Reposition your assets before they lose value

For an Asset Manager, the obsolescence of a building translates into a resale discount of 15 to 25% and a prolonged vacancy of 9 to 18 months in secondary areas. Kytom structures its interventions around three pivotal moments.

• Pre-acquisition (due diligence): a priority capex estimate, drawing on our experience of pre-acquisition due diligences, securing the IRR business plan, identification of technical risks (HVAC, asbestos removal, regulatory compliance applicable to workplaces, notably articles R4211 and following).
• Between tenants: repositioning of a vacated floor within 12 to 16 weeks, with calibrated density ratios (8 to 12 sq m per workstation in open space, compliant with the NF EN 12464-1 standard on workplace lighting).
• Major restructuring / ESG Capex Plan: alignment with the thresholds of the tertiary decree (ADEME, 2023 data) and targeting BREEAM In-Use or HQE Exploitation certifications, with indoor air quality assessment required both for ERP regulations and for the HQE, LEED and BREEAM frameworks.

For the investment committee: the timing of the capex commitment matters more than its amount. A capex of EUR 800/sq m committed at pre-acquisition (with adjustment of the purchase price) generates a higher IRR than an equivalent capex triggered 24 months after signing, due to a lack of technical visibility. This segmentation into three windows aligns with the schedules of investment committees, which require strict quarterly financial visibility.

Our reading differs from the broker consensus on this point. Market orthodoxy pushes to commit the repositioning during the between-tenants phase, when the floor is empty. In practice, operations costed BEFORE acquisition (during due diligence) show a markedly higher IRR than operations costed AFTER signing: the negotiation of the purchase price absorbs part of the capex, which the between-tenants phase no longer allows.

When this segmentation does not apply. On an asset below 1,500 sq m intended for a quick resale (horizon under 18 months), a full ESG Capex Plan is not profitable: the restructuring ticket is not amortised by the rental revaluation. Kytom then directs towards a targeted light renovation (refresh, regulatory compliance of workspaces), without targeting certification. Likewise, below 800 sq m of floor space, the between-tenants phase in design and build loses its value compared with a simple paint/flooring lot entrusted to a local company.

design and build method: a global fixed price, a single point of contact

Our integrated process eliminates the interfaces between project management and general contractors, the main factor of budget overrun in separate lots. The technical and usage audit (surveyor measurements, HVAC diagnosis, competitive benchmark on the building and its area) is delivered within 10 business days. The space planning design proposes 2 to 3 costed scenarios, with typological segmentation between bright collaborative zones and concentration zones with a sound level below 35 dB(A). The budget is based on a fixed-price commitment signed before works begin, under Qualibat certification, with a breakdown by lot for accounting allocation and re-invoicing to tenants. A single point of contact manages 100% of the trades, with weekly reporting to the property manager. The digital DOE is delivered within 15 days after handover. On partially occupied assets, Kytom operates on sensitive sites: night works, phasing by floor, site charter validated with tenants.

For the CFO: budget overrun is the primary OPEX risk, not the purchase price of the works. Change orders remain below 3% of the initial budget on delivered operations, compared with 15 to 25% overrun observed in separate-lot contracts. On a EUR 1.5M programme, the gap represents between EUR 180,000 and EUR 330,000 of unbudgeted capex, which goes into provisions and degrades the asset value at the next appraisal.

Limits of fixed-price design and build. The global fixed price ceases to be relevant on operations with an unstable programme, typically assets in complex legal arrangements (co-ownership in litigation, commercial leases to be renegotiated during works) or major restructurings requiring a building permit with ABF approval. In these cases, the risk is partly borne by the Asset Manager via change orders, and the separate-lot contract managed by a dedicated AMO remains better suited.

Measured benefits and programming vigilance points

On the operations delivered by Kytom for Asset Managers, the indicators converge towards a favourable economic equation: marketing time reduced from 12-18 months to 6-9 months, rental revaluation of +40 to +80 EUR/sq m/year in Paris CBD and +15 to +30 EUR/sq m/year in the regions, return on capex below 4 years in most cases. On the ESG side, the operations integrate as standard LED lighting compliant with HVAC control requirements, connected energy instrumentation and low-carbon materials traced according to the frameworks in force.

For the Asset Manager: 6 months of vacancy avoided is worth more than EUR 200/sq m of capex saved. On a 2,000 sq m floor leased at EUR 550/sq m/year, 6 months of vacancy avoided represent EUR 550,000 of recovered rent, the equivalent of EUR 275/sq m of capex. It is this equation, and not the cost per sq m alone, that should drive the ambition level of the programme.

Three vigilance points structure a robust programme. Capex / yield arbitrage: an overly ambitious programme increases the ticket by EUR 200 to EUR 400/sq m without proportional rental gain; Kytom costs two levels. Regulatory stacking: obligations applicable to workplaces (articles R4211 to R4217), obligations to reduce energy consumption of the office stock, ERP accessibility, HVAC control requirements, SFDR article 8 or 9 requirements depending on the fund. Property management coordination: works phasing, prevention plan, clean site charter, contradictory inventories of fixtures at tenant interfaces.