Redev CEO discusses the formula for their success.
Filed in: Investment
30. July 2019
Building Success On A Winning Formula
CEO Richard Crenian Of ReDev Properties Discusses How A Succesful Commercial Retail Estate Business Was Built.
"The lessons I've learned can be boiled down to one simple fact when dealing with multi-billion fund partners, contractors and tenants, your chance of success is much higher if you've done your homework."
Everyone at ReDev Properties knows trust from clients can only be assured when they have confidence in our knowledge. We have the same approach whether it's with a would-be partner who may be willing to commit millions of dollars to a project or to a new tenant whose livelihood depends on finding the right business location.
All parties we do business with deserve the most comprehensive data available so they can make the most informed decision.
Our accomplishments over the past 16 years, involving more than 30 commercial properties, have been based on a foundation of nothing is left to chance. If you don't do your homework, you are asking for problems, it's all about building success on a winning formula.
The changing face of malls
Any person who regularly visits large indoor malls will have seen the changes imposed by the onslaught from online shopping. We understood very early that parts of the commercial real estate sector were facing some serious challenges. Therefore, we set our sights on a category that offered great opportunities for creative development.
Our focus is on mature neighbourhood outdoor shopping centre. While they have undergone their own transformation, in relative terms, they have been immune to many of the downsides created by online shopping. What we strive to develop is a mix of tenants that reflect their individual neighbourhood – demographics, spending habits etc. Data matters.
A few years ago it would have been normal to have had two, sometimes three banks, in close proximity at an outdoor shopping centre – online banking has changed that. So what do we look for when developing a successful project?
Developing neighbourhood malls.
We know every project needs to be approached in a singular way because what works in one area is unlikely to produce similar results in another. We have to dig deep into the demographics to understand a neighbourhood. We need to separate what people want and what they need. A neighbourhood shopping centre should aim to cater for essentials because this will guarantee a regular stream of customers.
Most projects can be built-out to other tenants after identifying the most appropriate anchor tenant. This is the outlet that best reflects the neighbourhood and its needs. This could be a family grocery store, a retail drug store or a major-type of universal tenancy.
The new type of neighbourhood centre is likely to be a mix of retail outlets and services but a number of factors have to be considered including the amount of space you have for the development. We at ReDev Properties are driving more towards services like restaurants and physicians. Doctors or dentists have a lot of traffic so the site only works if there is enough suitable parking. Medical buildings require a number of unique features including larger doors and elevators. When we add high volume tenants in small units like nail and beauty salons you have to consider the impact they will have on customer parking. Or if there is a school nearby who are the tenants that can benefit most?
At ReDev Properties we are always looking for projects in high-visibility areas. If people have to drive past your mall on a regular basis they will know what retail outlets are there. Our catchment area is customers who are within a 10-15 minute driving radius so accessibility and convenience are very important.
Know what to do and do it well.
With some properties, extensive redevelopment is necessary while for others it may be cosmetic upgrades and securing the right mix of tenants. And while online shopping may not affect many of these businesses, it is vitally important to provide high speed WiFi and help tenants understand the importance of reaching out to potential customers through social media.
Because of our established relationships with brokers, particularly in Western Canada, we are able to secure properties before they have been listed. If brokers know we can close a deal very quickly it makes sense to come to us (so-called off-market purchases). Our reputation also means we are a known quantity when it comes to Pension Fund Managers who are looking for smart investments with good returns.
While our focus is on mature neighbourhoods, the tremendous diversity across Canada means many of these subdivisions will have gone through several cultural and economic phases. Before getting involved, we assess where the neighbourhood is heading and see if we are able to develop a desirable project.
As we move forward, we are seeing impressive economic indicators in Alberta, a province where we have a strong track record. Across Canada, many subdivisions are getting close to a tipping point where new opportunities can be found an our expertise can create great value for our partners and generate cash flow. While every project is different, and requires an individual understanding of its potential, all our decisions remain underpinned by the philosophy behind the founding of the company in 2001 – be better prepared than anyone else.
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