The management of a shopping center is a special process. It requires a lot of planning and ongoing control by the managing agent. That is why shopping center managers and leasing specialists charge a reasonable management fee. The process of retail property control and optimisation takes experience and commitment.
When I hear that a shopping center owner is tendering the property management process to get the lowest fee I know that the owner is not serious about property performance; they get what they deserve. There is an old saying that goes something like this, ‘If you pay peanuts, you get monkeys’. Why would you jeopardise the performance of an important retail property for the sake of a lower fee?
There are many things to manage in a retail property. Here are three of the bigger ones:
- Leases are at the top of the list. Every lease is potentially different, and in a property with a lot of tenants you really do need to understand all leases to the fullest of their impact on the property. That requires a detailed lease review and property optimisation plan. From that review you can put in place a standard lease profile so that every lease that you negotiate on a vacant tenancy can be negotiated within the rental standards and lease terms that the landlord requires. Given all of this you can also put in place a tenant mix strategy and a tenant retention plan. Both of these documents should be merged into the business plan for the property.
- From the earlier comment you can see that a business plan is required. That is the job of the property manager working together with the landlord. The landlord will have investment strategies and holding patterns that they observe with their investments. The business plan should be reviewed quarterly given that the trends of rent and the factors of the shopping center operations will change. The business plan for the property should exist 3 months before the start of the financial year for the property. The plan will take into account all the stakeholders involvement and interests; the stakeholders are the landlord, tenants, customers, financiers, property managers, and leasing experts. It is easy to see why the management process in a retail property is so intense. A successful shopping center or mall is a direct reflection of the skills of the retail shopping center manager.
- Rent in a retail property will be critical to property performance. Net income will be important to the landlord, and from that point you work backwards to ascertain that expenditure is well structured and standardised for the efficient operation of the asset. Income and expenditure structures and strategies also should be merged into the lease and business planning process.
For the specialised property management agent the opportunities for professional fees and services in the industry are large. I go back to the point that reasonable fees are required for the specialised retail services to be provided.