Booming Industrial Market Heightens Demand for Third-Party Management

The industrial real estate market in New Jersey continues to thrive due in no small part to the rapid growth and evolution of e-commerce retailing. Last-mile distribution facilities – from which goods are stored and delivered directly to the consumer and local retail outlets – are becoming more reliant on well-located and well-operated warehouse space. This is particularly evident in core Garden State submarkets, where demand for space proximate to transportation networks, the Port of New York/New Jersey and New York City is stronger than ever before.
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New Business Increase Signals A Growing Interest In Outsourcing. Third-Party Commercial Real Estate Services Thrive in a Competitive Landscape

2017 was all about milestones. Not only did Levin Management Corporation (LMC) celebrate 65 years of industry leadership, but we broke previous new business records with the addition of 10 new assignments – totaling 1.5 million square feet YTD. This achievement increased our diversified leasing and management portfolio to 100 properties, totaling 14 million square feet.

There’s a strong appetite for third-party commercial retail real estate services right now. Are we seeing a retail real estate trend in the making? That’s hard to say from my perspective, but the evolving retail landscape, increased competition for fewer retailers and growing transactional complexity are bringing more private owners and institutional investors to our doors. These companies are looking to maximize property performance and value by outsourcing to experts like LMC. I find they’re drawn to us, in particular, because we offer a complete package (from retail leasing and management to construction management, and everything an owner needs to effectively run their properties). You might call us a specialized firm in that we customize our approach to the client and their property – and we stress high-quality service.

What’s Behind LMC’s Record-Breaking Anniversary Year?
LMC is attracting new business for a number of reasons. At the top of the list are:

• Longevity – 65 years of industry leadership
• Expertise – leadership with long-time industry and company affiliations
• Market knowledge and connections
• Scope of services – we’re a one-stop shop
• Individualized service model
• Reputation for excellence and integrity

The Big Decisions: Why Turn to a Third-Party Solution? Why Switch Providers?
For institutional investors, the decision to go with a third-party service provider is simple. They are asset managers who always hire third party management and leasing firms, and they make their selections based mostly on past experience and the level of service provided. On the other hand, private owners that are currently doing management in house are turning to third-party managers to help address a number of concerns in today’s challenging retail environment. The most common issues are:

• Rising vacancies
• Increasing competition from other centers
• Insufficient recovery of billable expenses
• Need for better control of CAM costs
• Keeping pace with an increasingly digital world, and opportunities to leverage technology in property marketing
• The burdens of day-to-day property management, such as emergency response to tenants
• The need for institutional-level financial reporting to other investors or lenders

The more issues they are experiencing, the more they realize their most efficient solution is a single expert resource – like LMC – that can address every challenge. Like institutional investors, many private owners no longer want to handle operations. This is especially true in our increasingly complex environment. Many private owners are also facing a generational shift. Younger family members are assuming leadership and often want to shed the responsibilities of in-house management entirely.

Switching third-party providers is another story. I find that neither private firms nor institutional investors want to get lost in a large national management provider portfolio. Major brand-name property management firms with huge client rosters and global reach seem to be attractive initially, but they often fall short in delivering individualized attention. These big players also tend to lack smaller market expertise, a factor critical in today’s environment. Being well-connected locally means a better sense of the market, which creates a clear advantage when it comes to property strategy.

LMC delivers that competitive advantage plus economies of scale in purchasing services and has strong connections to the best professionals, such as tax appeal attorneys, architects, engineers, insurance consultants, and environmental experts. Still, many owners are wary of changes that may interrupt property operation. LMC has decades of experience smoothly onboarding new properties and ensuring seamless transitions. This has been another factor in our successfully securing new assignments this year.

Anticipating Another Year of Milestones in 2018
LMC is looking to 2018 for another year of growth. We’re reaching out to institutional investors and private owners of retail centers, especially in our Northeast region. Our 65-plus years of experience can make a major difference for retail real estate owners eager to invest their energies in building value not managing property.

Retail Property Managers Stress Corporate Citizenship

By Bob Carson, EVP, Levin Management

Green Products Help Both Business and the Environment
This month, more than a billion people in 192 countries are expected to take action to protect the environment in observation of Earth Day (April 22). Sustainability is always top-of-mind in the retail real estate industry, with property owners, managers and tenants all involved in the effort. At Levin Management, our property management services team is committed to using the best in planet-friendly products and processes.

Energy Efficiency is the Goal of Our Property Management Services
Energy efficiency has always been our top priority. Years ago, the emphasis was on controlling the expenses of heating, cooling and lighting the buildings in the properties we managed. Today, we’ve got a dual goal: cost-control and environmental sustainability, with a special focus on solar power, LED lighting and high-efficiency roofing.

Levin is in the final stages of our first solar project, at Capitol Plaza in Ewing, N.J. With Vanguard Energy Partners of Branchburg, N.J., a national solar construction firm, we’re installing rooftop panels at 1001 Spruce Office Center, the property’s office component.

We anticipate a significant drop in annual utility costs by supplementing electric power with this clean, alternative energy source. Besides lower bills, N.J. property owners, who install solar, benefit from tax rebates and sustainable renewable energy credits, which are market-traded certificates.

Based on our positive experience in Ewing, we’re exploring additional solar opportunities. A number of clients and larger big-box tenants have expressed interest in undertaking similar projects.

More Powerful LED Lighting is a Practical Energy Solution
LED bulbs are both energy efficient and long lasting. Their typical lifespan is four to nine years, depending on the specific use, which curbs the costs of both materials and operation.

We’ve been using LED lighting at shopping centers for years but were limited by their low illumination levels. Recent technological advances have corrected that problem. Now we’re transitioning all the parking lot lighting at Warren Plaza in Washington, N.J. to LED – with great results. We’ll be bringing LED lighting to other sites under our management soon.

New Roofing Products Provide Improved Insulation
Our property management services team likes the good news in roofing. The newest products on the market have a higher R-value, meaning they do a better job of limiting heat loss. That improved insulation equals less energy usage and lower heating costs.

New code regulations require that commercial owners use these energy-saving materials in both new construction and re-roofing. In other words, this sustainability measure is a mandate – not a choice. The catch? The cost of R-value materials is between $1.25 and $1.50 per square foot more than traditional products. Owners can expect to recoup that outlay over time with lower heating bills.

Roofs with a high R-value definitely make a property more marketable. More and more, prospective tenants – particularly national retailers – are looking for this type of roofing. They realize that, in addition to promoting sustainability, higher R-value roofs reduce operating costs. Many prospective tenants, in fact, will choose a property with an energy-efficient roof over one with traditional roofing.

Going Green Makes Good Business Sense
Earth Day reminds us of our responsibility for the environment. At Levin, our property management services team is always on the lookout for new ways to boost the value of the shopping centers we manage. We’re glad that many of the best measures for protecting the bottom line also protect our planet. Owners and operators who embrace these opportunities get a double win: enhanced property values and reduced carbon footprints. And those are both good things!

Levin Property Managers Name Their Favorite Tech Tools

Tablets, Numbers App and Paperless Invoicing Lead the List for Efficient Real Estate Property Management

Recently Levin asked the Property Managers of our 95 retail real estate sites how technology has made them more efficient. Which tools are indispensable in delivering top quality property management services? How has tech helped them cut costs and save time? We’d like to share the responses with you. First, we’ll look at the four tech products that make our managers’ jobs easier and second, we’ll see what tech innovations are making Levin’s retail properties operate more efficiently.

iPads, Tablets are Indispensable to Real Estate Property Management Today
It’s not always the latest piece of tech innovation that makes the list of favorites. Our Property Managers named iPads and other brands of tablets as the must-have, on-the-job product. First released to the market four years ago (with several updates), these portable computers mean in-the-field reporting can happen quickly and easily. No more taking notes, returning to the office to write them up, and then circulating them. Tablets cut steps and save time.

File Sharing is a Favorite of Levin Property Managers
Dropbox and iCloud, tech tools that allow access to files by multiple parties, are also clear winners among our managers in the field. A recent fire at one of Levin’s properties demonstrated the value of Dropbox. The Property Manager took pictures of the damaged areas with his iPad, then loaded the pictures directly into Dropbox for review by the property owners, their insurance company and any other relevant parties. File storage in iCloud serves a similar purpose, especially among our internal Levin staff.

Spreadsheets Straight from the Field with the Numbers App
Apple’s Numbers app, which works on both iOS and Android platforms, helps our managers create spreadsheets and charts right on their tablets. Easier to use than Excel in a field situation, Numbers has become an essential part of every manager’s tech toolkit.

Paperless Invoicing Means More Efficient Real Estate Property Management
AvidXchange, web-based software for end-to-end invoicing, has streamlined our managers’ accounts payable processing. Everything from the original vendor statement up to its payment is paper free. Processing time, including review and approval, is cut drastically, and the status can be checked on the computer from anywhere. And AvidXchange is fully integrated with Levin’s accounting system. What’s not to like?

Technology is not only making our Property Managers’ lives easier, it’s also helping them run our Levin-managed sites with greater efficiency and lower operating costs. What tech trends are you seeing in Retail Property Management? Please share your comments with us here on Retail Property InSites.

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About Robert Carson:
Executive VP Robert Carson, CSM, oversees coordination for Levin’s client properties and is instrumental in transitioning new management assignments to the Levin team. He plays a key role in the firm’s day-to-day operations, and, as an environmental issues expert, he oversees management of issues such as asbestos in older buildings and specialized tenant uses, like dry cleaning. Carson joined Levin in 1992 as Director of Property Management after serving as General Manager for retail properties owned by Hartz Mountain Industries. Prior to that, he managed an enclosed mall for the DeBartolo Corporation. Carson began his career as a buyer for Gimbels Department Stores. He received a bachelor’s degree in Economics from Indiana University of Pennsylvania and is an ICSC-Certified Shopping Center Manager (CSM).