Roads to Growth

Editor’s Note: The 27th annual survey of Fastest-Growing Managers tallies new domestic and international third-party management and leasing contracts obtained during the 2015 calendar year and ranks the top performers. As always, the measuring stick is square footage.

This year’s fastest-growing third-party managers are taking many roads to growth, from acquisition to a multidisciplinary focus.

For top-ranked CBRE, acquiring entire companies (and thus their contracts) contributed to a nearly 60 million-sq.-ft. increase in new contracts. Second-ranked JLL continues its surging growth by expanding its personnel around the country. List mainstay Mid-America Real Estate Group cites training and a strong team for its consistent portfolio expansion, which earned it third place this year.

Fourth-place Woodmont Company works in multiple property types, from traditional malls to outlets, helping it to grow. Divaris Real Estate’s strong relationships with institutions are bringing it to new territories, and fifth place on this year’s list.

Regardless of their specific path, all the leaders stress the importance of relationships, both internal and external, for last year’s growth and the opportunities to come.

No. 1 CBRE

A global reach might be the first reason CBRE would top the 3P Managers list this year with 58.75 million sq. ft. of new property management and leasing contracts signed worldwide. But at least in 2015, the United States dominated the gains.

Some of that growth came from acquiring entire companies, including kicking off 2015 by acquiring Dallas-based United Commercial Realty and closing the year with purchasing Indianapolis-based Sitehawk Retail Real Estate. That trend likely will continue throughout the industry, said Scott Weaver, senior managing director of retail asset services for CBRE.

“We’ll continue to see more consolidation, not just on the ownership side but on the services side,” Weaver said.

And more business is likely to be found in coming years as international investors seek U.S. real estate, especially retail, but need local management, he added.

“With the amount of investment coming from Europe and Asia, I expect to see strong gains in 2016,” Weaver said. “A lot of people are now in leadership positions, and I see them pushing hard for new business.”

And that should stand CBRE well as the real estate cycle turns again.

“Most of the research tells us that 2017 is the beginning of another change in the cycle,” Weaver said. “But on the management side, we’re counter-cyclical. When we have a downturn, owners are saying that maybe we need a professional manager.”

No. 2 JLL

While other companies pulled back on staffing during the most recent downturn and ongoing slow recovery, JLL continued to add staff — and the result has been more projects under management. The company placed second this year, with 30.5 million sq. ft. of new contracts signed.

“We’ve increased our production by having local professionals — that has gotten us a lot more properties,” said Greg Maloney, CEO, Retail, Americas. “The difference for us is our local experts. We can deliver to clients what they need — information on who’s who, and who’s strong in a market. We know who’s going where, and where they’re trying to expand in each city.”

From just 30 projects and 150 people in 2002, JLL has grown its retail practice three-fold since 2011, increasing its brokerage staff alone from one broker to 145, Maloney said. In the last year, it acquired Wilson Retail; Shelter Bay Retail Group; Martin Potts & Associates, Inc.; and Big Red Rooster.

This year has already seen the company acquire national retail lease and debt restructuring firm Huntley, Mullaney, Spargo & Sullivan, Roseville, California, and most recently bring aboard senior VP Houman Mahboubi and his team to expand its group in Los Angeles.

“Our 2020 goal is to have 200-plus brokers in the top 15 markets around the country,” Maloney said. “It’s always about the team approach.”

No. 3 Mid-America Real Estate Group

Consistently ranked among the top-growing managers in Chain Store Age’s annual list, Mid-America Real Estate Group signed nearly 12.5 million sq. ft. in new contracts in 2015 to place third in this year’s list.

“We believe the key to consistency is that we have a great team of employees who are very experienced, and we have a great training program,” said Michelle Panovich, principal-management services. “Clients clearly are able to count on us for management and leasing, and we get a lot of referrals to other institutional owners. We do exactly what we tell the clients we’ll do.”

With offices in Chicago, Detroit and Milwaukee as well as its headquarters in Oakbrook Terrace, Illinois, Mid-America continues to focus on opportunities throughout the Midwest, even as the skill sets of its team continue to evolve. Right now, Mid-America is looking to bring aboard more real estate finance professionals as owners look to outsource accounting and related tasks. Marketing is changing, too, with Mid-America being called upon to do more in terms of consumer interactions, including social media (such as maintaining center Facebook pages), direct couponing and more.

“I love the makeup of our group and how we can work on all sides of the equation,” Panovich said. “We want to have the best information, make the most deals, and fill space whether the client is the bank, a private owner or a new owner.”

No. 4 The Woodmont Co.

For The Woodmont Co., which ranked fourth this year with 6.2 million sq. ft. of new contracts, multiple disciplines and experience in varied property types allow the company to expand.

“We’re a little unique in that we have a big toolbox. We operate outlets, enclosed malls and open-air centers,” said Woodmont president Fred Meno. “[Our staff] are all aware of the opportunities that exist in each other’s portfolios. We try to create an environment conducive to that.”

As outlet centers locate in full-priced retail locations, the company’s possibilities expand, he added. Individual investors, too, are looking for value-add properties, and they bring in Woodmont to perform the needed functions of asset management, development, brokerage, leasing and investment sales so they can sell at a profit. A real boost came during the downturn, when special servicers needed someone to manage foreclosed properties.

“Lenders are in the lending business, not management,” Meno noted. “They’re going to look to sell it. And then you hope the buyer will look at the job you’ve done and retain you. We’ve had a lot of luck with that.”

More of those opportunities should be available as the last tranches of 10-year CMBS debt issued prior to the recession mature.

“Where property values have come down, some borrowers are under water,” Meno observed. “Because CMBS is non-recourse debt, they’re just going to give the keys back. Lenders are getting more involved in workout scenarios.”

No. 5 Divaris Real Estate

Relationships not only have grown the portfolio of Divaris Real Estate, which placed fifth with 3.38 million sq. ft. of new contracts in 2015, but they have also extended its geographic focus.

“It’s all the result of