core activities, like property management, are necessary to operate the business,” Sharp continued, pointing out that none of the food empires mentioned above owe their success to property management.

Instead, he said: “Outsourcing these functions allows companies to focus on what they do best.”

He sees large internal property teams as are a relic of the past, noting the risk of valuable knowledge walking out the door with departing employees.

According to Sharp, “in a rapidly changing world, medium to large businesses need to focus on their priorities to stay competitive”.

No wonder property costs can account for up to 30 per cent of a business’s total operating expenses, according to data from the International Facilities Management Association.

Sharp sees property management as a rising trend, “no longer limited to call centres, drop shipping, and virtual assistants”.

“Property, often the second biggest cost centre in a business, is the next growth market in the space,” he commented, drawing on a Deloitte study that showed three in five companies – or 59 per cent – are now outsourcing to reduce their costs.

“Property is poised to follow suit,” said Sharp, especially since businesses are now seeing the convergence of climate change, cost pressures, and technological advancements.

This is especially true in Australia, where the account director acknowledged our societal obsession with property means employees who are managing property functions can be distracted from focusing on customers and business growth.

Sharp is of the belief that “issues like air conditioning failures, power outages, and facility damage are unwelcome distractions that can be handled more efficiently through outsourcing”.

As Sharp concedes, property is expensive.

“Whether it’s rent, building, or buying, the costs are significant. By leveraging technology and expertise from global property providers, businesses can avoid reinventing the wheel and stay ahead in a fast-changing world,” he stated.

What gets measured gets managed. The few players that have benefited from decades of experience can offer valuable insights and efficiencies. Given the cost of property, it may be time to tap into this opportunity.

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ABOUT THE AUTHOR


Grace Ormsby

Grace Ormsby

Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.

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