Jack Halpern
In this challenging time for shopping center owners, what steps are they taking to increase efficiencies? Here are five tips that have worked for us in our business that may be of help:
1. Review your retail center’s property tax valuation every year: We have found that valuations sometimes don’t match reality. And since your tenants usually pay a pro-rata share of taxes owed, they will greatly appreciate you conducting this review.
At two of our Georgia retail centers this past year, we were able to have the property tax valuations reduced by 10 percent and 12 percent, respectively, and these savings were very significant for each center’s bottom line.
Consider using tax professionals who are paid as a percentage of tax savings they find for you. We have had good success with this approach, and have been able to pass the fees along to the tenants on a pro-rata basis.
Use consultants who are familiar with such factors as the value of other properties in the area, the value of comparable properties in other parts of town, the impact of vacancies and rent concessions on value, and recent sales prices for comparable properties.
2. Consider using local companies for landscaping and property maintenance: This approach pays off on several levels. First, it leads to quality long-term relationships, and builds rapport and contacts in the local community. We also find that these professionals can serve as another set of eyes and ears for a property.
In cases where you need help fast, local contractors can arrive at the property quickly. For example, we had a number of snow days at our center in Ellijay, Ga., last year, and it was a great help to be able to call upon our local contacts to get the ice in the parking lot removed quickly, thereby reducing the chance of accidents.
3. Don’t defer maintenance spending: Whether it's a small leak in a roof or a minor pothole in the parking lot, it's important to address little problems before they become major issues.
Putting off expenditures for maintenance may save money in the short run, but it can come back to bite you and cost more to fix in the long run, so we look to deal with problems as soon as we find them.
4. Pay your vendors quickly: Consider paying your vendor bills once a week. This quick turnaround will be a huge benefit for your relationship with vendors — especially for small local companies with tight cash flow.
5. Strike a balance in lease negotiations: As you work to secure tenants, strike a balance between being flexible on lease terms and doing what’s best for long-term profitability.
Of course, this is a moving target and has to be addressed on a case-by-case basis, depending on the current vacancy rate and how difficult the location is to market. As a center fills up, it stands to reason that you don't need to be quite as flexible in terms.
— Jack Halpern is chairman of Atlanta-based Halpern Enterprises. The company owns more than 3.4 million square feet of leasable space in 33 retail properties, which are located in Georgia and Florida.