Welcome to Our World
by Lisa Krizek, NRTA President
We all read the business media posts reporting that retail industry sales will continue to rise annually through 2021. We’ve also heard that the driving force behind this successful performance is online sales and a shift in shopping habits.
If your career is in retail real estate management like mine is, this good financial news is an encouraging projection. Obviously, we want retail to do well. It is “our baby.” Yet while we welcome good news, we see a world of real estate portfolio management that is in a state of flux and troubling to many.
The story of retail has always been one of change. Malls moved commercial energy from Main Street into the suburbs. Big-box stores took their toll on mom-and-pop operations. And now we find ourselves on the ground floor of this next generation of retail. It is exciting; at the same time, it is challenging, puzzling and frustrating.
Welcome to my world. It is a stressful time to be sure. But also, as a member of the NRTA, it is a time of great opportunity as we help prepare our profession for, and transition into, this new face of retail.
Here is a contradiction commercial tenants are dealing with: healthy retail sales belie the shakedown going on within the over-saturated, traditional brick-and-mortar environment. There is a surplus of retail square footage in our American shopping model; something needs to give. In short, there is a revolution going on and we as commercial lease administrators are right in the middle of it!
As the landscape for malls and shopping centers change, commercial tenants of all types are being increasingly challenged to craft lease language and strategies that protect their investments from occupancy cost increases and misallocated charges from landlords. With the guidance of professional resources such as the NRTA, lease administrators must continue to incorporate short- and long-term strategies to challenge restrictive lease terms that may hinder the company’s ability to adjust to market forces during this transition period.
A hot topic at NRTA’s 2017 Expanding Knowledge Conference in New Orleans dealt with the obligation of today’s lease administrator in this challenging time. As front-line guardians of the industry’s real estate investment, we must adjust best practices in order to secure and protect the stockholders’ property investment. We do that by reminding ourselves of a critical and fundamental lesson taught at every one of our NRTA conferences: lease language should always be clear and concise.
In the case of controlling expenses that are pooled and allocated with mixed-use space, the language of a lease needs to be particularly detailed. The savvy lease administrator protects the company from overcharges from biased cost allocations. The informed lease administrator influences the management person responsible for negotiating the lease as to how lease clauses protect a company; especially during this transition period.
Effective lease management is the most essential tool available to control tenant obligations and effectively exercise early termination, assignment sublease, kick out rights, tenant expansion and reduction, use clauses and co-tenancy violations.
My point is, as lease administrators, this isn’t a time to panic; it’s a time to re-evaluate. Your training and experience is a valuable commodity. You are poised to make important contributions to an organization that understands the inherent return on investment gained from a reliable lease administration resource.