MANAGEMENT ACCELERATES
Whether local or global, growth has been robust for 2014’s top third-party managers
The 26th annual survey of Fastest-Growing Managers surveys new domestic and international third-party management and leasing contracts obtained during the 2014 calendar year and ranks the top performers. As always, the measuring stick is square footage.
For third-party managers, it’s almost an existential question: Is growth achieved by focusing on individual markets and even submarkets, or by expanding outward to embrace the challenges and benefits of an increasingly international industry? This year’s fastest-growing managers have chosen various answers, all to great success in 2014.
The key for CBRE and JLL, ranked first and second, respectively: going “glocal” by offering best practices and resources from an international base, while continuing to grow the number of local offices, brokers and tenant reps to provide in-person service and market depth.
At third- and fourth-ranked Mid-America Real Estate Group and The Woodmont Company, local contacts and specialized knowledge allowed them to expand their portfolios by millions of square feet.
And fifth-ranked Simon Property Group grew without really trying that hard, as owners simply went to what they feel is the best management team in the business.
No.1 CBRE
Top-ranked CBRE proves that acquiring locally and expanding globally are profitable, boasting new contracts totaling a whopping 45 million sq. ft. in 2014 from a broad geographic swath: more than 12 million sq. ft. throughout the United States, nearly 21 million sq. ft. of contracts in Asia, 3.7 million in Australia, 8.7 million in Europe and more than 102,000 sq. ft. in Canada.
“We’ve probably seen the most activity in this cycle,” noted Todd Caruso, senior managing director, Americas, for CBRE, Los Angeles. “Last year and this year feel like the highest level of activity that the industry has seen.”
Last year, the firm acquired Conshohocken, Pennsylvania-based Fameco, which frequently had been among Chain Store Age’s fastest-growing managers in years past. Meanwhile, the company continues to expand around the world.
But the business may shift in coming months. With so much consolidation having already occurred, merger and acquisition activity may slow down a bit, Caruso noted — expect some changes and opportunities as the last of the pre-recession CMBS pools come due.
“It will result in a change of ownership and service providers,” Caruso said.
CBRE’s growth should continue through both acquisition and expansion. Earlier this year, the company acquired Dallas-based United Commercial Realty. Meanwhile, CBRE is looking for even more geographic growth, with a small practice in Mexico City, and expanding staff in South America.
No.2 JLL
A major corporate change toward building up staff in individual markets continues to pay off for JLL, which placed second this year with 18.8 million sq. ft. of new contracts, ranging from single locations in Alabama to Ka Makana Ali’I Mall in Ko Olina, Hawaii.
“We have traditionally been more of a national approach,” said Greg Maloney, president and CEO of JLL’s Americas Retail Group, Atlanta. “That has completely shifted over the last 24 months.”
The company has grown from 40 retail brokers in the Americas to 100. Clients include Deutsche Bank, Morgan Stanley, and Gregory Greenfield and Associates. Yet its global structure also allows the company to exchange best practices and information.
“What is globalization in retail?” Maloney said. “It’s about capital flow and the needs of a retailer.”
It’s also about best practices, exchanging information regarding such matters as safety issues, and introducing specialty leasing to areas where it previously was unknown.
“We do export that, but we’ve never taken our eyes off the ball locally,” Maloney said.
The company continues to find growth potential, particularly on the U.S. coasts from New York to California, as well as North Dakota, Texas and the west coast of Florida. But the concentration on submarkets continues.
“California is a big push for us,” Maloney said. “Especially in the local markets.”
No. 3 MID-AMERICA REAL ESTATE GROUP
Expanding the services offered at one of its offices continues to add to the third-party portfolio of Oakbrook Terrace, Illinois-based Mid-America Asset Management, which placed third this year with more than 8.8 million sq. ft. of new contracts.
More than 2 million sq. ft. of that sum is in Wisconsin, due in large part to a deci sion to expand the services offered in its Milwaukee office.
“The Wisconsin office did a great job,” said Michelle Panovich, principal and executive VP. “Mid-America made a commitment a couple of years ago, and it’s worked really well.”
The company had a team in Milwaukee for some time, but boosted the staff with experienced managers, creating yet another full-service office, in addition to locations in Chicago; Minneapolis; and Bloomfield Hills, Michigan.
“We have a lot of long-standing institutional clients, and the Milwaukee team really made an effort this past year with quite a bit of success,” Panovich added.
And that investment in new sites could continue if the opportunity arises, she said. The Milwaukee office was opened after Mid-America had worked with some professionals in the city.
“We always have our eyes out,” Panovich said. “And we look at it every couple of years.”
No. 4 THE WOODMONT CO.
Some firms grow their third-party leasing contracts by focusing on one particular niche, such as enclosed malls, while others base their services broadly. The Woodmont Co. expanded its portfolio by doing both.
The Fort Worth, Texas-based company, which placed fourth with 5.2 million sq. ft. of new contracts in, did so by creating specialized teams that allow experts to lease projects from malls to outlets to neighborhood properties, building loyalty among owners.
“We’ve had a pretty good couple of years in a row, and that’s a testament to a lot of repeat business from our clients,” said Frederick J. Meno, president and CEO of Asset Services.
Unlike many firms, which are vertical in structure, Woodmont is more horizontal.
“We like the single point of contact,” Meno said.
That may well be Woodmont’s advantage in a possibly challenging market in the near future, as outlet centers could be over-expanding and special servicers take over some of the last of the pre-recession projects funded by CMBS.
“Outlets are springing up all over the place, and getting closer and closer to rooftops,” Meno said. “You’re going to have an overabundance of outlet centers, and over the next two years it will be a competitive arena. We’ll actively put together a redevelopment plan for a special servicer. It’s just another bell and whistle we can offer.”
No. 5 SIMONPROPERTY GROUP
For a company primarily focused on developing and managing its own projects, Simon certainly does well with third-party management, signing 4.7 million sq. ft. of space to rank fifth on this year’s list.
“It’s not a business we solicit, but because of our prominence in the industry, it comes our way,” said Les Morris, manager of corporate public relations for Indianapolis-based Simon. “We’re just laser-focused on making our properties amazing.”
The company is known for the quality of its management, asking a lot of its personnel, he noted, “but that’s led us to have the best in the business, with a great bench and support staff, great regional vice presidents.”
Of course it also helps when the largest project s