In recent years, an increasing number of commercial and residential properties have been completed and transferred to the portfolio – a result of the fact that many project developments were purchased during the real estate boom. New-build properties promise state-of-the-art technology and design, no wear and tear and attractive rents. But the reality is often different: While tenants are already moving in and income is supposed to flow, defect rectification, warranty enforcement and technical readjustments run in parallel. There is a risk of performance losses, reputational damage and dissatisfied tenants. Practice shows that the first few months after handover are crucial for the economic success of a new building.
At the invitation of RUECKERCONSULT, Berkan Gülen, Head of Asset Management at Savills Investment Management, Markus Grabau, Head of Technical Property Management at B&L Property Management, Jürgen Hau, Managing Director of INDUSTRIA Immobilien, and Sascha Nöske, CEO of STRATEGIS, exchanged views on typical problem areas, operational challenges and solutions.
No more construction defects, but higher time pressure with increasing complexity
Contrary to the widespread perception, the participants in the discussion do not see a general increase in construction defects in their work. Rather, the nature of the challenges has changed. “Due to the increasing complexity and networking of technical systems, it now takes much longer for buildings to run stably,” explained Berkan Gülen. Technical building equipment in particular, but also missing documentation or incomplete documents can make commissioning more difficult.
Markus Grabau sees the time pressure as a problem: “In order to be able to generate rental income more quickly, the time available for remedying defects has become significantly shorter. As a result, properties go into operation more often with open points than before.”
Sascha Nöske explained on behalf of the apartment tenants: “The first defect reports are received in the first few weeks after first occupancy. Then we have to classify whether it is a warranty defect, an acceptance defect or an insurance claim. We have to pre-sort it, otherwise we run the risk of overtaxing the client or the architectural office.”
Jürgen Hau adds: “In order to accelerate defect management and increase tenant satisfaction, we have concluded a framework agreement with a nationwide partner in a pilot project to immediately remedy minor structural defects and later handle them with the general contractor.”
Commissioning as an independent project phase
A central result of the discussion: The commissioning of a building should be understood as an independent, complex project phase. “We distinguish between technical, commercial and organizational commissioning,” said Berkan Gülen. “Common sources of error on the technical side are that consumption meters are missing or systems are poorly tested. From a commercial point of view, the handover of contracts and guarantees is a sticking point. Often, no warranty management is commissioned and we have to ensure that insurance policies run at the beginning of operations if possible. With regard to organizational commissioning, it is important to clarify responsibilities and interfaces, define escalation paths and communication channels with tenants, and clearly regulate how the process of remedying the defect is to be designed, from defect notification to rectification and release notification. Incidentally, many problems can be avoided through preliminary inspections and regular inspections during the construction phase.”
Markus Grabau emphasizes: “With the handover to property management, we are also assuming operator responsibility. If safety-relevant defects occur, this often leads to a refusal of acceptance. And if contractually fixed move-in dates cannot be met, high costs are incurred, especially for commercial tenants. Less problematic, on the other hand, are visual defects that can be reworked during operation.”
Early involvement of property and facility managers as a success factor
According to the panelists, a major structural deficit lies in the lack of standardised responsibilities of the actors involved. Although cooperation usually works in practice, friction can still occur. Clear responsibilities and defined processes could significantly increase efficiency and quality.
A recurring topic in the panel was the late involvement of property and facility managers. This often leads to avoidable problems in the company. Early integration, on the other hand, enables realistic budget planning, reliable operating cost calculations and better coordination of technical requirements.
“The ideal time to connect a property manager is already at the groundbreaking ceremony,” said Sascha Nöske. “Good preparation is everything, even when it comes to calculating operating costs. The calculation of ancillary costs must not only be plausible in the first month, but also work out in the twelfth month. This only works if you already know the property well.”
Berkan Gülen confirmed from the perspective of the asset manager: “We involve the property managers in good time, also so that we get realistic property budgets and commissioning can run smoothly. We have to identify deviations from the calculation at an early stage in order to be able to take action against them.”
Markus Grabau noted: “In practice, we as property managers are sometimes only involved a few months before completion – that’s clearly too late. The facility manager could also buffer many problems in the technical area if he were involved earlier, if possible about three months before completion.”
Jürgen Hau emphasised: “It is important to make sure that the necessary data and documents are available in good time. This is especially true for maintenance contracts, which are apportionable.”
Tenants at the heart of the first phase of operations
The first few months after completion are particularly sensitive, also from the tenant’s point of view. Deficiencies, technical problems or organizational deficits have a direct impact on satisfaction and cash flows.
“The tenant expects a functioning property, regardless of whether it is a warranty case or not,” says Jürgen Hau. Delays could quickly lead to rent reductions and reputational damage. “Construction delays also pose a special challenge. They can prevent overarching acceptances from being carried out, at best partial acceptances. The result: The fixed move-in date cannot be met – with all the consequences that go with it: replacement accommodation, which then has to be organized at short notice, removal goods that have to be stored.”
Structured onboarding is also crucial, especially for large residential projects with many simultaneous move-ins. “Handing over a hundred or two hundred apartments at the same time is a major logistical project,” explained Sascha Nöske. “Without clear processes, chaos quickly ensues. Straight access roads are a bottleneck. Therefore, we work with fixed move-in dates including time slots. On the one hand, we also have to explain the building technology to the tenants, and on the other hand, we have to make sure that it is also ready for use and that the consumption data can be read.”
The discussion made it clear that early involvement of the relevant service providers, structured processes and clear responsibilities are key levers for minimising friction losses and achieving the planned target values for rental income, operating costs and energy consumption.
