How Cushman & Wakefield is ramping up its retail services platform around the world.
By Randall Shearin
Since President & CEO Glenn Rufrano took the helm 2 years ago, Cushman & Wakefield has analyzed every part of the company, making significant changes in some areas. One of those areas is the company's presence in the retail sector. Cushman & Wakefield has made a number of significant hires in many markets across the globe, and has made a significant push forward in the tenant representation and investment sales areas of retail.
Shopping Center Business recently met with Rufrano at Cushman & Wakefield's New York City headquarters, and later with a team of the company's retail professionals from around the world at ICSC RECon, including the company's global head of retail, John Strachan, who is based in London.
Over the last few decades, Cushman & Wakefield made strong inroads in many large markets across the globe. First and foremost, Cushman & Wakefield thinks of every aspect of its business as global. The goal is to have a consistent service mix across regions — the United States will be as strong as the United Kingdom, India, France, Germany and other countries where it operates. And its platform is strong — Cushman & Wakefield has 14,000 employees around the globe in 243 offices in 60 countries, and the firm hired more than 1,900 employees in 2011 alone.
"We've taken the three regions of the world where Cushman & Wakefield has a presence in retail and we are devoting a lot of resources to increase the number of people in those regions," says Rufrano. "We are tying all those people together."
To do so, Cushman & Wakefield has created a global retail team, headed by John Strachan, based in London. The team, focused on C&W's tenant representation business, helps retailers facilitate their expansions around the globe. Over the last year, C&W has spent the last year putting international management in place.
Cushman's mission with its tenant representation business is to help retailers — both U.S. and international — expand in all markets. It is unifying its retail teams in the various markets around the world so that the execution is consistent. With local market knowledge — no matter where the retailer goes — it can be assured of the strong deals and locations, and rely on one provider to execute its strategy worldwide.
"We are building on our retail dominance in Europe and building market leading teams in every major global market," says Strachan. "If we don't have that, we can't possibly hope to deliver the services that we aspire to. Over that platform, we have put an international management structure in place, led by Glenn Rufrano, myself for retail overall, Matt Winn in the Americas and Sanjay Verma in Asia."
Cushman & Wakefield has also created an international retailer group (IRG). This group of top multi-national retail agents and brokers are charged with expanding the company's clients across the world and building teams in major markets.
"The global footprint is what we feel is the importance of our platform," says Rufrano. "We have local market knowledge in all those markets. When we talk about China, we have people from China running our business there. We have people from India running our business in India. We have professionals who understand the local real estate fundamentals, cultures and languages operating our business."
Building the retail teams in various markets has been at the top of Strachan's list in recent months. To C&W, a market leading team requires a group of brokers who have detailed market knowledge, contacts and connections, research, consultancy and expertise.
"We need those capabilities in place in every global city market if we are going to capitalize on what we see happening around the world," says Strachan.
Cushman & Wakefield recently negotiated a lease for Japanese retailer Uniqlo at 53rd Street and Fifth Avenue in Manhattan — the largest retail lease in Manhattan ever. Nearby, Cushman & Wakefield also negotiated a lease to American retailer Hollister on behalf of the landlord.
"We have worked with these tenants all over the globe," says Rufrano. "We know how to fit them into New York City, Sao Paulo or London."
With a number of retailers exploring the world's growth markets, Cushman & Wakefield has made sure it has a strong presence in India, China and Brazil.
"International retailers have no choice but to think about these growth markets," says Rufrano. "They may choose not to go there, but they need an analysis of whether or not to go there. We bring our local knowledge of London, Delhi, Paris, New York or other markets to the table. In pretty quick order, we can help the retailer understand what they have to consider when expanding into any market around the world."
Cushman & Wakefield has 150 research professionals around the world, about 25 percent of which are dedicated to retail. Its annual publication, Main Streets, covers data on the world's top retail places, providing analyses of the high streets around the world.
"Research has a large position in how we assist tenants with their decisions of where and when to go," says Rufrano. "Many markets outside the U.S. do not have the same level of transparency.
In the United States, Cushman & Wakefield has chosen to concentrate its retail business in urban markets. In 1998, Cushman & Wakefield acquired Healey & Baker to facilitate its expansion in Europe, in markets of all sizes. Healey & Baker specialized in retail throughout Europe. That acquisition has made Cushman & Wakefield one of the largest retail leasing agents in Europe.
The company has also made a big push into Asia, including the growing countries of China and India. Foreign retailers in India are currently operated through franchise partnerships, where Indian partners run stores franchised by their corporate parents. China opened its borders to corporate foreign stores years ago.
"China has encouraged more new market entries," says Strachan. "Cushman & Wakefield is strong in both countries. We have all the major markets covered in both India and China."
C&W expanded into Asia about 15 years ago, and has spent the last 2 years building its retail practice in urban markets there. The company is active in Tokyo, Singapore, Seoul, Delhi, Mumbai, and Jakarta. C&W is focusing on China within the region now; over the last 6 months, its largest increase in resources in retail has been there.
At ICSC RECon this year, Cushman & Wakefield launched the rollout of its global cities research platform, and brought the majority of its international retail leaders to the convention.
While tenant representation has been a focus globally, other areas of Cushman & Wakefield's retail practice are being refined and augmented around the globe. Those practices include landlord representation, retail investment sales, retail property management and valuation.
"We will emphasize the areas based on location," says Rufrano. "In the EMEA, we have a mature retail business practice, so we have a large tenant rep and agency business in urban and suburban markets. In the U.S., we specialized in tenant rep, so we are increasing our efforts in investment sales, management and our leasing agency."
Over the last 2 years, Cushman & Wakefield has spent significant efforts putting together a strong investment sales team focused on retail. In the United States, the company now has retail investment sales coverage on the East Coast, West Coast and Midwest. The company has specialized in selling open-air, strip shopping centers and second-tier malls. Cushman & Wakefield continues to expand this team throughout the country. The company is also expanding its property management business to retail. In the last year, the company has listed seven malls, containing about 10 million square feet that it is now managing.
"Outside of the public companies, there are not many retail management firms, but there are still a number of properties to be managed," says Rufrano.
In Asia, Cushman & Wakefield has had a retail investment sales team for a number of years. It continues to increase the number of people dedicated to that group as well.
Valuation is also a growing line of business for the company. Rufrano sees this as an area that C&W specializes in and that brings much value to the company's research. As someone who started his career at a valuation firm, Rufrano recognizes the value that this specialty brings to the firm. Because of Cushman's expertise in this area worldwide, it has a lot of cross-continent valuation assignments from international property owners.
When Rufrano joined Cushman & Wakefield, he spent the first 6 months traveling the globe to many of the company's offices, identifying the company's strengths and weaknesses. At the end of that period, his executive team wrote a long-term strategic plan for the business. The plan was presented to the board of directors, who quickly adopted it in late 2010. The strategic plan called for four major initiatives:
• Global alignment of management;
• Creating a consistent service mix across all C&W offices;
• Creation of a client prioritization process; and
• Operational efficiency.
Whereas Cushman has globalized its retail practice, it has gone through the same process in all its business lines: capital markets, valuation, leasing, corporate occupier and investor services, and consulting.
Cushman & Wakefield is still looking at its affiliate model to grow its business in smaller markets. For a number of years, the firm has aligned itself with top brokers in mid-size and smaller markets to fill in areas where it believes can be covered by a local alliance.
"As a company, we've decided our offices will be in major cities around the world," says Rufrano. "Instead of having owned offices in mid-size and small cities, we affiliate with high quality players in the market. Those relationships have worked very well with us, especially in retail. We can provide a lot of information to our affiliates on a regional and global basis. We bring them that benefit, while they bring us the benefit of local market knowledge."
The company has always had a focus on tenant representation, and is looking to augment that by increasing its other capabilities in certain markets. It has increased its capabilities in property management and landlord representation, as well as property services.
"Cushman & Wakefield specializes in tenant representation in urban markets," says Rufrano. "These are the brands expanding globally and are most sought after by property owners."
In 2011, Cushman & Wakefield hired 1,900 people around the globe, and it is still aggressively recruiting talent. The company generated $2 billion in revenue in 2011, its second highest volume ever.
"We have been aggressive in bringing good people to the company," says Rufrano. "We have very good, smart people in retail. We don't want to be the company that has the most people in retail all over the globe. Our goal is to provide value in the retail markets where it is hard to know and understand how to create the retail environment that will provide profits to owners and retailers."
For Rufrano, who ran Centro — at the time the nation's second largest open-air shopping center REIT — before coming to Cushman & Wakefield, the change has been good. Rufrano also spent 17 years with The O'Connor Group.
"For 27 years, retail has been a part of my career," he says. "I'm enjoying rethinking services for retail real estate."
— Randall Shearin