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PMA Newsletter
Service Charges and Shopping Centre

MARKETING EFFICIENCY DRIVE
The campaign launched in April/May of 2011 is starting to show some real results in both levels of communication, transparency and cost savings.
Land Securities embraced the reality of the situation, had a few sample audits undertaken and rolled out the procedures across their portfolio under central control form The Strand. They have stripped £700,000 out of their Marketing Budgets in the year to March 2012 and have budgeted a further reduction of £600,000 in 2012/13 - a total of some £1.3m Capital & Regional, The Mall have introduced internal controls on costs and procurement with a largely centralised campaign style and common purchasing resulting in savings in the region of 10-15% whilst maintaining presence and impact.

CSC have an internal resource who has conducted similar audits to the ones suggested by myself, but internally and have generated savings and efficiencies but have tended to hold the budgets steady and reinvest the funds removed from poor performing marketing streams. Grosvenor has instructed all of their agents to review the standards of controls upon cost and efficiency / value for money and we are getting message, but not a lot else so far, that things are being improved on all fronts. I had a meeting with Cushman Wakefield to discuss their appointment on a trial basis of an independent firm to audit / develop the marketing strategies and cost control at their managed schemes. Mason Bailey are currently evaluating the schemes under C&W management and devising a strategy to move forward, and are hoping to provide something for me to review in January 2012.

Similar stories have been heard from Workman.

Jones Lang LaSalle took great effort to show me through an internal system set up by 2 ex retailers they have working in their marketing department. The audits they have undertaken have managed to identify upwards of 40% of funds not as efficiently spent as they could have been and managed to redress that at a lower cost to the occupiers. The short fall there is that not all JLL clients (only about 25%) let them audit the marketing at the schemes under management. I have written to JLL stating that this is a trick being missed and should be campaigned to bring about change.

Westfield talked me through their internal KPI led control systems and cost control management on central procurement, but have not delivered the simple proof that this was working in a practical sense - I continue to push for this.

BCSC have approached me with regard to the desire to develop an up to date Guide to Good Practice on Shopping Centre / Destination Marketing, and I have agreed to get involved and hope to encourage senior retail members of the PMA to join in too.

Kate Mason (of Mason Bailey) suggested that the retailers Marketing Management ought to be involved to ensure that any marketing strategies are in tune with those of the retailers to maximise benefit of the expense.

In addition Kate Mason advised that as a tutor at the College of Estate Management she has been asked to re-write the Marketing module in light of all the interest that the current initiative is stirring up.

This has been a slog, involving a lot of unpaid trailing up and down to London, but with the best part of £2m saved on Marketing Budgets thus far says it has been worthwhile, who knows what we could achieve if some of those canvassed at the beginning of the process actually pressured the landlords and agents as well!

CROWDED PLACES INITIATIVE - TERRORIST TARGET HARDENING
Many landlords are coming under increasing pressure to introduce physical amendments to the centres under their control to defend against vehicular borne explosive devices being driven into shopping centres.

Surveys and investigations by bodies such as MI5 etc have thrown up reports suggesting massive expenditure is required to fully defend against this perceived threat.

These have invariably been resisted by the landlords as the figures involved are staggering, but despite appeal and reason being seen, instigation being phased etc the bills are still huge, and likely to a large extent to hit the service charge bills as repairs, requirement of a responsible authority etc.

PruPIM and CSC at Cribbs Causeway have funded £1.2m on provision of alternative vehicular queuing systems during the current period but will result in much higher security costs to manage the additional provision and this will be collected through the Service Charge.

I have been trying with Andrew Thompson of Hammerson to come up with some sort of formula that would realistically determine whether these costs were in fact recoverable under the service charge, or not.
For example we have suggested that all schemes less than 10 years of age should have such defences already designed in, so if any are required it is a development / landlord cost. Over this age we looked at whether there were already defences in place but where these did not come up to current specification required - if this was the case we would look at these being classed as repair. If there were no defences in place and these were required then perhaps a contribution could be made from both Service Charge and Landlord - say 50/50. I would like some sort of indication what you would think about such an agreement to allow some sort of order to be seen regarding the finance of these works so please could you e-mail me on john.gray@servicechargesltd.com at your earliest convenience.

PMA QA MARK 2011
We continue to audit selected schemes under the auspices of the above, and 18 certificate shave been ordered for distribution before the end of the year.

British Land led the way from the Landlords perspective, having imposed a kpi on their respective agents to achieve a certain percentage mark in the audits. Jones Lang LaSalle similarly task their centre managers with achieving a given mark.

We need to develop this important tool for measuring performance and compliance with the RICS Code of Practice in the same way as the Code itself has evolved and become less cumbersome and I will work towards that for 2012.

RICS CODE OF PRACTICE FOR SERVICE CHARGES IN COMMERCIAL PROPERTY
I continue to represent the PMA on the working party drawing up the comments and potential improvements towards on-going improvement and an Issue 3 in the next few years so if anyone has any constructive commentary please contact me on John.gray@servicechargesltd.com and I will attempt to introduce your concerns to the group and work a solution agreeable to all.

OTHER MATTERS
There has been a lack of Shopping Centre Committee meetings, including the Landlord and Tenant forum during the last quarter for which myself and Andrew Martin apologise that our respective schedules have not allowed us time to organise.

The L&T will be organised for late February / early March 2012 and I will be announcing shortly a date and venue early in the New Year for the next Shopping Centre Committee meeting.

If anyone has specific agenda items for the next meeting that they wish to include on the agenda please advise to me as soon as on john.gray@servicechargesltd.com.

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