When you efficiently run a shopping center, expenses and operating costs need to be under control. In this real estate market there are a number of pressures to balance as part of that property management process, and spending will always be a major concern. It is very difficult to lease vacant premises to new tenants if the outlays are excessive for a property of this type. The owner will also have a lower net income if that is the case.
Most importantly, the shopping center must have a financial performance that is at least equal to or better than any other competing property in the area of similar type and size. The standards should include key financial criteria such as:
- Repair and maintenance costs
- insurance
- Essential maintenance services
- income generation
- vacancy factor
- revenue growth
- MAT Sales (Average Average Profit)
- Sales by type of retailer
- Sales by store size
- Customer visits to the property.
- Municipal fees and other legal costs
These figures must be managed and understood within the financial performance plan of the Shopping Center. To achieve this, it is not uncommon for Shopping Centers to share some information and averages as part of market research on financial performance. If you can’t compare your property to something else, then you won’t know where you’re going and how it’s performing.
It should be said that the history of your property in recent years will always be useful as a reference point in the performance plan of your property. As part of that historical analysis, you can divide expenses between controllable and non-controllable items, and then track increases by code or revenue type.
Uncontrollable items are those that apply to the property and must be paid. These are usually municipal fees, water fees, and land taxes. The escalations in these areas occur due to the uncontrollable qualification policies and processes of the municipalities. They will typically base their rates and charges on the value of the property. It is not uncommon for town halls to assess local properties every two years for this purpose. Retail center managers know the high value of monitoring and disputing property value when it arrives. You can save huge operating costs and paying fees and taxes by getting a realistic property value.
Therefore, the cooperation between the directors of the center is common and quite productive since the work and the industry are very special. Ordinary and unskilled property managers have little chance to improve and specialize without gaining experience from other established retail center managers in this part of the real estate industry.