The second level of savings involves long-term cost control. "Working to reduce the costs of doing business with municipalities is one solid savings strategy," Harding tells GlobeSt.com. "New Jersey’s local property tax is a good example, where commercial property assessments are based in part on income. Vacancies should produce a decrease in taxes, but few municipalities will grant a decrease without a formal appeal." Levin hires counsel and appraisers to review our clients’ situations on a case-by-case basis.

Utility costs also should be watched closely. Reducing heat and eliminating cooling at vacant stores can make a major difference. In the winter, keeping vacancies at a safe 50 degrees can reduce heating bills up to 30%.

"We also see great long-term savings through reduced energy costs; lighting is a key area," Harding relates. "While maintaining proper lighting levels makes shopping centers more attractive and safer, there are ways to save without compromise. Converting to the most energy-efficient bulbs and controlling the use of lighting during non-business nighttime hours present viable options."

However, the biggest potential savings for REO assets can come from what is not done. In tougher economic times, that means deferring capital projects, when appropriate. "For example, in a parking lot we may patch and fill cracks, rather than replace the lot," says Harding. "We may repair sections of a roof, rather than re-roofing. Of course, these large jobs will still have to be completed at a later date, so it is very important to be prudent in choosing which projects to postpone."

Rent collection also bridges short-term and long-term operational planning. "There is certainly a renewed emphasis on closely monitoring tenants that may be facing economic challenges," Harding notes. "It is imperative to communicate clearly that late rent payments are unacceptable. While every owner would much rather avoid the vacancy, when necessary they must be willing to default or evict tenants."

The drive toward savings should be coupled with an ongoing effort to increase income through leasing. Yet with vacancy rates at all types of retail venues still rising, the competition for new tenants is intense. "Owners must adjust their income expectations to be competitive, and leasing agents must reach out to a wider range of prospects through active canvassing," says Harding, who adds that an analysis of tenant categories present or missing at the property and throughout the market area is mandatory. And consideration must be given to non-retail uses at some properties.