The Retail Outlook is Brightening, But Don't Ignore Cost Control

A new season and strong signs of a continuing recovery in consumer spending have the retail real estate management industry in an upbeat mood. We’re optimistic too, but at the same time, our long experience tells us not to neglect operating efficiency and cost control even in a positive climate. Here are some of the ways we achieve both of these key goals:

Managing Vendors: Yes to Bidding, No to Bundling

Levin holds costs steady for high-end retail property management services (sweeping, landscaping and snow removal) by close control of vendor contracts. Our contract renewals are usually contingent on suppliers maintaining current fee levels. We are always prepared to bid out an assignment if a vendor’s price or quality does not match our expectations. When we do call for bids, we present very specific requirements. At the top of our list is superior service and responsiveness. And we realize that the best provider of these must-haves may not be the lowest bidder. Levin enjoys a unique advantage in vendor selection, because of our large portfolio of properties in a relatively concentrated area. This concentration enables us to save money through economies of scale.

With few exceptions, we’re not fans of bundling. Yes, you absolutely can save money by contracting with a single provider for retail property management services like snow removal, sweeping and landscaping. However, few vendors will excel in all three of those. Rather than compromise quality in any area, we go with the vendor who delivers top quality work in each niche. That usually means more than one supplier. This winter, responsiveness to the need for snow removal and attention to pipes and drains was critical and we were glad to have the right suppliers focused on those special seasonal needs.

Having multiple contractors also provides a system of checks and balances on overall property maintenance, with individual contractors reporting any shortcomings they observe in the overall condition of the premises. Our ultimate goal is to balance cost savings with quality, and we have found that bundling places too much emphasis on the savings side of the equation. At Levin, we approach this industry practice with great caution.

Retail Real Estate Trends We Like: Recycling, Re-lamping, High-Tech Alarms

Right now commercial retail real estate is awash in trends. We’ve identified three winners. The first is aggressive recycling. Levin has committed to recycling programs at many of our centers, which has lowered trash removal costs significantly. For example, we went to single-source recycling (where the hauler separates recyclables from rubbish) at one property where we have a large trash removal contract. As a result, we saved roughly $13,000 on maintenance last year.

The second trend we like is re-lamping. We’re increasing the use of LED lighting in the common areas of many of our shopping centers. At one property, we recently re-lamped an under-canopy section, replacing 150-watt lamps with new, 34-watt LED fixtures. That translates into savings of nearly 120 watts per lamp on 16 fixtures that are lit 12 hours each day. Additionally, the new bulbs should last about five years – about twice the lifetime of the older ones. Beyond that, the new fixtures look great and provide brighter illumination. Feedback from tenants has been very positive.

Radio-signal fire alarm panels represent a third trendy area we are exploring in some of our centers. Traditional panels are monitored by phone. This newer technology communicates through radio waves, eliminating the need for – and costs associated with – dedicated phone lines.

Looking to Control Costs? Don’t Ignore Upgrades and Renovation

Proper shopping center maintenance involves expense, but it saves money in the long run. Like anything else, if you ignore something that costs $500 to repair today, three years from now you may face a price tag double or triple that. Levin believes in dealing with maintenance issues before they become costly fixes. Roofs are a major consideration at any shopping centers. We conduct regular inspections and replace those at the end of their lifecycles in phases and in accordance with annual capital improvement plans. Parking lots are resurfaced frequently, and repaved regularly. With an eye on curb appeal, we repaint exterior doors and re-stripe parking areas each year, and analyze wear-and-tear on façades, signage, landscaping and other exterior elements. These are the maintenance efforts that uphold and enhance our clients’ properties and ultimately their competitive positioning.

Look for more observations from Levin Management executives in upcoming posts here at Retail Property InSites. Please join us and please share your comments about our posts or about your own management experiences in retail real estate.


Robert Oliver ensures that the operation of each property entrusted to Levin meets the highest standards and remains within its operational budget. He directs the day-to-day activities of property managers at Levin’s 95 shopping centers (totaling more than 13 million square feet). He oversees the team’s training and professional development, aimed at providing superior procedures, direction and support for clients and tenants. Bob joined Levin in 2002 as a Property Manager and was elevated to his current position in 2013. With more than 27 years of industry experience, he previously oversaw property maintenance at South Street Seaport and Manhattan Mall. 


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