“We use our size and the number ofwe're in to leverage the best pricing for goods and services available.”
Innovation is not a new concept for Indianapolis-based SimonGroup Inc. The size and uniqueness of its portfolio confirm its position on the leading edge of the real estate business. In the past few years, the company has been developing yet another way to stay competitive.
Simon Business Network, a wholly owned subsidiary of Simon Property Group, is going beyond the more traditional real estate roles ofand re-leasing and focusing its efforts on tenant operations. It is developing programs that are designed to help retailers in Simon malls save money on products and services that are needed to operate their businesses in a timely and cost-efficient manner.
“Our mission is to accomplish a couple primary things,” says Scott Mumphrey, president of the company. “We use our size and the number of markets we're in to leverage the best pricing for goods and services available in the real estate industry, and we drive that value down the line.” The company offers its retailers the “same value proposition” that the shopping center receives.
Traditionally, tenants use their own respective service-oriented companies to perform regular maintenance and repair tasks. Knowing retailers have many of the same operational needs as shopping centers, Simon Business Network is banking on creating economies of scale for the retailer, a large customer base for the service providers and added value for Simon malls through on-site facility support.
“We are in the business of bringing service providers and clients together,” Mumphrey says, adding that one of his goals for the company is to become a sought-after landlord, which will result in greater revenue later on. “We want to create a stronger bond between the landlord and the tenant.”
To do this, Simon Business Network contracts with nationally proven facility maintenance companies that lease space in its shopping centers and serve as the on-site facility support center for that location. These service providers earn business not only from meeting the operational needs of the shopping center but also for providing goods and services to tenants. For example, if a retailer has an HVAC problem, it can call the service provider in that center, which will dispatch one of its trained technicians to fix the problem quickly and cost effectively.
It becomes a win-win situation for everyone involved. “The benefit is soup to nuts,” Mumphrey says. “We're able to drive pricing down, while maintenance is kept up.” In addition to receiving volume cost benefits, the tenants also have an easy way to get maintenance work done. Service providers also benefit because of their access to a large base of business in a central location.
Simon Business Network has expanded beyond its total facility maintenance program to encompass such services as retail space renovation, expansion and buildout. All of these offerings fall under the Total Facility Support (TFS) program. In addition, the company has created a similar security program, Total Security Connection (TSC), which offers tenants on-site security services via reputable security companies that also lease space in the center.
While servicing its retail tenants is top priority, Mumphrey says the company also is looking at approaching businesses on the periphery of its shopping centers that might benefit from similar economies of scale and ease of service. TFS and TSC providers also have the opportunity to sell their services to nearby businesses.
Beyond on-site services, Simon Business Network has developed a preferred vendor program, which consists of more than 80 prescreened and qualified vendors that provide anything fromsupplies and janitorial products to furniture and HVAC equipment. Again, the company uses its size and market aggregation to drive down prices for itself as well as tenants. Other programs include traffic counting, waste hauling, energy services, interactive telephone systems and music services.
One of the most recent programs the company is testing is a partnership situation is Up Front Plus Parking. For a minimum fee, customers can park their cars in a well-lit, fully attended area close to the mall's main entrance. Additional fee-based amenities that are being considered for customers who take advantage of Up Front Plus Parking include a car wash, window cleaning and perhaps even an oil change.
“It is new for a landlord to do this,” Mumphrey says, adding that Simon Business Network is taking advantage of its locations and combined service needs to drive market share and gain better opportunities for itself, its tenants and, in this case, its customers.
Allyson Sicard is an Atlanta-based writer.