TAX - Knight Frank...Security costs include the cost of reception staff and security guards....
Transcript of TAX - Knight Frank...Security costs include the cost of reception staff and security guards....
2015
SERVICE COSTS AND CHARGES
IN OFFICE BUILDINGS IN POLAND
perpetual usufruct
utilities
property management
facility management
cleaning of common areas
security
insurance
property tax
TAX
other costs
SERVICE COSTS AND CHARGES
IN OFFICE BUILDINGS IN POLAND
ASSUMPTIONS
Knight Frank manages commercial buildings in Poland with a total area
of 1.3 million sq m. This report is based on a portfolio of A/A+ and B/B+ class
office as well as office and retail buildings located in the Central Business District
(CBD) in Warsaw, other areas in Warsaw outside the CBD, and in regional cities
of Poznań, Wrocław, Kraków, Gdańsk and Łódź, whereby:
• the report covers only buildings constructed after 1998,
• service charges are calculated per total rentable area,
• figures are averaged and expressed in PLN in net amounts,
• the report covers the period between 2011 and 2014.
COSTS OF LETTING OFFICE SPACE
Tenants, in addition to the base rent, are required to pay additional monthly
charges, including service charge, car parking as well as Internet,
telephone and utility charges.
In Warsaw asking rents in buildings situated within the Central Business District
range between EUR 16-23/sq m, while office space in non-central locations
is priced at EUR 11-18/sq m. In all major regional cities in Poland, asking rents for
office space are similar and range between EUR 8.5 and EUR 13/sq m
in Łódź to EUR 10 and EUR 16/sq m in Poznań and Wrocław.
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DEFINITION OF SERVICE COSTS
Service costs include all costs incurred by the owner to properly maintain
the property and keep it in a good state of repair. These include:
cleaning of common
space
perpetual usufruct
charges
insurance
other services
TAX
Service charges do not include:
• costs of property improvement and modernisation carried out
to enhance the property value,
• tenants’ fit out costs,
• repair costs arising from misuse by tenants or other entities,
• costs incurred as a result of acts and omissions by the property owner
and manager,
• administration costs incurred by a special purpose vehicle (SPV).
utilities
property tax
facility management
security
property management
CONSTITUENT SERVICE COSTS IN OFFICE BUILDINGS
utilities
facility management
property management
cleaning of common areas
insurance
perpetual usufruct
payments
property tax
other services
security
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In commercial properties, service costs are passed on, in whole or in part,
to tenants in the form of service charges and / or utility recharges.
Types of costs covered by service charges and the manner of calculating them are
specified in lease agreements.
Where a property is equipped with individual meters, tenants are invoiced
separately for electricity, heating and water consumption directly.
In the event that a property does not have individual meters installed, charges are
calculated based on cubic capacity, leased floor area and / or technical equipment and
installations.
Other costs, including utilities used in common areas, are calculated based on the ten-
ant’s share in the rentable floor area.
SERVICE COSTS VERSUS SERVICE CHARGES
CHART 1 | Average service costs and charges (PLN/sq m/month)
2011 2012 2013 2014
Warsaw’s CBD Other areas of Warsaw Regional cities
23.17 23.67
20.14
24.20 24.11
21.8723.84 23.95
20.8422.23 21.92
19.40
18.97 18.78
15.65
19.70 19.37
16.40
19.66 19.68
16.35
18.87 18.46
15.39
Serv
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Serv
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The majority of the main constituent service costs is directly correlated with the total
area of the building, with two exceptions, namely the annual perpetual
usufruct charge and security charges, which depend on the functional structure
of the property.
The square footage of the land where the building is located has a significant
impact on grounds maintenance and property tax costs.
SERVICE COSTS ACCORDING TO THE TOTAL AREA OF BUILDING AND LAND
CHART 2 | Average service costs (between 2011 and 2014) relative to the square footage of the office building (PLN/sq m/month)
19.0821.14
15.49
18.61 18.56
15.47
< 7000 m2 7000 sq m - 15 000 sq m > 15 000 sq m
Warsaw’s CBD Other areas of Warsaw Regional cities
24.10
18.4120.42
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Cons
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Utility costs include mainly electricity, which accounts for 60%-70% of total utility costs, as well heating, gas, water and sewage disposal costs. The fall in utility charges that occured in 2014 can be attributed to highly favourable terms of electricity procurement contracts negotiated by property managers.
CHART 3 | Average utility costs in an office building (PLN/sq m/month)
2011 2012 2013 2014
Warsaw’s CBD Other areas of Warsaw Regional cities
8.939.75
8.10
9.5410.129.38 9.05 9.60
8.197.18
8.187.08
UTILITIES
PROPERTY TAX
Property tax applies to land, buildings and structures. It is calculated based on the rate per square meter of land and the total floor area of the building (depending on the type of business activity) or, in the case of structures, as a percentage of their initial value.
CHART 4 | Average property tax rates (PLN/sq m/month)
TAX
2011 2012 2013 2014
2.413.00
2.65 2.53
3.132.79 2.63
3.272.92 2.69
3.292.80
Warsaw’s CBD Other areas of Warsaw Regional cities
FACILITY MANAGEMENT
The cost of facility management is made up of technical installations service and technical support carried out by a permanent group of support technicians and / or a mobile service.
CHART 5 | Average cost of facility management (PLN/sq m/month)
2011 2012 2013 2014
Warsaw’s CBD Other areas of Warsaw Regional cities
2.412.20 2.32 2.50 2.30
2.56 2.54 2.38 2.59 2.72
2.08
2.74
PROPERTY MANAGEMENT
Property management includes comprehensive services necessary to maintain a facility in an unimpaired condition, as well as property administration, such as tenant and landlord representation, cost optimisation and control over broadly defined technical security of the property.
Property management rates are normally defined as a percentage of invoiced annual rental income.
CHART 7 | Average costs of office property management (PLN/sq m/month)
2011 2012 2013 2014
Warsaw’s CBD Other areas of Warsaw Regional cities
1.91
1.301.47
1.98
1.48
1.98
1.461.81
1.031.331.39 1.30
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CLEANING OF COMMON AREAS
This service involves cleaning common areas inside the building, car parks and external areas as well as required cleaning products and materials.
CHART 8 | Average costs of cleaning common areas (PLN/sq m/month)
2011 2012 2013 2014
Warsaw’s CBD Other areas of Warsaw Regional cities
1.051.26
0.871.00
1.27
0.841.01
1.23
0.84
1.091.19
0.87
Security costs include the cost of reception staff and security guards. Security officers are supported in their work by CCTV surveilance cameras, card access control systems and, increasingly, turnstile access control systems.
CHART 6 | Average security costs (PLN/sq m/month)
2011 2012 2013 2014
Warsaw’s CBD Other areas of Warsaw Regional cities
2.282.75
1.69
2.20
2.65
1.60
2.18
2.66
1.60 1.83
2.36
1.74
SECURITY
PERPETUAL USUFRUCT
The annual perpetual usufruct charge is calculated based on the land value and the intended purpose of the land (3% of the value in the case of land used for commercial purposes and 1% of the value in the case of land used for non-commercial purposes). The land value is adjusted periodically, no more often, however, than once every three years. In Knight Frank’s property management portfolio, 60% of landlords in regional cities hold a freehold title to their property while in Warsaw the percentage is significantly lower, at 42%.
CHART 9 | Average annual charge for the right of perpetual usufruct (PLN/sq m/month)
2011 2012 2013 2014
Warsaw’s CBD Other areas of Warsaw Regional cities
2.44
1.361.19
2.44
1.331.19
2.22
1.36 1.19
2.70
1.371.06
INSURANCE
Insurance costs include the cost of property insurance, including terrorism, natural disaster and civil liability insurance covers.
CHART 10 | Average costs of insurance (PLN/sq m/month)
2011 2012 2013 2014
Warsaw’s CBD Other areas of Warsaw Regional cities
0.46
0.360.41
0.510.44 0.44
0.510.42 0.42 0.43 0.40
0.32
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OTHER COSTS
This item covers a broad and difficult to accurately estimate range of costs, which includes recurring and predictable costs (procurement of day-to-day services, e.g. waste disposal, facade cleaning or maintenance of green areas), costs incurred every few years (e.g. 5-year inspections and measurements) as well as seasonal costs (e.g. repairs, snow removal).
CHART 11 | Other costs (PLN/sq m/month)
2011 2012 2013 2014
Warsaw’s CBD Other areas of Warsaw Regional cities
2.16 2.29 2.35 2.502.06
2.53 2.532.32
2.572.36
2.61
2.18
UTILITIES
The freeing up of the energy market in 2012 enabled property managers to enter
into and negotiate terms of energy supply contracts with providers of their cho-
ice. Initial results of energy supply contracts for 2016 indicate that energy prices
will fall slightly, as compared to 2015 when energy prices at the Energy Exchange
rose unexpectedly relative to 2014. It is envisaged that the remaining utilities mar-
kets will be liberated in the coming years.
CLEANING AND SECURITY
Changes in employment regulations, due to take effect on 1 January 2016, will
result in increased costs of security and cleaning services, where employee sala-
ries are the main cost factor. Depending on the type of property, such costs may
rise by 10% to even 40%, forcing some businesses to implement technological
solutions to reduce the physical presence of employees on the premises.
FACILITY MANAGEMENT
In the contemporary facility management market, facility management companies
tend to expand their offer by services requiring specialist licenses to carry out
periodic inspections of technical equipment and installations, which until recently
were an exclusive domain of manufacturers.
T R E N D S F O R T H E F U T U R E
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PROPERTY MANAGEMENT
Since 2013, as a result of changes in rent levels and vacancy rates, property
management fees have decreased significantly. The changes have also been fueled
by an increasing competition in the professional property management market.
USING THE ECONOMIES OF SCALE
Property managers and owners with large market shares are getting more and more
successful at using the economies of scale to negotiate and set contract prices
of electricity and services, thus optimising service costs.
T R E N D S F O R T H E F U T U R E
Knight Frank is an international real estate consultancy headquartered in London which has been active in the property market for nearly 120 years. Currently, Knight Frank employs over 12 000 professionals in 370 offices in 55 countries. The firm’s Polish subsidiary, with its 24 years of experience, is among the longest operating international real estate teams servicing regional markets. In its Warsaw office and 6 regional offices (in Gdańsk, Katowice, Kraków, Łódź, Poznań and Wrocław), Knight Frank employs over 130 professionals.
If you want to find out more about our commercial property management services, please contact:
© 2015, Knight Frank Sp. z o.o.
Knight Frank shall not be liable for any loss or damage sustained as a result of any actions under-taken in reliance on the information contained in this report. Despite detailed research and due diligence applied in preparing this report, Knight Frank does not warrant or represent that informa-tion contained herein is accurate or up to date. Reproduction of this report in whole or in part is not allowed without prior consent of Knight Frank.
Urszula ŁuszpińskaSenior Technical [email protected]
Magdalena OksańskaHead of Property [email protected]
Knight Frank Sp. z o.o.
Mokotowska 49
00-542 Warszawa
+ 48 22 596 50 50
www.KnightFrank.com.pl
Knight Frank offers comprehensive property management services in compliance with domestic regulations and in line with internatio- nal standards. Our Property Management Department develops and implements stategies tailored to our client’s individual needs and re-quirements in an effort to increase the property value and maximise investment returns. In Poland, Knight Frank manages commercial properties with a combined area of 1.3 million sq m.