Advantages of Using Strategic Partners in Commercial Real Estate Management
As a company expanding its learning to work smarter, leveraging its expertise through strategic partnerships is a prudent path to achieving profitable growth. Partnering with strategic suppliers will help reduce costs on vendor management and transactions while elevating property management productivity and the overall customer experience.
Many mid-sized and large multi-family property groups have been moving in this direction of late-Avalon Bay, Equity Residential, Bell Partners, and UDR. As multi-family property firms expand, supply chain consolidation is a key business lever in creating operating efficiencies and reducing costs. A leading consultant in lean procurement, The Hackett Group, stated in a recent study that the estimated internal cost of adding a supplier ranges between $700 and $1,400 per occurrence. Further, Wilmar and WW Grainger, two of the nation’s largest distributors of maintenance and repair operations (MRO) products for commercial real estate, suggest that property management companies spend some $140-$160 per vendor transaction, and up to 40% of these expenditures are “non-planned.” These numbers are staggering if left unchecked.
Figure 1: Shows the dollars saved according to the size of the business and reducing the number of suppliers used; these are the green bars. The blue diamonds show the total number of suppliers for businesses in each business size.
A Case Study of Business Cost Savings Using Lean Procurement Strategies
The Wiremold Company was facing a growth stall and used a lean procurement strategy to spearhead the firm’s resurgence. They consolidated their supplier network and leveraged their knowledge to identify best-in-class partners. In ten years, they achieved a compounded annual growth rate (CAG) of 34.7% per year and increased enterprise value by $740 million, or 2,500% growth over the ten-year period.
Figure 2: Wiremold gains after employing a lean procurement over a ten-year period.
Why Is This Important?
The fitness industry is growing 2.8% annually and is expected to expand as baby boomers retire and demand greater lifestyle amenities and activities, as well as millennials and Gen Z generations who are even more active and health and wellness conscious than their predecessors. “Active Adult” communities as well as “Urban Living” high-rise apartments and condominiums are both engaged in an amenities arms race to attract owners and residents by engaging them and elevating their amenity experience and community lifestyle. Bottom line, developers, owners and property management groups are implementing strategies that drive client experience to drive portfolio performance..key strategic partners will be front and center on executing such a strategy.
The Benefits Of Using Heartline Fitness As A Strategic Partner
Heartline has been serving commercial real estate, hospitality, education, and government groups and their amenity needs for some four decades. From Maine to Miami, the company’s geographic reach and technical resources (data analytics and preventive and predictive maintenance capabilities) provide clients with a highly professional, total solutions management approach to the fitness space. This includes:
- Site Assessments
- Facility Design & Layout
- Extensive Brand & Product Options
- Creative Financing & Extended Warranties
- White-Glove Installation & Resident/Staff Training
- Highly Responsive Preventive Maintenance & Repair Services
- Fitness Center Activation & ActiveAmenity Technology Platform
Heartline is laser-focused on enhancing the customer experience which if done correctly will improve the client’s overall performance, resulting in mitigating property risk, improving property performance/value, and elevating the resident and guest lifestyle.