Spreading Wings

Editor’s Note:Chain Store Age’s 18th annual survey of Fastest-Growing Managers measured domestic and international third-party management contracts obtained or renewed during the preceding calendar year–2006.

Anyone who believed that the consolidation of shopping center ownership would mean the death knell for third-party managers couldn’t have been more wrong.

Retail real estate continues to be a sought-after investment, drawing capital from across the United States and even overseas. Less-experienced owners are continuing to look to third-party management firms to oversee the day-to-day operations of their projects.

For their part, third-party managers are spreading their wings as well, with major companies now operating projects overseas. The result is a varied landscape for this year’s fastest-growing management firms.

No. 1: CB Richard Ellis

CB Richard Ellis (CBRE), Los Angeles, expanded its reach globally in 2006, buying Dallas-based Trammell Crow as well as Belgian retail real estate specialist Immobilière Développement & Gestion (IDG).

“For a long time, the United States dominated in terms of the properties we control,” said Todd Caruso, senior managing director of CBRE Retail Services, Chicago. “We’re an international company, and the world is shrinking.”

That requires a continuing focus on customer service that evolves with each new country—and each new client. “We share our practices,” Caruso said. “There are still unique aspects as to how we conduct our business in other parts of the world.”

Corporate acquisitions, though, form only part of the CBRE expansion, he said. Mostly, its growth has come from individual contracts.

“That’s catapulted our growth. But we’ve tried to drill deeper with our relationships with developers and pension-fund advisers,” Caruso said.

No. 2: Jones Lang LaSalle Retail

Jones Lang LaSalle Retail ( JLL), Atlanta, has grown by stretching beyond its original business, honing a focus on open-air.

2006 Fastest-Growing Managers

CB Richard Ellis
Retail Management Contracts Awarded and Renewed for 2006

“We define open-air a little differently from others,” said Greg Maloney, president and CEO. At JLL, a project complex enough to have been a regional mall, whether it has a roof or not, is still considered part of the core business, not an open-air center.

Increasingly, though, JLL is being asked to oversee groups of smaller properties that wouldn’t necessarily have a full-time, on-site manager, and has created a division specifically for those projects’ needs.

“We hope this open-air division will grow over the next 12 to 24 months,” Maloney said. Managing and leasing these properties requires a different skill set, and a greater knowledge of regional and local tenants compared with the more nationally oriented malls and lifestyle centers.

Investors in value-add opportunities also turn to Jones Lang LaSalle because of its ability to retool a tenant mix, Maloney added.

No. 3: General Growth Properties

In an era where it’s actually more profitable to develop than to acquire projects, General Growth Properties isn’t buying as many of its third-party centers as it once did. Even so, increasing its relationships with existing clients helped it to rank third this year among growing third-party management firms.

Jones Lang LaSalle Retail
Retail Management Contracts Awarded and Renewed for 2006

General Growth Properties
Retail Management Contracts Awarded and Renewed for 2006

“One of our existing clients awarded us two more contracts,” said Kate Sheehy, senior VP of partner relations and client services. “It’s a wonderful way to grow.”

The company combined full contracts to manage and lease South Bay Pavilion in Carson, Calif., and Northwest Plaza in St. Ann., Mo., with leasing-only assignments for ground-up developments, including mixed-use projects. The company recently was awarded the contract to manage and lease Georgetown Park, an urban project in Washington, D.C.

“While our core business remains regional malls, we can bring retail management and leasing expertise to another venue,” Sheehy said. “We can craft a solution.”

No. 4: Fameco Management Services

Fameco, Plymouth Meeting, Pa., is a relative newcomer to third-party management. But it’s moving up fast, and the reason is simple, said Lawrence R. Zipf, senior VP, owner services: “It’s just an uncompromising focus on service. Though forms, policies and procedures are important, we are hands-on managers. That allows confidence to be built that our information will be timely, accurate and complete,” he said.

Fameco Management Services
Retail Management Contracts Awarded and Renewed for 2006

Fameco’s staff is on site much more regularly than typical third-party managers, visiting each property at least monthly. The contact creates a relationship “that’s as intimate as if they’re in our backyard.

“That’s the hands-on part of the business,” Zipf added. “We also work with the township, so that if we need a variance, a relationship already exists.”

The management business also is considered a significant added value to its main focus as a brokerage company, he noted, helping Fameco’s clients in leasing space.

No. 5: Stirling Properties

The rebirth of the Gulf South after the devastation of Hurricane Katrina in 2005 has created a growing need for professional management services, as new retail returns to the region. That growth and the company’s local knowledge boosted Covington, La.-based Stirling Properties to the No. 5 slot this year.

Stirling Properties, Inc.
Retail Management Contracts Awarded and Renewed for 2006

“We have offices all over the Gulf Coast, and we’re diversified,” said Martin A. Mayer, president and CEO. “We are riding on the rebirth and reconstruction, and the infusion of dollars into this region.”

The Interstate 10/Interstate 12 corridor has seen accelerated retail activity, particularly Target-anchored centers as residents return and rebuild, a bit more inland than before.

“After the storm and the disbursement, Target, J.C. Penney and Belk accelerated their pace. Walgreens, too, accelerated openings, and they’re all looking for someone local to the markets,” Mayer explained. “We had a record year, and will have record years in 2007 and 2008.”

No. 6: The Macerich Co.

The Macerich Co. is perhaps the most surprising entry on the list—the company is far better known as an acquirer and redeveloper of existing centers, and for the ground-up development of its own properties through its Westcor subsidiary.

The Macerich Co.
Retail Management Contracts Awarded and Renewed for 2006

And that’s pretty much the way it will stay, according to Charles Waldron, senior VP of property management of Santa Monica, Calif.-based Macerich. “[Third-party management] isn’t necessarily a growing focus,” he said. “We have a lot of joint-venture partnerships, and we’ll get involved in a project through them.”

Cross County Shopping Center in Yonkers, N.Y., which it now manages and leases, came to Macerich in that way, and complements Macerich’s East Coast portfolio.

“It performs very well, and has a lot of potential,” Waldron said.

The company will oversee a massive redevelopment of the center, which opened in 1954. The 1 million-sq.-ft. open-air center will be expanded by nearly 250,000 sq. ft.