Commercialisation for smaller centres on smaller budgets
Published: 26 April, 2010
The plight of secondary centres has become more important than ever. But with lower budgets and commercial values, in-house commercialisation teams aren’t an option for smaller centres. So is specialist outsourcing the answer?
Asset Space was launched at the start of 2008 as the asset management division of outsourcing company Asset Factor – a JV with Helical Bar. Bryony Crowther, who was appointed managing director, describes it’s unique selling point as “a subsidiary company providing niche services in the commercial property world”.
Crowther headed up commercialisation and marketing at Savills before becoming head of the same department in Jones Lang LaSalle’s shopping centre management team. “In asset management, everyone asks what exactly they are getting for their money, but I never heard this question being asked of marketing or commercialisation budgets. You asset manage your company to get the best return, so why can’t you bring that principle down onto the mall itself?”
With this philosophy that every pound spent on marketing and commercialisation should be demonstrably worthwhile, Asset Space aims to bring commercialisation in line with the transparency and cost-effectiveness employed elsewhere. Describing the options available to landlords putting on commercialisation activity, Crowther says: “Some landlords are big enough to justify their own commercialisation team in-house, but if your portfolio is smaller then it isn’t possible or worthwhile.”
Traditionally, the alternative for smaller landlords was to devolve responsibility to the asset manager or managing agent, or to the centre manager. But Crowther argues that, while each of these roles plays a vital part in the running of a centre, the growth of commercialisation puts extra pressure on managers whose core responsibilities lie elsewhere. “Shopping centre managers have to look after the tenants and keep them happy; asset managers are concerned with the financial side of the centre as a whole. They don’t have the time to keep on top of a rapidly changing industry.”
So Asset Space provides a viable fourth option: outsourcing. Crowther acts as landlords’ eyes and ears in the world of commercialisation, and passes all her contacts and industry knowledge back to each centre. “It’s my job to know exactly what’s happening: what kind of operators are out there and which is best for the job; who occupies RMUs and promotional space in a shopping centre and what they give back to the shoppers.”
A major bonus is that smaller landlords can add their centre to Asset Space’s growing portfolio, giving them extra leverage while still being cheaper than hiring a team in-house. “There’s no single place that brands can go to select and book promotional space and RMUs in shopping centres. We can provide brands with the details of every centre in our portfolio, no matter how big or small. It makes smaller centres more visible in the industry, and brands will come to us to start a campaign across any number of our centres.”
While Hammerson is large enough to have its own marketing and commercialisation department, its retail park portfolio is outsourced to Asset Space. “Our shopping centres generate a substantial amount of revenue so having people onsite is a good thing,” begins Stephen Court, Hammerson’s head of retail marketing and commercialisation. “But retail parks are very different. They have lower footfall and are often in more peripheral areas, lowering their commercial value to advertisers and sponsors.”
Like smaller centres, retail parks don’t warrant internal commercialisation teams. So instead Court looked for operators with the market knowledge to carry out high quality commercialisation activities in a retail park environment. “We didn’t want someone just to sell empty space, but to gradually build a sustainable business.”
Crowther at Asset Space matched the brief with a business model focussed on long term growth and outdoor activity. “Any deal brought to the table is a balancing act. We want to promote sustainable growth by creating an optimal retail stream that will give ongoing value,” she says. “We set five-year terms: the first two years are about gaining knowledge from the supplier side; year three is a steady state period; and then it’s ongoing management.”
Over at Hammerson, Court is happy to wait a couple of years for things to start levelling out. As with many landlords, he understands the overall impact of good quality and targeted commercialisation in a retail destination. “It’s incredibly important, and in some cases even a vital part of the occupier and visitor experience,” he says. “Of course there’s a financial benefit, but it also creates life and vibrancy, and maintains a centre or retail park as interesting place to work and visit.”
Hammerson hires its own UK portfolio commercialisation controller – Susan Szabanowicz – who stands between Crowther and the asset managers. “Retail parks don’t need the full immersion that our shopping centres get, but we do need Susan as a consultant go-between. She has more specialist knowledge of commercialisation than the asset managers so can communicate with Asset Space to get things done more quickly,” adds Court.
Having one point of contact, rather than a number of individual asset managers in retail parks miles apart, makes it easier for the outsourced company to do its job. But it also provides asset managers with a means to communicate any issues they might have. “There was a time when asset managers were expected to do a lot of things outside their area of expertise. Commercialisation requires very different skills to land management,” Court explains. “But we need our asset managers to have a strong relationship with the outsourced company because they are key to the smooth running of each scheme.”
So while outsourcing is a cost effective way for smaller or less commercially valuable schemes to build commercialisation programmes, it is important for the landlords themselves to keep a handle on things. In short, it’s not simply a case of blindly handing the reins over to a third party. Ross McCall, retail commercialisation manager at Cushman & Wakefield, advocates retaining at least some control internally.
“By keeping a certain amount of commercialisation in-house, centres can tie activity in with the retail mix and with long term goals and aspirations,” argues McCall. “A long term view is very important. It used to be all about money, but commercialisation has matured as an industry and now landlords are being far more creative.”
McCall looks after commercialisation across several C&W schemes, many of which are local centres like Idlewells in Nottinghamshire. Here, McCall focuses on forming relationships with partners in the community who “won’t pay the big bucks but will provide mutual benefits in the long term”. One initiative at Idlewells brought in the local scuba diving club, kitted out in full diving gear plus boat, to raise awareness of their company and encourage people to get involved.
“It was a marketing event, but we can convert it into a commercial venture by making them a partner. Nowadays, commercialisation and marketing go hand in hand,” says McCall.
Forming partnerships and close relationships is a top priority at C&W, which explains McCall’s strive towards a “cohesive approach” where every aspect of the centre – leasing teams, marketing teams, and commercialisation – runs in tandem.
However, like Court at Hammerson, McCall sees the benefit of outside agencies as a form of third party support. “Our aim is always to work in conjunction with agencies rather than giving up everything to them,” he says.
So it seems that landlords, asset managers and outsourced specialist agencies are finally moving onto the same page. Each of them wants the scheme to be a success, and that involves putting the retailers and customers first. Crowther adds: “We’ve got to work very closely with the guys on the ground and managing agents to know what’s happening with the tenants. In the end, the retailers are the asset. We work with the centre to make sure they’re happy and trading to the best of their abilities.”
