Chapter 4 – White paper: ‘UPLEVEL – SIX PERSPECTIVES ON THE SECOND CYCLE OF INSTITUTIONAL PROPERTY’
New skills for a new phase in a property’s life cycle
How transformation must be implemented organisationally
As many properties enter their second cycle, it is not only the requirements placed on the buildings themselves that are changing. The organisations of institutional owners are also facing new challenges.
For many years, asset management structures were geared towards the efficient management of stable portfolios. Standardised processes, clearly defined responsibilities and continuous oversight of day-to-day operations formed the basis of successful property strategies. This model has proven its worth and will remain indispensable in the future.
However, periods of transformation present different challenges.
When several properties need to be modernised, repositioned or adapted to changing market conditions simultaneously, the complexity of the tasks increases significantly. Decisions regarding letting, technical systems, investments, ESG and market positioning are interlinked and can no longer be made independently of one another.
Transformation requires a different approach to collaboration
The further development of an existing property is rarely the responsibility of a single function today. Asset management, lettings, technical services, project management, finance and ESG each bring different perspectives to the process.
The success of a transformation therefore depends less on the quality of individual specialist disciplines than on their ability to work together towards a clearly defined goal.
It is particularly evident in challenging projects that good organisation does not result from involving as many specialists as possible. Rather, the key is to combine the various areas of expertise in such a way that a consistent development strategy emerges.
Proximity to the market is becoming increasingly important
Alongside internal organisation, an understanding of the respective market environment is playing an increasingly important role.
Repositioning does not take place in the abstract property market, but in specific micro-locations with their own competitive structures, user requirements and development prospects. Those who recognise these dynamics at an early stage are better able to prioritise decisions and tailor measures more precisely to actual needs.
Detailed local market knowledge thus becomes an essential component of successful transformation processes. It complements traditional market analyses with experience, networks and direct dialogue with tenants and other market participants.
Additional management capacity is a phase – not a permanent state
Properties in the second cycle require significantly more attention over a specific period than during normal day-to-day operations. Numerous decisions must be prepared, measures coordinated and developments closely monitored.
However, this increased management intensity is not a permanent organisational model. Rather, it describes a temporary phase within a property’s life cycle. Following a successful transformation, the management workload decreases again and the asset can be returned to stable day-to-day operations.
This is precisely why institutional investors face the question of how these temporary requirements can be sensibly reflected in organisational terms without permanently altering existing structures and, where necessary, creating overcapacity.
Organisation becomes a key success factor
With the ‘Second Cycle’, the perspective on institutional property management is also changing. In future, the quality of a portfolio will not be determined solely by the selection of properties, but increasingly also by the organisation’s ability to professionally support change processes.
The more complex transformation phases become, the more the quality of collaboration determines the long-term success of a repositioning. Organisation thus becomes not an end in itself, but an essential component of sustainable value creation.
Conclusion
The requirements of the Second Cycle go beyond traditional property management processes. They demand organisational structures that facilitate interdisciplinary collaboration, incorporate local market knowledge and are capable of managing complex transformation processes with a high degree of intensity over a limited period of time.
Against this backdrop, UPLEVEL sees itself as a targeted complement to existing asset management structures. The approach brings together the expertise required during a transformation, thereby creating the organisational conditions needed to systematically guide properties through the Second Cycle. The aim is to support owners precisely at that stage where traditional management structures may reach their natural limits.
For institutional investors, this means that the Second Cycle not only places new demands on property; it also requires organisational structures capable of managing change just as professionally as they manage stability.
