Management and maintenance costs for office buildings in Colliers’ portfolio increased by 9% in 2023

The management and maintenance costs of the office buildings in Colliers Romania’s Asset Services portfolio increased by 9% last year compared to 2022. Higher costs for services in general, including higher salaries, and an improved presence of employees in the office in 2023 were the factors driving this trend.

Colliers Romania manages some 680,000 sqm of modern leasable real estate projects (encompassing 590,000 square meters dedicated to office spaces, with the remaining area allocated for industrial warehouses)), making the company’s figures for administrative costs quite representative for the whole market. As utilities are not always included in service charges collected by landlords, but are paid directly by tenants, Colliers did not include these costs in the analysis to maintain cost comparability.

The largest increase in office building management and maintenance budgets occurred within the domain of waste-related costs – 40% compared to 2022. This increase is largely due to higher staff presence in office buildings, which increased from a portfolio average of 40% at the start of the year to 55% at the end of the year. There are also significant increases in security and fire costs of 12%, while cleaning costs increase by 11%, influenced by the two minimum wage increases in January and October 2023.

Currently, the company has a total of approximately 400 tenants in buildings it manages in Bucharest, Cluj-Napoca, Timisoara, Brasov, and Arad, and the value of the properties in its portfolio exceeds one billion euros.

Regarding utility costs, international markets have witnessed successive declines in electricity and gas prices, returning to pre-crisis levels, resulting in lower bills in 2023 compared to 2022. Specifically, in December 2023, the unit price of energy (in kWh) was on average around 15% lower than in January 2023 across the Colliers portfolio, with the trend continuing to be slightly lower. There was also no significant difference in gas prices in 2023. Furthermore, considering all market factors, the budgets for management and maintenance costs have been constructed based on an average increase of 13% in 2024, according to Colliers’ consultants.

“Starting next year, the new property tax system will lead to a significant increase in property taxes, according to the information circulating in the public space. This cost category is essential, as the property tax represents between 30% and 40% of a normal budget for the management and maintenance of an office space”, says Ștefania Baldovinescu, Senior Partner | Asset Services | Land Agency at Colliers Romania.

Colliers Romania annually manages Service Charge budgets totaling over 26 million euros and optimizes costs for companies that have opted to outsource property management. Contracting Asset Services underlines the professional approach that developers and owners of office and industrial space take towards their tenants, generating economies of scale and benefits such as a significant contribution to the implementation of environmental, social and governance (ESG) commitments, the integration of optimized software and applications, and unified reporting of financial data related to the operational status of the site.

Colliers’ Property Management division takes a multi-disciplinary approach to each project, covering a vast number of activities through the services offered. Specifically, it ensures technical and operational building management, addresses tenants’ needs and requirements, and ensures that tenants comply with their contractual obligations. At the same time, the company manages property-related financial services (invoicing, payments, revenues and expenses, reconciliations) and reporting activities to the landlord, ensuring the operational link between tenants’ and landlords’ needs.