How to Measure Performance in Real Estate

By: Uwe Falkenberg

Performance Measurement of single real estate, portfolios or service providers like property managers are vital to any sustainable management decision:"What you measure is what you get!"

Depending on structure and size of an organisation the measurement can take place at various levels and can then be consolidated upwards. From property to location to portfolio etc..

Performance Measurement of service providers is important: Asset Manager, Property Manager, Facility Manager or the own internal organisational units influence the performance of the property.

To establish measurements as an effective tools for real estate the "philosophy" of the property or the portfolio needs to be defined and detailed into targets to be fulfilled to meet the philosophy. What does that mean? Ambitious but somewhat achievable targets for rent and value development have to be set and determined which are the immediate factors determining their development. This process is best done by looking at data from the past, data from comparable (performing) properties and/or property benchmarks available in the market. The measurement then includes the targets against their set values and the defined factors like tenant turnover, payment backlog etc.. It is key for the effectiveness of the tool that these factors reflect not only what has happened, like already occurred payment backlog but also warning indicators like tenant turnover or late payments.

All of these performance measurements (indicators) are then mapped against their targets in a graph which will show the decision maker at one glance where the performance meets the targets or better and where attention is required. These charts are produced at every level where measurement takes place and can be consolidated upwards: A graph for each property, each location, each manager or the entire portfolio.

This is one of the most powerful tools for managing a property portfolio - an Executive Dashboard! For more information and an example graph please visit the website Berlin Portfolio Ltd or contact the author by clicking on this link:E-Mail

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