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PROPERTY MANAGEMENT: REITH LAMBERT here are plenty of property management companies around that will try to cover all aspects related to a property. Reith Lambert is possibly a little different because it tends to offer a more specialised service, concentrating on what it knows best and aiming high. The company also tries to operate as a true democracy, with the five owners of the business sharing the responsibilities, which means providing the service as well as being constantly on the look out for new business. “You’ve got to keep an eye on the future as well as try and keep an eye on what you’re doing just now, which can be a tricky balance,” comments Ian Irvine, who handles property and shopping centre management.
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RETAIL PROPERTY Concentrating on what it knows best means that Reith Lambert is primarily focused on the retail aspect of commercial property. Although it has some activity in Ireland and the north of England, it generally concentrates on Scotland simply because it knows the markets and isn't contending with the national practices. Ian says: “Scotland’s what we know and it’s about being able to reassure clients that the advice we’ve given them is the right advice. By the time we get down to Cornwall and the likes, I don’t think I could look a client in the eye and say I’m giving them the right advice.” In effect, Reith Lambert is about being honest, recognising that it's a relatively small business with a team of nineteen in Glasgow and playing to its
strengths rather than trying to spread itself too thinly. The outcome is that it focuses on acquiring properties for clients and managing retail properties, although not necessarily for the same clients. On the acquisition side, it's currently active for four large clients — TK Maxx, Home Bargains, Warren James and Whole Foods. Unusually in today’s economic climate, they’re companies that are currently expanding, which puts Reith Lambert in a very healthy position. Home Bargains, for example, started with a requirement for stores in the Central Belt of Scotland, which is now nationwide and also includes Northern Ireland. In Scotland, 15-20 have been found so far. The situation is helped by the fact that the client is flexible, prepared to rent sites or buy outright, with
COMMERCIAL PROPERTY ADVISERS Reith Lambert pride themselves in providing unrivaled advice with personal service and quality market information
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PROPERTY MANAGEMENT: REITH LAMBERT the possibility of bringing in other retailers alongside. Given that landlords are finding it difficult to let space at the moment, with a lot of temporary tenants on short-term deals, the prospect of a company wanting 10-20,000 square feet and prepared to pay a decent rent is an attractive proposition. COST FOCUS The downside is that a retailer with a business model at the value end of the retail market is acutely focused on cost and isn't prepared to pay a high service charge in addition to a decent rent. “They won’t pay more than £1.50 a square foot,” explains Ian. “If landlords are taking them on board, they have to find a way within the package of dealing with the residual sum after the retailer has paid the
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£1.50. But in the market that they’re in just now, a lot of landlords are finding ways of doing that, which means a landlord paying the service charge shortfall themselves. There are other mechanisms for doing it but that’s typically what’s happening. So they’re very much a retailer of the moment given that landlords are finding it so difficult to let space.” The process is that the retailer sets out specific parameters, including desired population centres, site viability and cost base, and Reith Lambert will identify possible sites. These are then run through the client's appraisal system and, if they match up initially, the best deal is struck with the landlord. Home Bargains is currently rather under-represented in Scotland, so there are plenty of towns it wants to be in. Nevertheless, it will turn down sites
on the grounds of the demographics not being right or due to the configuration of the unit. As Ian points out, the process is likely to get more difficult as it progresses: “The difficulty will be as we get closer to the number of required stores and we begin to have to take into consideration things like having too many units in a certain town. At the minute, we’re still in the position where we’re trying to get them into towns.” STORE MANAGEMENT Having identified new stores for acquisition by clients, the ideal situation is that Reith Lambert will then take over the management of those stores. However, as Ian recounts, it doesn’t necessarily work that way: “These retailers do everything themselves.
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They deal with rent payment, service charges and landlords. They do it all directly through an inhouse department. For these retailers, all we are doing is finding them their accommodation and seeing that deal through to completion, basically to their unit opening. At that point, we step out of the picture.” The property management side of things is for a different set of clients altogether and has grown from one shopping centre when the company started in 1996 to twelve now. Ian reckons this isn't a bad hit rate for a small, Glasgow-based practice. The two biggest schemes are the 1.5 million square feet East Kilbride shopping centre and Ocean Terminal shopping centre in Edinburgh for Forth Ports. The more common emphasis, as Ian explains, is on smaller schemes: “We tend to work for high calibre clients but not necessarily always on high calibre property. But higher calibre clients where we can really maximise our promise to our clients that, if they give us the work, they get the director of the business doing it. By working with a higher calibre client, there tends to be a better margin in the instruction so we’re able to fulfil that promise. You don’t see us chasing rating work, agency and poorer secondary locations, because there’s just no margin in that structure for us.” Some of the property managed is parades of shops on high streets but the preference is for shopping centres where the company can put in a management team that can look after security, cleaning, maintenance and all the day-to-day activities. All the specialist workers at each centre are provided through a sister company, Reith Lambert Facilities
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Management LLP, with upwards of 200 people employed on sites. STRATEGIC MATTERS There's co-ordination with the management team at least on a weekly basis to address any issues. As Ian points out, the arrangement means the company can focus on strategic matters: “We know where the clients want to go with the asset and we’re trying to direct everything that happens locally towards those goals — make sure the maintenance is right, make sure the security team and the cleaning team project the values the client’s looking for.
“It’s not always the case that high standards are necessarily where people want to pitch it. For instance, with the big drive on bargain shopping just now, and Home Bargains is a good example, you want an environment that’s consistent with those brands. So you don’t need a Westfield type retail environment for a lot of shopping centres and it’s trying to get that balance absolutely right.” The property management clients are typically the owners of the shopping centres and the work is generally with the landlords rather than the tenants. CONTINUED ON PAGE 814
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PROPERTY MANAGEMENT: REITH LAMBERT This emphasis rather shapes the make-up of the company's team, with the number of accountants exceeding the surveyors. “People who are landlords or who have property as an investment are in it for the cash flow and the capital growth,” explains Ian. “So right from the off, we set up on the basis of the accounts team being really well resourced. We find if we get the clients' money right, it gets us off to a good start with them. It’s not always what we’re seeing from some of our competitors but the account function is right at the forefront of considerations for us.”
ing projects but instead sub-contracts the work out. “We think it’s a strength for our business in that we use a variety of consultants on all sectors because we don’t have them in house,” remarks Ian. “We actually think our clients respond to that better. Rather than say we've got someone who’s a general building surveyor and oversees a variety of topics, we'll say the job needs specialist advice. We'll say that we know a company that does a good job and we bring them in as we see fit or as the client sees fit. We actually think it works in our favour that we don’t have these services in our organisation.“
potential conflicts of interest: “I can be sitting in a position where I’m managing a shopping centre for a client and a colleague is trying to negotiate for space for one of those occupiers to go into the shopping centre. “We’ve got to have some fairly robust Chinese walls at times like that because the two things are not always complementary in terms of the commercial pressures on the deal. So we have to be pretty up-front with clients, that a colleague is negotiating on behalf of his clients and I’m advising my clients as to the best course of action for the shopping centre.”
MEETING CLIENTS NEEDS In effect, the extent of the service provided can be variable and depends on the needs of the client. In some cases, Reith Lambert will deliver the full range of property management services and at other times it's more specific, with the client often having specialised teams to meet different needs. Ian says: “We tailor the service for each client as they want it. We very much approach it not on the basis of how some of the national practices do, where they set out the service that you get from the company. We ask the client at the very beginning what they want from us and we try to deliver that. What people want can sometimes be quite different and we try and tailor our service accordingly.” The make-up of the team means that Reith Lambert doesn't have technical people such as building surveyors and civil engineers. As a result, it doesn't get directly involved in refurbishments and build-
MAXIMUM REVENUE The overall emphasis is on getting the best revenue from the properties, which means focusing on the outgoings as well as minimising void rates and service charges. In today’s letting market, where shopping centres have a significant number of temporary tenants and retailers are generally under pressure, there is a need to constantly take the pulse of tenants to get early warning of difficulties. A common practice these days is for tenants to be required to provide turnover figures to monitor how well their site is trading. Although the provided figures can't always be confirmed as accurate, it's a useful control mechanism when combined with an ongoing dialogue with retailers to assess the current state. The difficulties in getting long-term lettings have given a boost to Reith Lambert's site acquisition activities. At the same time, as Ian points out, it can result in
RIGHT ADVICE Reith Lambert's ethos is to provide a high level, high quality service that exactly meets its clients' needs. To do that, as Ian explains, it has to be completely open with them at all times: “We try to give the client the right advice all the time and sometimes it’s to our detriment. We may actually turn away a fee because we are not the right people for a job. It’s something we pride ourselves on. “When our clients come to us for our advice, we genuinely try and give them the right advice as opposed to simply trying to get a fee out of it. It’s all about long term relationships because, when you’re the size we are, long term relationships are hugely important. If you take a quick fee but give the client the wrong advice, he will remember that.”
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