Managing retail properties is getting ever more complicated. When Michelle Panovich sets out to hire team members at Mid-America Asset Management, she seeks a more advanced skill set than she did 10 years ago. The Oakbrook Terrace, Ill.–based firm handles leasing and operations for nearly 60 million square feet of retail space across five states, making Mid-America one of the country’s largest third-party retail property managers. “We look for a different type of employee these days, usually someone with a major in real estate and finance,” said Panovich, who is a principal and executive vice president at the firm. “Our institutional clients are handling more investments
with fewer people in their own organizations, and that pushes things they used to handle onto our firm. We want to get those top-line employees, because what used to be handled in our clients’ offices is now handled in our office,” Panovich added.
Retail asset management today can include daily operations, marketing, leasing, repositioning an asset, enhancing sustainability, collecting and analyzing market data, and running a social-media campaign. In this increasingly multidisciplinary field, scale and experience are helping the major players grow even larger. Cushman & Wakefield announced in May that it had agreed to merge with DTZ under the Cushman & Wakefield flag. The merged company will manage some 4 billion square feet of commercial space, including retail. (The companies are now in the quiet period pending the merger, and thus cannot comment.) On the very day of the Cushman & Wakefield announcement came word that JLL would buy Wilson Retail Group, a retail brokerage and capital markets firm in Los Angeles, for an undisclosed sum. The 16-person Wilson group markets for lease roughly 9 million square feet of retail space across 75 shopping centers. JLL manages 67 million square feet of U.S. retail space in regional malls, lifestyle centers, grocery-anchored centers, power centers, central business districts, transportation facilities and mixed-use projects. “We’re always looking to grow our leasing and brokerage business,” said Karen Raquet, JLL’s director of national retail property services.
And CBRE, which manages about 85 million square feet of retail space in the U.S. alone, in January acquired United Commercial Realty, a -Dallas retail real estate firm with some 8 million square feet of retail under management across the country. That deal followed a little more than a year after CBRE’s acquisition of Fameco, a mid-Atlantic retail real estate firm that added about 20 million square feet to the CBRE management portfolio.
Other changes concerning shopping center management are afoot. Property management professionals say keeping up with technology has become a continual concern. “There are so many -innovations, it’s almost changing weekly,” said Panovich. The Mid-America technology group keeps tabs on new data-reporting systems, digital-marketing tools and other advancements that may prove useful at its properties. And Raquet says providing Wi-Fi connectivity throughout a mall is essential for the success of retailers’ omni-channel sales-marketing -efforts, which seek to capture both in-store and online sales. “Most of our centers do have Wi-Fi capabilities,” Raquet said. “The consumer is very focused on looking on their smartphones for price comparisons and looking up sales.” JLL’s technology improvements include creating an emergency contact system that simultaneously contacts retail tenants by phone, text and email in the event of a crisis at the property, as well as such cost-saving measures as LED lighting and efficient water fixtures.
Social media are also becoming part of the property manager’s job, according to Todd Caruso, senior managing director of CBRE’s retail agency services in the Americas. As retailers do with omni-channel strategies, property managers must adopt a multichannel social-media strategy in representing their clients’ properties, Caruso says. “Gone are the days when you could rely on a property brochure, a property sign, electronic mailings and hard-copy mailings,” he said. “You have to be messaging on a number of channels, be it Twitter, Facebook, Instagram, what have you. Our industry is just starting to adopt that.”
The make-or-break task for third-party service providers, though, continues to be leasing, says Frederick Meno, president and CEO of asset services at The Woodmont Co. “Without tenants, there is little to manage,” Meno said. Woodmont manages roughly 18 million square feet of retail properties across 15 states, chiefly in open-air shopping centers and power centers. On most of those properties, Meno assigns two leasing agents — one to woo national retailers and the other to focus on local tenants. For malls, he adds a specialty-leasing manager to work with local retailers, potentially moving them into permanent spaces that may come available. Filling vacant spaces quickly reduces the risk of defaulting on co-tenancy clauses that other tenants may have in their leases. “One of most important positions at a mall now is the specialty-leasing manager,” Meno said. “You have to have someone solely dedicated to leasing in that market with local tenants.” Woodmont is finding additional work managing distressed properties for lenders as a receiver. That can lead to long-term management assignments if the stabilized property later sells to a buyer in need of a property manager.
CBRE will be cultivating much of its new business through relationships with existing clients, Caruso says. “Like any other service company, it tends to lean toward the 80-20 rule,” he said, referring to the 80 percent of a company’s business that is done with 20 percent of its clients. “A lot of our growth has been from increasing our share of business with our top-tier clients.”
SIDEBAR: EUROPEAN RETAIL MANAGEMENT
In Europe the contrast between poorly managed properties and those that meet customer expectations for a high-quality shopping experience tied to the digital world is growing starker, observers say. “Within the U.K., we have found that there is now a two-tier market within the shopping environment between those that have created space that meets the needs of the consumer, versus those that have not adapted and will not adapt to the changing face of retail,” said Lucy Oldham, director of U.K. retail management at JLL. “Obsolescent buildings and legacy issues from underinvestment blight parts of the market.”
Better asset management may offer hope for many of the underperforming malls across Europe, according to Marc Espinet, a partner at Property Market Analysis, an independent consultant firm in London. Espinet cites a widely held belief in Europe that only large, market-dominant malls and small, grocery-anchored shopping centers are well positioned to face the challenge of omni-channel retailing. His firm is challenging that notion, however. Property Market Analysis found that at least 10 percent of European malls have gone a decade or more without renovation or -modernization — -creating what he calls a significant -asset-management opportunity in turning those properties around. “This equates to over 100 schemes in major markets,” he said, “such as Germany, France, Italy and Spain.”
