The real cost to upkeep a building: why operational excellence protects asset value

7 janv.

Across Brussels and Europe, asset managers are facing growing pressure to deliver stable returns while operating buildings that are becoming older, more regulated and more service-driven. In this context, upkeep is no longer a cost to be contained — it is one of the most strategic levers for protecting long-term value. Operational excellence has become a financial tool.

Here we explore how building upkeep directly impacts occupancy, tenant satisfaction, churn, and ultimately NOI, and why reducing operational budgets can create a “fake NOI” that may look appealing on paper but harms asset value over time.

1. Upkeep and NOI: the link most investors underestimate

NOI is often treated as a simple equation: revenues minus operating expenses. But, in practice, the quality of operations shapes both sides of the formula.

Pro-active high-quality upkeep helps to:

reduce vacancy
extend tenancy duration
lower extraordinary repair costs
increase perceived building value
strengthen the asset’s reputation on the local market

Reactive weak upkeep:

accelerates degradation
drives tenant dissatisfaction
increases maintenance tickets
raises turnover and vacancy
leads to irregular cash flows

In Brussels’ competitive rental landscape, the cost of losing a tenant and reletting a unit often exceeds what would have been spent on preventive maintenance.

2. “Fake NOI”: the hidden risk in under-maintained assets

Reducing operational budgets may temporarily inflate NOI, but this gain is rarely sustainable. This is what we call “fake NOI”: a short-term boost created by deferring essential upkeep.

Examples include:

reducing cleaning frequency
delaying small repairs
extending the life of outdated equipment
ignoring early signs of degradation
underfunding technical checks

While these decisions reduce current expenses, they create structural risks:

higher capex in the future
tenant churn
reputational damage
lower valuation at exit
inability to justify increases in rent

In a due-diligence process, experienced investors and auditors quickly identify this pattern. Buildings that show clear operational neglect often suffer valuation penalties, especially as ESG standards tighten across Europe.

3. Tenant satisfaction: the operational metric with financial impact

Tenant satisfaction is now a measurable financial indicator. In European markets, unhappy tenants translate into:

higher churn
increased vacancy period
shorter lease renewals
negative word-of-mouth within companies
weaker resilience during market downturns

Buildings with consistent upkeep show stronger stability because tenants:

trust the management
feel supported
experience fewer disruptions
are more likely to stay beyond the typical lease cycle

Operational excellence becomes tenant retention, and tenant retention is stable NOI.

4. Operational excellence vs. operational neglect: a Brussels reality

Comparing two buildings with similar location, typology and tenant profile quickly reveals differences:

Building A – Operational Excellence

predictable and planned maintenance
proactive cleaning standards
fast resolution of tickets
transparent reporting
stable tenants, low churn
minimal extraordinary interventions

Result: stable NOI, strong reputation, higher interest from institutional buyers.

Building B – Operational Neglect

fragmented upkeep
recurrent issues left unresolved
slow ticket handling
visible deterioration in common areas
tenant complaints
frequent vacancy spikes

Result: volatile NOI, valuation discounts, reduced interest from investors.

This comparison is now central in the Brussels market, where companies increasingly expect hotel-level consistency in their operational experience.

5. How Nested supports asset value through operational excellence

Nested’s operational model transforms upkeep from a cost line into asset protection. We approach buildings with a blended focus: technical stability + tenant satisfaction + operational transparency.

Concretely, this means:

preventive and recurring maintenance that avoids expensive failures
high-quality cleaning that preserves building perception
quick resolution of technical issues
detailed reporting for asset managers
processes designed to reduce churn
stable, predictable operations for long-term planning

Nested’s teams manage assets at scale, ensuring that the ratio asset manager/buildings remains sustainable and that investors gain visibility and control.

Nested Maintenance: a natural extension for larger portfolios

For investors managing multiple assets, Nested Maintenance provides:

standardized quality
consistent procedures
centralised communication
rapid deployment
unified reporting across buildings

This ensures that upkeep becomes a competitive advantage, not a vulnerability.

So, in today’s market, operational excellence is not a luxury, it is a strategic asset. For investors, the real cost of upkeep is not the amount spent, but the value preserved. Buildings that are well cared for retain tenants, operate more efficiently, and deliver stronger NOI over time.

Sustainable returns are built through sustainable operations.

References