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The Warsaw Voice » Real Estate » May 27, 2011
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Tricks of the Trade
May 27, 2011   
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Andreas Thamm, managing director of the German-based Metro Group Asset Management company, which operates in over 30 countries, talks to Marcin Pawlak about running shopping centers in Poland, tricks to saving on energy consumption, and the future of facility management.

Facility management is a fairly new concept in Poland. How does it differ from the broader concept of center management?
You can say that center management is very focused on tenants. This includes marketing activities for the center itself such as regional advertising in newspapers and radio stations. In our company the center manager makes sure that the common areas of a mall, the aisles, stands and so on are rented to tenants. These are mostly short-term rentals for a matter of weeks or month as he doesn’t deal with long-term rental. He has to make sure the whole building is operating the right way and this usually involves organizing a lot of services. I’m not only talking about security, cleaning, and green area maintenance, but technical services which run in a way not as visible to customers and tenants. You have heating, sprinkler systems, ventilation systems; all this has to be maintained in the proper way. He doesn’t focus on it being done correctly technically, as he’s not a specialist, but he makes sure it is done, period. The center manager also takes care of fire plans, evacuation plans, the whole security concept. He’s a central person to the whole operation. Facility management is part of that. From our point of view when you talk about facility management it includes all the services I described. You have the infrastructure services and technical facility management and in other European countries you have commercial facility management, which involves splitting utility costs among your tenants. This is organized differently here in Poland. We call it lease and service charge management here. Facility management in general means all the services to run a building.

How has the management model changed over the years?
Here in Poland I would say in the beginning no one had any idea what facility management was. There was a housekeeper and a Mr. Fixit and maybe some specialized companies who were called in from time to time, but there was no concept how to do it in an organized, structured way. Nowadays, you can see that this area is getting more and more professional in Poland.

You could see huge differences from mall to mall, depending on who was operating them, who the owners were behind a mall. Nowadays some malls still have private owners behind them relying on Mr. Fixits rather than facility management.

But you also have more big investment companies such as GE, professional operators such as ECE, and they really focus on facility management and do it professionally. They’re bundling services from different facilities, renegotiating good prices. Two years ago when the financial crisis hit, the market in Poland changed from a leaser market to a lessee market, meaning the power of the tenants increased. They have much more offers as to where to rent space and they’re now comparing not only the main rent but they’re also comparing service charges. Service charges are related to facility management, as well as utility costs. They are asking, “Why am I paying 5 euros per square meter here, and only 4 euros over here?” If you want to change something, you have to organize it in a professional way, and then as a company you can work on it, keeping quality with lower prices.

What are the keys to implanting Metro Group’s facility management methods in new facilities such as Plaza Center in Rybnik or Gemini Gallery in Bielsko-Bia³a?
If we get the chance to prepare an offer for a center then the first step is to analyze what is inside and, let’s say for infrastructure services, it’s quite easy to make offers as you can use figures of costs per square meter. In technical facility management it’s a little different. Here it really makes sense to analyze the building first and see what kind of equipment is inside. Is there a complex building control system which has to be maintained or is there a very simple ventilation system, without any air conditioning etc.? You have to know this, and prepare an offer based on the conditions inside.

In addition to the development of center management, Metro Energy Management emerged as an offshoot of Metro Group Asset Management. What is it involved in?
We founded this subsidiary because the Polish power market was liberalized in 2007. It was possible to buy and sell electricity on a special power exchange which was operating in Warsaw. In 2007-2008 there were only a few players on this exchange, which meant that the market wasn’t very liquid and not as professionally run as in northern European countries. By the beginning of 2009, however, there was an increase in energy prices for companies by 30 percent and then many companies joined up and the liquidity of the market increased. You can really influence the prices you are paying for electricity on a daily basis if you’re doing this in the right way. This is developing in Poland, but still many companies are only tendering and buying for next year.

If you’re doing this in a professional way you can really lower your electricity price. Another task for this team is to reduce consumption, mainly in electricity. Meanwhile we also have some specialists for the other utilities.

What does the “optimization of energy use” mean exactly?
You have different ways to do that. You can do it without money, with lower investment, or with bigger investment. Without investment means training your staff. For example, we developed a program in the UK for store managers, where for the first two months managers were only trained how to save electricity at home, which peaked their interest because this led to them saving money. Then it becomes a habit, and believe it or not here you can save between 5 and 7 percent, which is a lot for a big store. Our Metro companies have a bill of around zl.130 million a year, so if you can reduce this by 5 percent it’s quite significant. Then in terms of small investment, you can focus on small things. For example, you have this refrigerator where you can buy frozen pizzas and so on, and these fridges have covers installed. This is a small investment but it really reduces the energy consumption for freezing. Then a big investment, where you’re talking about building control systems, efficient heating systems, or using heat from cooling systems, which is wasted but can be used for heating in the winter. So you have a lot more options if you’re spending.

What are the latest plans of Metro Group Asset Management in relation to the facility management and energy management strategy?
In facility management, we have two pillars. One pillar is to work with external companies more and more and to bundle service volumes and get good prices. Our other pillar is to provide services with our own staff. We have 120 technicians in Poland. Two years ago we switched from a stationary model, where we only had technicians on site, to mobile teams. We have 16 teams running in Poland, operating three to five buildings each. This gives us more flexibility, lowers costs, and gives us the opportunity to serve smaller customers. If we can do something for companies outside Metro the benefits are great because the savings come back to us. Here we are very focused. In energy management, we started electricity trading and power reduction; now we are looking at other utilities as well, because you can see that from year to year local authorities are raising costs for water and sewage. This is because they invest lots of money in the infrastructure and in the end someone has to pay for this, which means all of us are paying for it. You can only control this a little bit by controlling your water and sewage consumption. To give you one example, sometimes we use water outside the building for watering and so on and if you install separate meters to measure these separate cubic meters you’re spending outside, you don’t have to pay sewage costs. Usually the rule is 10 cubic meters of water equals 10 cubic meters in the sewage, but in this case you can say, “No, I spent 2 cubic meters outside.” It’s simple but brings benefits, especially if you’re doing this for 50-80 facilities in Poland. Overall, we want to be prepared for everything if the markets change.
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