Retailers Are Outsourcing More and More Real Estate Functions

The retail industry has been under siege for the last decade. From the adoption of online shopping to the pandemic, retailers have had to continually adapt. Outsourcing real estate-related functions has become a common way for retailers to remain flexible and respond to new consumer demands.

“Before COVID-19, the outsourcing of real estate functions was already a growing trend for retailers, because it provides immediate scalability and agility in an industry known for pivoting quickly,” Michael Mason, executive managing director at Newmark and head of the company’s retail occupier services practice group, tells GlobeSt.com. “The pandemic underscored the need for many retailers to evaluate their organizational structures and portfolios and assess if they are positioned to handle the dramatic change required to meet new consumer behavior. For many retailers, this brought the realization that they need more resources, and outsourcing has been a common answer.”

Outsourcing doesn’t only increase resources, but helps retailers tap into expertise that they might not otherwise have on their team. “Having worked in-house and as third-party consultants for well over 100 retailers, Newmark’s retail occupier services group offers clients insights and efficiencies in real estate department integration that comes from our many years of experience,” says Mason. “Additionally, outsourced providers have access to information, technology and other resources that are expensive and challenging for retailers to aggregate on their own.”

The team at Newmark has extensive retail background, so they understand the business structure, not just the real estate, according to Mason, who says this is crucial for retailers outsourcing real estate duties. “Scalable expertise in real estate department infrastructure provides retailers the ability to pivot quickly and also allows them to focus more fully on their core business,” says Mason.

In addition to choosing an experienced team, Mason also recommends retailers first outline what services they need, which could include strategy, site selection, asset management or lease administration. “Many retailers that are thinking about outsourcing have already completed this step and are clear on what they want to improve,” he says. “Additionally, it is important for retailers to research companies that provide these outsourced functions, as their approaches vary in terms of experience and background, technology solutions, ability to customize and scalability.”

The new changes in consumer needs and retail growth over the last year will both fuel the outsourcing trend. Changes in consumer behavior is constant and accelerating, so retailers will need to position their teams and portfolios in adaptive ways,” says Mason. “The outreach we receive from retailers wanting to explore our services is stronger than ever, and I do not see that slowing down anytime soon.”