Experience and Flexibility Ensure Success in Retail Management – and a Long-Term Relationship
It’s a new day once again in retail.
Of all the commercial real estate sectors, retail has inarguably been through more challenges over the last decade with the advent of online shopping and the concurrent influx of people to cities -- leaving suburban shopping centers and malls to struggle for tenants – and then, of course, the pandemic. Many retailers, developers and owners struggled to “find a new way.” Heritage Partners CEO Terry Richardson saw opportunity – as he and his team have been both an Owner/Developer and Property Manager.
“We have developed, owned and managed our own properties, constantly strategizing for the best location, tenant mix, financial returns – and we constantly monitor trends,” said Terry. “We are always prepared to pivot because we understand retail has always been fickle, driven by ever-evolving tastes, lifestyles, technology, and product ingenuity.”
While Heritage has enjoyed developing and owning retail and medical office property, they are equally committed to expanding their third-party management and related services as it gives the team an opportunity to exercise their collective skills and experiences, having been on the development and management sides—and with turnarounds and reimagined centers under the belt.
Their partnership’s reinterpretation of the former City Place Mall to Ellsworth Place, a now-edgy 350,000-square-foot mall in Silver Spring Maryland, is a prime example of their vision for an overlooked opportunity. Responding to the densification and urbanization of the submarket, the team executed a significant overhaul to the entire property – both interior and exterior with an industrial chic vibe – which resulted in a sale to current owner, a partnership led by GBT Realty Corporation.
“Terry and the team literally turned this center on its head as they renovated the interior space, added new escalators, brought in more light, created an edgy new design, and therein attracted higher-quality tenants,” said Scott Porter, Managing Director of GBT. “Their expertise and the aesthetic employed continue to support our ability to attract and retain our retailers and restaurants, as well as increase our visitors to Ellsworth Place.”
“Working side-by-side with Terry and his team during our acquisition, we felt it was a win-win to maintain the level of diverse and deep expertise that Heritage Partners brings to the table,” said Danielle De Vita, Urban Edge Executive Vice President. “They are a nimble team that understands the challenges of development and construction, management, leasing, and the need to consistently monitor the day-to-day to insure a solid NOI. To us, he Is not a vendor, but a true partner.”
Exemplifying the strength of their network and relationships across retail, they successful secured and then constructed a 60,000-square-foot medical office and ambulatory care center on the Woodmore property which they sold to Children’s Hospital National Medical Center for a much-desired outpatient facility.
At their core, it’s the mix of their strengths in understanding how to work with local governments to secure permits and maintain tight cost constraints while ensuring quality in construction. From there, it is pre-empting the challenges that come with realizing the highest and best use for each property, identifying in real time both what the profile of the submarket is and where it is growing -- while interpolating the national trends of the consumer. These include online competition, the imperative to provide entertainment and dining, access to parking and public transportation, the target demographics and age group. And then relentlessly continuing to monitor these variables in order to maintain a vibrant, fresh and desirable destination.
“At the end of the day – and especially after the strong cultural and systemic changes that retail writ large faced over the last decade – being hands-on is imperative,” Terry acknowledged. “My team and I visit all our properties on a tight, rotating schedule in order to monitor what’s doing well or not, check in with the onsite managers, integrate solutions from what we see at other properties, and always seek ways to retain or improve the tenant mix in order to create the most value. To do this, you need to keep a constantly updated, global view.”
One of their current challenges currently is managing the Lakeforest Mall in Gaithersburg, Maryland as it is being repositioned by WRS, Inc. Real Estate Investments. Soon the owner will be sharing the plans for the next generation for the that site. In the meantime, Heritage was charged initially with maximizing NOI during the transitional period and then shifted to implementation of the strategic vacancy of the property.
In a word, like partners to the clients, they are also partners to their onsite team, enhancing the vision, ironing out challenges, and essentially seeing the landscape with fresh eyes each visit. This applies to strip centers, large malls, grocery-anchored centers and single-tenant properties. They simply think like owners, value employees, keep down costs like owners, and take on the challenges personally.
“Terry and I often meet to discuss how we can best keep the consumers’ interest in returning to a dynamic retail and dining environment,” said Chris Duffy, president and founding partner. “We enjoy a great perspective from being in the field and feel that is key to curating a property. You need to be onsite weekly, seasonally, and annually -- and constantly assess what you are learning. From there, you need to be able to pivot, to be agile and decisive. I think that’s our key to success.”
A new chapter of lessons to learn came by way of the pandemic and – in keeping with their core philosophy – they embraced the unprecedented challenges and reassured their clients that, based on the multiple cycles the team has experienced independently or collectively, there will be a solution.
“After decades of working on different properties and with different clients across the region, you understand that value creation is key and there can be more than one way to improve a property,” said Terry. “Our success is all about market research, being nimble, and knowing how to pivot.”
