Centralized management of public real estate in the Baltics

The global trend of strive for efficiency and resource optimization in the public sector has not missed out on real estate (RE) management functions in two Baltic states – Lithuania and Latvia. Executives in these countries confirmed the plan of administrative RE centralization under the state-owned RE management enterprises – Turto bankas in Lithuania and Valsts Nekustamie Ipasumi in Latvia.

Since the reform followed ship and fix approach – at first RE management companies were ill-prepared to competently manage enormously increasing numbers of RE properties, management consultancy CIVITTA and its partner - property house Newsec Baltics helped these companies to gain necessary competencies and tools which would help them to professionally deal with the challenges of large scale RE management.

Large changes in enterprise scale of operation require significant organizational and business management changes

Usually, clients facing a sharp increase in demand and the number of clients need to adapt by making significant changes in its strategy, everyday business operations, and human resource management. Case of public RE centralization in the Baltics is no exception.

Clients were looking to improve the quality of its services and efficiency of its operations by:

• Modeling RE management processes in order to institutionalize performed functions and provide services in accordance with the set standards.
• Changing its organizational structure in order to create an environment which would enable employees to foster their performance by splitting roles of real estate acquisition, management and sales in separate departments.
• Creating a KPIs system which would measure the performance of separate departments and company as a whole.
• Creating a competency center model which would assist in attracting and developing needed competences.
• Developing short and long-term real estate take-over, sales, management and liquidation strategy in order to outline the company’s goals and provide the framework to achieve them.

To successfully implement extensive organizational change first it is crucial to outline long-term goals and then create the tools to achieve them

At first, CIVITTA with partners conducted as-is analysis in order to understand the main challenges that the client is facing, fields where it lacks competences and procedures which could be improved.

Later on, the strategic session with heads of organizational units, members of board and representatives from the government was held with the aim to determine main principles of further company development and long-term goals.

Main derived goals where:

• To become the public sector’s real estate management competency center;
• To manage the majority of the public real estate in the long term;
• To rent real estate not just to the public, but in some instances also to the private institutions.

Further, all necessary tools which would allow public RE management companies to achieve those goals and facilitate the ability to gain competences to cope with the increasing scale of RE properties where established.

Deep knowledge of business and real estate management lead to interconnected solutions

Deep knowledge of the subject has led to the establishment of practical tools and long-term strategy recommendations:

• Have different management principles and strategy for different type (by value and type) RE projects.
• Even when working in the public sector’s environment try to look for solutions which would liberalize the operation of state-owned enterprises.
• Follow competency center model which includes incentives-based KPIs, employee evaluation and remuneration policies and periodic trainings.
• In the long-term separate state-assigned social functions, which do not generate revenue by creating a new public institution.