By: Cheryl Todd, Coreland Companies
As published in Western Real Estate Business, February 2018
Today’s property management role goes far beyond serving as property caretaker. Some of the most critical management responsibilities begin in the final development stages by focusing on three key aspects: adherence to critical dates, early establishment of operational efficiencies and the implementation of fundamental marketing.
From entitlements through construction, the target of any new retail development is to get to the point of collecting rents as soon as possible. As tenant improvements begin and opening dates loom, a strategic ‘watchdog’ is needed to effectively guide the property to revenue production.
Adherence to critical dates, such as plan check dates, delivery dates and rent commencement dates, is what optimizes revenue generation and gets it to the finish line.
Opening dates are sometimes at the mercy of utility companies or municipalities. It might take longer than expected to install traffic lights, tenant electrical panels or even powering the site. Even though these situations are often beyond control, it is important to be proactive and expect the unexpected to mitigate delays.
Equally as important is the detailed tracking of these dates. The delivery of space and the date a retailer opens for business all need to be documented for future reference. To eliminate any discrepancy, sometimes the best tactics are the simplest, such as making a purchase for a cash receipt on the day a retailer opens for business.
When a development is in its final stages, strategic vendor selection is key to establish the necessary operational efficiencies.
New landscape and lighting installations will be warrantied, for example, but a smooth transition must take place between the installation team and long-term service provider. Properly phasing-in services is critical. Day porters, security, trash pickup are just a few of the services that must be phased in as businesses open and customers arrive.
The manager now becomes a watchdog for the property, paying close attention to the evolving demands of tenants and customers. Are areas of landscaping becoming walking paths? Are employees parking in unauthorized areas? Are customers navigating the parking field as expected?
These service decisions impact the budget and estimated CAM costs at the property. It takes the expertise of having worked with a wide range of vendors on varied properties to ensure you are staying within the limits of market NNN costs. In addition, balancing warranties with phased-in service contracts means your first year CAM expenses will not hit stabilized levels. First-year CAM cap language should be adjusted to a fully-occupied level in order to maximize CAM reimbursements. The true budget and CAM expenses will likely begin to develop in year two, thus relying on proper lease language and good budgeting to support the variations.
Tying everything together in the final stages of development is the implementation of fundamental marketing to ensure tenants not only open, but open with strong sales and the needed tools for success.
The property’s introduction to the community begins by understanding the development’s staging. Will all tenants open at the same time, or will the retailers’ opening dates be phased?
Whether celebrating the opening of one tenant or the completion of the shopping center, gathering community leaders from both the City and local Chamber of Commerce reinforces a positive relationship. It is the first step in creating a strong connection to the center’s neighborhood.
Getting to know community leaders, becoming familiar with the service providers and even understanding the location of every shut-off valve on a new property are all critical components of the property management role. The earlier the management team is introduced into the development process, the more effective the team can be in proactively addressing challenges and establishing the new destination.