As commercial real estate markets evolve, the gap between prime assets and ageing stock is becoming increasingly stark, and nowhere is that more evident than in how properties are managed.
According to Sarah Keenan, partner in Ogier’s real estate team, the market is now clearly divided. “We’re seeing the emergence of a two-tier market within commercial property,” she said, pointing to the divergence between top-tier, energy-efficient buildings in prime locations and the vast swathe of older, secondary stock.
At the premium end, demand remains strong. New, high-spec buildings attract institutional capital, command rising rents and require relatively little intervention. “There’s not much to do once they buy it; essentially, it’s passive asset management,” Keenan explained.
However, the majority of assets, particularly in markets like Dublin, fall into a very different category. “The majority of stock in these areas is secondary, edging towards obsolescence,” she said.
For owners of these buildings, asset management has become significantly more complex. Rising regulatory demands, particularly around rent controls, ESG and energy efficiency, are forcing landlords to reassess the viability of their portfolios. Access to finance is tightening too, with lenders increasingly favouring greener assets. “Banks are increasingly saying that their mandates are now to focus on energy-efficient green properties,” Keenan noted.
This creates a compounding problem. Older buildings not only generate lower rents, but also require significant capital expenditure to remain compliant and competitive. “You might think you’re going to make a good return off these higher-yield properties… it actually gets eaten away quite a lot,” she said, pointing to the cost of upgrades, tenant incentives, refinancing risk and ongoing management.
In this environment, strategic asset management is no longer optional, it is critical. “The only way to tackle it really is with strategic asset management,” Keenan said.
That strategy often involves difficult decisions. Landlords must weigh up whether to invest heavily in retrofitting and repositioning assets, or risk holding properties that may ultimately become “stranded”. As Keenan said, “If you don’t repurpose or reposition your premises, your asset will become stranded and eventually obsolete.”
Operationally, managing these assets can also be challenging. From non-compliant planning to problematic tenants, legacy issues are common, particularly in older industrial and multi-let properties. “If you don’t actively manage it, you will run into problems,” she said.
This is where technology, and the broader proptech ecosystem, has the potential to play a transformative role. At the top end of the market, digital tools are already embedded in day-to-day operations. “They all have software, often AI-driven, [that] automates operations and invoicing, predicts maintenance, enhances portfolio performance and improves financial decision making around capex and service charge expenditure,” Keenan said, referring to institutional-grade assets.
However, adoption is far less consistent across the market. Many smaller landlords, particularly those dealing with secondary stock, remain reliant on simple tools. “Some are relying on basic aids, such as an Excel spreadsheet… it’s not good as it relies entirely on the human input of data, which leaves room for error,” Keenan said.
The reason is often economic rather than technological. With margins already under pressure, investing in proptech solutions can feel like an additional burden. “Some might be thinking, ‘am I going to spend even more money to have this sophisticated rent tracking software? No’,” Keenan said.
Yet there are clear examples of how technology can drive efficiency and scale. Within Ogier itself, Keenan points to tools such as the Ogier in-house developed software iConvey, used to manage high-volume residential new homes sales. “It’s uneconomical to do that amount of work [manually]. It saves so much time and efficiency,” she said.
For asset owners, the challenge is deciding where technology fits within a broader investment strategy, particularly when balancing short-term costs against long-term value creation. What sets Ogier apart, Keenan says, is “our depth of experience in this area over the last decade. We’ve seen firsthand the types of problems that can evolve within each asset class. We use this experience to advise where proactive steps are necessary, such as lease re-gears, lease enforcement, insolvency and potential litigation – to ensure that any problem issues are cut short before escalating.
“It’s this approach that has resulted in us procuring a diverse range of commercial property clients that are active in this sector. It’s not for the faint-hearted, but combining a strategic approach to asset management with the use of technology to stay close the key data can make for a very successful investment.”
No matter what happens, however, regulatory pressure, tenant expectations and capital markets are all pushing towards higher-quality, better-managed assets. For landlords, standing still is no longer an option, especially when dealing with secondary commercial property.
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