Is YOUR Shopping Center Management Firm Guilty of These All-Too-Common Shortcomings?
Finding a qualified property management firm to handle your shopping center is sometimes little more than a walk in the dark. It’s hard to tell how well your firm will perform in day-to-day activities. Here are a few tips we’ve developed to help shed some daylight on the topic.
1. No solid system for collecting and depositing rent payments
Amazingly, many so-called professional shopping center management firms have never established a smooth, efficient collection and deposit system. That can lead to late payments and even overlooked payments. This can be a touchy situation with your tenants, so be sure you select only a firm that has the pay/deposit system fully laid out and foolproof.
2. Poor grasp of the laws and regulations.
Shopping centers must abide by a wide variety of rules, laws and ordinances, and your property management company must know them inside and out. Be sure to know your management firm’s mastery of the following important legal topics:
o Tenant Advertising
o Loading and Unloading
o HVAC and Plumbing
o Noise Limits
o Refuse Collection
o Pest Control Requirements
o Store Plan Approvals and Permits
o Outside Promotional Activities
3. Inadequate maintenance procedures.
You’d assume that a property maintenance company would be skilled at keeping your property clean and well maintained. Unfortunately, while they all pay lip service to maintenance, many firms are woefully inadequate at execution. In our experience, this is not always simple incompetence, but is sometimes a premeditated tactic by which some firms cut corners. If they spend less time on maintenance, they increase their profits-at your expense. Ask your property manager candidates to fully disclose and explain their maintenance programs, including the inspections they run to ensure the work is done to your high standards.
4. Inadequate Tenant Retention Programs
You pay a lot to secure each tenant for your facility, so keeping them is critically important to your profitability. Be sure your shopping center property management firm is skilled and experienced in executing programs that encourage tenants to renew their leases. This means your managers must excel at spotting potential problems and dealing with them early. When a dispute arises, they have to be very good at resolving conflicts and providing solutions. Most importantly, they have to be skilled at talking to and listening to tenants. They must know which tenants should be kept, and at times, which should be let go for the overall good of the property.
A strong shopping center management firm will have in place a solid program for communicating regularly with tenants. The program should be designed to encourage 2-way conversations and be able to identify problems while they are still manageable.
5. Unskilled at Relationship Building
When you find a property manager who is skilled at building and cultivating national tenant relationships, you won’t ever want to lose them. Finding long term anchor store tenants is critical to your long term success, so insist on that skill from the firm you choose to go with.
Incidentally, relationship building skills is also important for your relationship with local tenants, contractors and vendors. Property managers who cannot communicate well with these critical resources will undoubtedly not meet your expectations for performance overall.
6. Reactive Rather Than Proactive
The really good property managers are proactive to a fault. They are ahead of problems, abreast of the most recent information-good and bad-and competent enough to offer good advice before you even know you need it.
Reactive managers give out advice long after it does you any good. You don’t what that kind of manager on your team.
Look for systems from your management firm that lets them perform comprehensive analyses of your shopping center performance, including current rents, lease expirations, renewal options, projected rent escalations (if any), and more. Then a deeper analysis is needed to qualify the best options for providing more stability within the shopping center, such as:
o Breaking up the space to gather more rent
o Condition of the property
o Condition/business climate of the areas surrounding the center
o Ability to redevelop and the feasibility of that option
o Facelift vs. Complete Redevelopment
o Ability to bring in new (and national) tenants
o Keeping the center current and up to market
o Lease renewal options to help owners protect their assets
7. Inability to Negotiate Well.
Negotiating well is perhaps the most important skill a property manager can have. They have to understand the fine balance between representing your best interests and meeting the desires of your tenants. Anchor tenants, of course, are known as tough negotiators, and your manager has to be able to stand toe-to-toe with them.
Without strong negotiating skills, your manager could be endangering your shopping center investment and you could lose very dollar you had put into it.