Power Surge
21st annual survey of Fastest-Growing Managers measured domestic and international third-party management and leasing contracts obtained during the preceding calendar year—2009.
Third-party management became the downturn’s bandwagon, as shopping center owners—with little to nothing on the development boards—jumped on an opportunity to grow at least one area of their companies and generate a reliable revenue stream.
Management stalwarts such as Atlanta-based Jones Lang LaSalle, this year’s top third-party manager by a mile, and Los Angeles-based CB Richard Ellis added plenty of noteworthy assignments during 2009. Others newer to the management table created third-party divisions, redirected staff to leasing nonowned centers and marketed their services aggressively to their shopping center peers.
2009’s top three slots are a 2008 repeat, with the exception of a flip-flop between JLL and CBRE, who took the top spot in last year’s rankings. Plymouth Meeting, Pa.-based Fameco Management Services reclaimed its third-place position, and the four and five spots are now owned by Columbus, Ohio-based Casto and Indianapolis-based Simon Property Group.
1. Jones Lang LaSalle Retail
Atlanta-based Jones Lang LaSalle Retail tops the list with a staggering 31.8 million sq. ft. newly under management, much of it coming from a handful of large assignments.
“Last year, Jones Lang LaSalle won the management contract for the RREEF portfolio consisting of 5.7 million sq. ft. and 29 retail centers, including four lifestyle centers,” explained Greg Maloney, president and CEO of Jones Lang LaSalle Retail. The company was also appointed manager for Panattoni Development Co.’s 1.2 million-sq.-ft. portfolio of 22 open-air centers.
“Both clients awarded us the majority of their retail assets, and this was a strong indication of their confidence in our team,” Maloney said.
Third-party management has gained strength because of the emergence of a new kind of client, according to Maloney. “While institutional and equity investors remain on the sidelines, lenders and special servicers are active and taking back the properties,” he said. “This new set of clients requires the expert guidance of a third-party manager to lease and manage their assets.”
2. CB Richard Ellis
Second-ranked CBRE has found continued third-party success not in spite of the recession but more likely because of it. “In a market environment racked with distress, third-party firms are a better option for lenders and special services,” said Samuel C. Delisi, senior managing director for CBRE
The company landed its share of high-profile assignments within its 11.7 million sq. ft. of new contracts in 2009. The Block 37 project in the heart of Chicago’s downtown Loop was a particular jewel in the manager’s crown.
“The Block 37 assignment is significant because of the opportunity to help the project fulfill its vision of becoming a major retail destination in the heart of downtown Chicago,” Delisi said. Block 37 encompasses an entire city block and features an eclectic mix of shopping, dining and entertainment.
3. Fameco Management Services
Plymouth Meeting, Pa.-based Fameco, which ranked third, has enjoyed continued growth in the sector, increasing its assignments from approximately 6 million sq. ft. in 2008 to 8.3 million in 2009. “As there have been many corporate downsizings and layoffs within the real estate industry, Fameco has been able to provide a third-party platform that delivers ‘in-house’ type leasing and management services to landlords of all sizes,” said Diane Weinberg, executive VP for Fameco Real Estate.
Fameco landed a property management contract for Upland Square, in Pottstown, Pa., which opened phase one in July 2009 with 486,000 sq. ft. and has a phase two planned for 170,000 sq. ft.
4. Casto
New to the fastest-growing third-party manager list is Casto, which reported 2.2 million sq. ft. of new assignments in 2009. Casto is the perfect example of a company that put its strengths to work when the development pipeline dried up.
“The downturn has resulted in less development opportunities, and most real estate companies are turning to third-party management to strengthen their bottom lines,” said Pat Westerhouse, VP property management for Casto, “both by the management fees generated but also through redevelopment opportunities with existing centers.”
Among its 2009 assignments, Casto was awarded management duties for Harbour Pointe Village, a 123,648-sq.-ft. Ukrop’s-anchored community shopping center in Midlothian, Va.
5. Simon Property Group
Although Simon landed 1.9 million sq. ft. in new management contracts in 2009, the company is quick to point out that third-party management is not the core of its business. “New third-party management opportunities are not something we’re actively seeking,” said Les Morris, spokesperson for Simon. “However, in the case of Galleria Dallas (Texas) and Novi Town Center (Novi, Mich.), we were pleased to take on the property management functions of these high-quality assets at the request of the institutional owner.”