Publish Date: June 01, 2017
Landlords are increasingly hiring outsiders to help boost property performance, spurring intense competition among national third-party management firms.
Competitive challenges hitting the retail sector are forcing properties to reposition and reinvent themselves in management terms more than ever before, according to Anjee Solanki, national director of U.S. retail services at Colliers International. “Management is much more complicated than it has ever been,” Solanki said. “For us at Colliers, we have definitely seen growth in property management being outsourced.”
Owners seeking management help include those dealing with distressed assets, such as special servicers. “There is a lot in the news today about retail bankruptcies and store closings, but we have seen that for decades in different cycles, and we know how to deal with it,” said Matthew Harding, president of Levin Management Corp., Plainfield, N.J.
As REITs prune their portfolios, the smaller firms that buy these properties need help turning them around, says Karen Raquet, executive vice president and director of national retail property services at JLL. “That’s a great opportunity for third-party managers, because most entrepreneurial buyers don’t have in-house property management staff,” Raquet said. “It is about gaining internal efficiencies and outsourcing management when owners don’t have an internal platform, which is costly and challenging to build.”
Property management firms are no longer focused solely on the basic tasks of hiring vendors and paying the bills, but have instead over the past decade become involved in every facet of asset management. Clients want accountability, comfort and trust, as well as guidance and strategic advice in navigating the current challenging marketplace, says Harding. “You really need a longer-term strategic vision for properties, whether it is repositioning a center or reworking space that you have gotten back from a tenant.”
Clients are also demanding that property management firms have expertise across other property types, such as restaurants, hotels, health care, office and transit, according to Raquet. “We are in an era,” she said, “where properties that are being repurposed are more mixed-use, rather than single-use properties.”