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Running The Show

Paul Harnett is breathing easier. The birth of his new baby, the Shops at Columbus Circle in Manhattan's opulent Time Warner Center, is finally over, along with the glittering grand-opening festivities and the frantic last-minute efforts to finish construction.

Now all Harnett has to worry about is the merchandise gridlock at the freight elevators and loading docks, which has forced him to add staff to direct traffic. And the utility bills and insurance and security and maintenance. And — oh, yes — making sure that the center stays fully leased and that every tenant pays the rent on time.

It's all in the job description of a shopping center manager, a line of work that requires the diverse knowledge of a Jeopardy contestant and the nerves of an air traffic controller. “Your interruptions are interrupted by interruptions,” says Peggy Weaver, general manager of Galleria Dallas mall for 15 years.

Dwight Yoshimura, a senior vice president of General Growth and general manager of its upscale Ala Moana center in downtown Honolulu, may have the textbook background. Before becoming a general manager 14 years ago, he worked as a retail manager for seven years, a pharmaceutical sales rep for two years and a union business agent for two more years. He also ran a trucking company and served as a state legislator. Retail prepared him well, he says, but politics honed his intuition and his people skills. “In politics, you have to figure out if people are sincere and what their motivations are,” he says.

With all the focus on design, tenanting strategies and dealmaking in retail real estate, the center manager's importance can sometimes be overlooked. Yet a manager has the power to elevate a property's performance or guarantee mediocrity.

“A good manager can make all the difference,” says Hugh Patinkin, chairman of Whitehall Jewelers, with 400 stores. “They can make the job of a retailer easy or difficult. How many times do you walk into a mall and find it a little dirty? The manager's responsible for that. More often we walk in and find it clean, and the people at the customer service desk are helpful and friendly. Once again, that's the manager.”

How do the best managers do it? “There's no hard and fast structure as to how to run a shopping center,” says John Schroder, Westfield's joint chief operating officer in the United States, who spent a dozen years as a manager of properties in Australia. “Certain things need to be done, but 80 percent of the time a general manager's day cannot be predicted.” It might bring a visit from a presidential candidate, a blizzard or a bomb threat, he notes — or just business as usual. “People who like that unpredictability absolutely thrive on it. People who like structure inevitably fail.”

It once was common for mall managers to come from retail, often department store management. Plenty still do. But nowadays it's just as common to find managers with backgrounds in leasing, finance and commercial property management. MBAs are increasingly common. That makes sense, because the modern manager's job includes a heavier dose of financial responsibility.

“The job is to make sure the asset performs well and to handle any issues that need to be dealt with,” says Harnett, who joined Related Cos. as vice president and the center's retail general manager a year ago and who managed properties for a dozen years before that, including Rouse Co.'s South Street Seaport in lower Manhattan. There are leasing, marketing, engineering and legal issues — so many of the latter, says Harnett, that “sometimes I feel like an attorney without the degree.”

Don't mistake that for a complaint. There's an esprit de corps among general managers, who seem to savor the variety of a job that's always different. The difficulty of the work is reflected in a healthy if not huge paycheck. According to a 2003 compensation survey by CEL & Associates of Los Angeles, the median base pay for managers of malls larger than 750,000 square feet was $86,100, with another 16 percent annual bonus on top of that.

The job itself is the attraction. “Most of my high school buddies are investment bankers, and I viewed that as a little one-dimensional, really more like a sales position,” says Harnett, who has an MBA from James Madison University in Virginia. “I wanted a job that let me take advantage of my education and use everything from finance to marketing to human resources to operations. You get to do that in a big way.”

“It's roughly equivalent to being the mayor of a city in terms of the broadness of the job responsibility and the number of constituents,” says J. Scott Mumphrey, president of Simon Management Group and himself a former manager of properties. “It was one of the most rewarding jobs I can ever remember having. I loved managing a shopping center. You are the guy, and the decisions you make have a lot of people counting on you.”

Doing it right involves managing both ways, meeting both the goals of the owner and the needs of tenants and shoppers. Contact with the home office is frequent. Says one manager, “Nothing can get your day off track as fast as requests for numbers for corporate.”

Thinking on your feet and having the ability to make hard choices are musts. “Every day something occurs that changes what your plan is for the property, and you have to be able to adjust on the fly,” says Mumphrey.

In recent years, a lot of those changes have involved vacancies. Losing a store gives managers what Mumphrey calls “the opportunity and the challenge” of finding a replacement, which can involve marketing, operations and working closely with corporate leasing staff.

The rise of specialty retailing also has added complexity. Randy Zimmerman, senior general manager at General Growth Properties' Rivertown Crossings Mall in Grand Rapids, Mich., recalls the days when RMUs were a rarity. Now they account for a substantial amount of revenue, and their operators must be nurtured and encouraged.

“You might have a handful of national tenants that are sophisticated and have a great setup, but what you tend to experience at the mall level is people who are just getting into the business,” says Zimmerman, a manager for nine years. “You want them to get off on the right foot, and that can take a lot of hand-holding.”

On top of the financial issues, there are inevitable surprises: Roof leaks, HVAC failures, sewer backups, power outages and floods — a cornucopia of minor disasters that can force an entire center to shut down for hours or even days and suck money from the budget.

One reflection of the job's complexity is the test administered each year by the ICSC as part of its Certified Shopping Center Manager designation. Forty-three percent of the questions deal with asset and property management, developing, leasing and retail; 15 percent with lease administration, accounting, finance and financial reporting; 10 percent with risk management, marketing, insurance and law, and 8 percent with human resources. The remaining 24 percent centers on “situation judgment.”

With center valuations as high as they are, there's a lot riding on the job. It's not surprising that managers are reluctant to talk publicly about their biggest adventures, many of which involve security matters. But, says one former manager: “I've seen things that would curl your hair.”

And frost your mustache. In the snowbelt, managers have to wrestle with issues involving snow — specifically where to put it. Plowing it into a corner of the parking lot may be fine in February but not in December, when every space means Christmas sales. It's the manager's call to either plow it or pay the big tab for hauling it away.

General Growth's Yoshimura doesn't have that problem. But he has issues others don't. Being on a tourism-dependent island creates economic forces beyond his control, Yoshimura notes, and a drop in visitors from the mainland or Asia can force him to rethink his marketing plan in order to make his budgeted NOI.

One problem shared among managers is how to walk the line between being a control freak and letting others do their jobs. “The trick is to make sure when you get into the micro that you don't get stuck in it,” he says.

That's important in a job that covers as much ground as Yoshimura's. He manages about 120 people, and in a typical day deals with food court, landscaping and security staffers before moving into specialty leasing and marketing issues. The conversion of a vacant JCPenney into restaurant space requires contact with builders. And he has to stay on top of the financials. “The first thing is to make sure the rent is collected,” he says.

For some, learning the financial end of the business is a challenge. Phillip St. Pierre, general manager of Westfield Shoppingtown Valley Fair in San Jose, Calif., came from ski-resort management. “It was a similar business in the sense that you were dealing with customers and recreation,” he says. “But when I got into the mall business, there was a lot more intensity and focus on the financial side. I had to refocus. I thought I was fairly good at that, but the demands in our business are that we really need managers to be savvy and entrepreneurial.”

And outgoing. JoAnne Brosi, senior general manager of the Glendale Galleria in California, counts community involvement among her highest priorities. “This job gives me the opportunity to interact with the community,” she says, including the city council and police and fire departments.

The greatest pressures may be on managers of smaller open-air centers, who don't have big staffs to lean on. “With an open-air strip manager, you're a janitor, a contractor, an accountant and a leasing agent; it crosses all of the disciplines in the real estate realm,” says Warren Strietzel, property management vice president or the Southeast region of New Plan Excel Realty Trust. “You deal with sophisticated tenants and the little mom and pops.”

Strietzel supervises seven managers who are responsible for 79 properties. That means each of the managers deals with 180 to 200 tenants. “You've got to be active all the time,” he says. “You're always juggling something.”

Does all of this frenetic movement lead to burnout? Surprisingly, no, say the managers interviewed. The turnover rate is by most accounts low. “People generally like this business, and as a result they may find different career paths in it, but they stay in it,” says Stephen Smith, senior general manager at the Mayfair center in Wauwatosa, Wis. “Maybe 90 percent of the people I've met in the industry are still in it. It's a fraternity.”

Still, the profession does have its stresses. A mixed-use property like Mayfair “is open about 20 hours a day. It's not unusual to get 8 p.m. or 10 p.m. phone calls,” Smith says.

Yoshimura knows the feeling. “Sometimes you just want it to stop,” he says. “That's when you take vacations.”

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