Improving Assets on a Shoestring Budget

Given that situation, property managers need to get more creative than ever, said speakers at the Building Owners and Managers Association's annual International Conference and Office Building Show. "You can't just ignore capital planning because there's no money being spent," said Glen Fernald, a managing senior vice president and director of management services in the Mid-Atlantic Region for Transwestern.

Right now it's going to be very difficult to push a capital improvement through that takes longer than two years to show a return, remarked Catherine Stephenson, senior vice president and national director of operations at Grubb & Ellis. One area that managers can make improvements and see relatively quick cost returns is in energy-saving efforts. "There are lots and lots of opportunities out there for rebates and incentives," Stephenson said.

Building owners also aren't giving up on other sustainability efforts, such as LEED certification, because tenants are increasingly attuned to environmental issues. When given a choice, more and more companies will choose a LEED certified building lease, said Gerald Oliver, senior vice president of property management at REIT Behringer Harvard.

Fernald also stressed that there are many ways to implement LEED standards without spending money. He also suggested little things like doing night tours of buildings and making sure the lights are shut off.

Pointed out Stephenson: "LEED certification is not for every owner, but sustainability is. It's going to reduce operating expenditures and increase tenant satisfaction."

All of the panelists stressed the importance of having a sound operating strategy. Oliver said you need to look at the value, debt load and income of each asset. "That says how much capital one can invest," he said.

And Fernald said that when planning a property's budget, it is best to first present low-cost improvements to an asset manager before asking for a more ambitious wish list. "Align your recommendations with what the owners interests are," he explained. "Start conversations with low-cost options. You'll have no idea how much your asset manager will appreciate that."