Back To The Basics
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Back To The Basics

by Alan Alexander, SCSM, CPM

Shopping center as well as most other types of income producing properties are doing so well in this wonderful economy that one should ask "if it isn’t broke--why fix it?" However, there are still plenty of shopping centers that are underperforming and the owners are trying to figure out why.

When one talks with property managers today, the overwhelming wail is "there is too much paper work." Much of today’s expanding paperwork has been a good thing. It has allowed us to have much more sophisticated planning and reporting, which should lead to better understanding of our management needs. For the most part, that has been true.

However, it appears that the required additional reporting along with a downsizing of shopping center personnel has lead to a large load for each manager, which, in turn, leads to less time spent on the property and working with the public, the tenants and the contractors that are so critical to the success of the property. We have to be sure that enough time is being spent where the real action takes place.

It is said quite often, and for the most part, is quite true. One can lose an account or one’s job quicker if they are late with the monthly reports than they can if things are not up to snuff on site. What a sad condition if it is true. What a sad situation of the relationships, when the brick and mortar are being slighted to be sure that the paper work is on time.

This is not to say that paperwork is not important; more accurately critical to the success of the center, but there must be a balance. The purpose of this article is not to advocate that budgets, market surveys and planning reports be trashed in favor of "hanging out" at the center, but rather to suggest that owners carefully evaluate their planning and reporting process and find ways to streamline them to reduce the redundant reporting and paper work.

Good paperwork is popular because one can easily measure the timing of the reports and can weigh them in to be sure that the proper poundage was forwarded as required by the management agreements or employment conditions. It is much more difficult to measure the effectiveness of the monthly tenant meetings, of the physical inspection of the entire property or the regular meetings with the site contractors.

Years ago this author had an employer that was quite nervous when the shopping center manager was out of the office "visiting the mall." During the first week of employment this author announced that he was going to the mall to visit the merchants. The owners response was, "why would one visit the tenants unless there was rent to collect of a problem to solve?" An explanation of tenant relations, site inspection and fact finding fell on deaf ears. On the other hand, this owner was quite satisfied to walk the halls of the office and see that same shopping center manager diligently occupying a comfortable leather chair at his desk working on the monthly reports. The monthly management reports for a small neighborhood shopping center can run 60 to 70 pages. For a regional shopping center they can be much larger. We have seen the monthly management reports exceed 400 pages, much of which is redundant.

One possible solution for keeping the managers on site and working where the real success takes place is to have office personnel prepare much of the reporting and have the manager only check the figures and add the narrative. Hopefully, the paper work can be accomplished with someone whose salary may be a little lower than the shopping center manager and, hopefully, that person would get very good at report preparation and assembly. This author is aware of one company that has accounting staff do all of the monthly reports and that is going too far in the other direction. One cannot run the property by the numbers alone. By way of example, in this situation just mentioned, accounting personnel prepared and sent out the year end continued from page six)

common area billing. The numbers were correct and

in (accordance with the agreements. However, the accounting personnel had no knowledge of field conditions and the attitudes and perceived problems on site. For these reasons, it is imperative that the shopping center manager be informed of the billings and involved in the final product. The owners of a center we were involved with had done some major roof repairs, exterior painting and replacement of underground water lines during one year and all of this was billable to the tenants under the lease agreement. Accounting would have billed this in its entirety, but the manager and the owners concluded, and rightly so, that this was just too much to bill in one year. The final decision was to bill the roof repair in its entirety, spread the painting over three years and the owner would absorb the water pipe repairs.

Larger management companies and in house operations can consolidate activities often performed by the shopping center manager and have an expert in that area handle those chores and stay in close touch with the manager for specific guidance and communication on site issues. Rent collection is one area that is often best handled by a central office expert. There are many advantages to having this done by someone other than the property manager. First, and most important, it frees up the manager to spend time on more positive aspects of the tenant relations. The professional collector seldom gets angry and the professional does not have to address operation issues. His or her job is to collect the monies and all other items are referred to the shopping center manager. Obviously, if the collection process gets very difficult, it is a good idea to bring in the shopping center manager to help on a more personal level.

A construction and contract department can be most helpful in getting these items out of the hands of the shopping center manager and as a plus in the hands of someone who has strong experience in this area. The company construction expert can develop maintenance and construction contracts that best serve that particular company and will have better knowledge in dealing with difficult contractors and suppliers. There may also be an advantage in that the central office can consolidate contracts for various shopping centers and save substantial amounts in the process. This central office can also be quite helpful in the bidding process that is so time consuming for many shopping center managers.

With the ever expanding shopping center load being handled by most shopping center managers, the manager needs administrative back up. It is just not a good use of the shopping center manager’s time to be typing memos and filing documents. The manager must be aware of everything that takes place in the shopping center, but to spend time on the more mundane administrative tasks is not using that person’s talents to the best advantage.

Finally, we need to cut the number of shopping centers or square footage load that we expect a shopping center manager to handle to a point that the shopping center manager has the time to work on such things as hazardous substance issues, emergency procedures, tenant sales analysis, tenant mix analysis, contractor effectiveness, tenant issues including store display, depth of merchandise, efficiency ratios, ADA issues and staying current on the market conditions in the trade area and just plain planning and evaluating the situation at all times.

This author had heard some owners and upper management brag that their shopping center managers are handling 15 to 18 small shopping centers spread out over three states and congratulating themselves on getting "the most" out of their people. But those same owners and managers were not bragging about how well their centers were doing. The long term success of our shopping centers depends to a very large degree on the quality of the management. Success will not be measured by the timeliness or weight of the reports or the fact that upper management has one of the lowest personnel costs in the industry. The real action is in the shopping center, not at the shopping center manager’s desk in the home office.

e-mail aaacon@compuserve.com.