FACED with increasing property management fees and wielding a thirst for more core business control, many of WA’s listed retail property trusts are moving away from managing agents to in-house shopping centre management.
FACED with increasing property management fees and wielding a thirst for more core business control, many of WA’s listed retail property trusts are moving away from managing agents to in-house shopping centre management.
Over time, major and regional shopping centres have been enticed away from agent management, requiring closer working relationships between tenants and owners.
Property trusts such as Centro, Westfield, AMP, Perron Group and Hawaiian Investments have taken shopping centre management out of agents’ hands and opted for the in-house approach.
“We have found that undertaking each of the functions of shopping centre creation, ownership and management, under the in-house management ‘one umbrella’ has been a better option,” Westfield Australia public relations manager Julia Clarke said.
“Westfield is a vertically integrated shopping centre group and we believe that we create more value for the centres’ investors and produce a better product for the centres’ consumers, by having this in-house management.”
Property Council of WA executive director Joe Lenzo shares the view that large retail groups are moving away from agent management.
He said the in-house trend had resulted from greater vertically integrated company approaches based on new ownership and cost-driven business models.
“In-house management allows owners to take direct control over each centre’s core, and decreases management costs,” Mr Lenzo said.
“It also opens the communication lines, as it enables the retail tenants within the shopping centres to be more closely aligned with the centre ownership.”
Many smaller shopping centre syndicates, on the other hand, have decided to stay with agency shopping centre management.
For example the Perron Group, which owns Mirrabooka Square, Belmont and Gateways Shopping Centres, is managed by property agent FPD Savills Byvan.
“We run on an outsource basis, so we focus our time on investing, rather than on management,” Perron Group general manager Ian Armstrong said.
“For 30 years we have been successful in finding great professional agencies to manage our shopping centres at a competitive price.
“As we are a major investment company in the property business with 12 staff, if we opted for in-house management, we would also have to increase our staff.”
FPD Savills Byvan WA divisional director retail management, Darin Maher, said agency management was popular as it drew from a wide range of skills and expertise.
“In-house management can only draw upon information that relates to the particular centre it is involved with, whereas, agencies have the support of a larger database of information and lead the way in accounting and human resources procedures,” he said.
Mr Lenzo told WA Business News the retail market was going through a positive stage, with a number of institutional buyers in the market. But this market demand was not currently being met.
“Even though there is a surplus of funds available, most of the retail properties are not for sale, as they are already successful,” Mr Lenzo said.
