How Kimco breaks the mold when contracting maintenance services
Contracting maintenance for a shopping center has followed the same process for decades. Traditionally, most real estate companies contract for maintenance services on an as-needed basis. For recurring services—think landscaping—contracts generally last from one to four years. This service work is usually bid out and coordinated directly between the property manager and the vendor.
The above process is what I consider the “old way” of running field operations, and it’s time for a better way. Perhaps a company like Kimco, with hundreds of shopping centers in most core markets across the country and an operating budget of over $200 million, could negotiate a better deal if we leveraged our entire portfolio?
This is exactly what we set out to prove last year when Kimco launched a pilot program in the San Francisco Bay area and aggregated all property maintenance services under one contractor. We wanted to see whether or not we could drive better pricing for our services, improve the quality of work being done, free up time for our property managers to focus more on customer service activities, and reduce the amount of administrative work associated with managing and paying hundreds of contractors. The name of this program is fittingly called “Bundled Services.”
Keep in mind that the scope of services that we’re talking about ranges from general repairs to skilled trade work, such as electrical, plumbing, concrete, and others; in addition to performing general services, like landscaping and parking lot sweeping. This broad range of services requires a very unique contractor: a company with a national footprint; in-depth and in-house expertise; and that understands retail real estate.
Enter Divisions Maintenance Group. Started by Gary Mitchell 17 years ago as a one-person maintenance company, it has since grown into one of the largest providers of maintenance services for retailers and retail real estate companies in the United States. Divisions was the perfect company to help Kimco pilot the program. They had the experience with other retail real estate companies, and were highly motivated to work with us in developing a better way of running our properties.
A little more than a year later, I’m happy to report that Bundled Services has delivered for Kimco in every respect! Kimco and Divisions, together, have built a model that’s scalable, provides cost savings, and allows our property managers to be more efficient with their time. Additionally, our tenants are benefiting from a new national call center (855-KIM-NYSE) operated by Divisions Maintenance, which is manned by live operators 24/7/365. This is a huge leap forward in our effort to improve customer service, and ensure that the maintenance needs of our tenants are addressed promptly.
Every call that comes into the call center is logged by a trained operator and a work order is opened. That work order is then routed to the appropriate person to take action. Once the work has been finished, every tenant gets a follow-up survey to ensure their particular situation was resolved completely and to their satisfaction. The tenants are then asked to grade Kimco on a five-star rating scale.
Since the program’s inception in 2016, and after completing more than 200 tenant work orders, our average rating is five stars. Additionally, the feedback that we’re getting from the tenants is overwhelmingly positive. Tenants love the fact that we have live people answering the phones all day, every day, and that someone is regularly following up with them. It’s creating the sense of confidence and credibility with our tenants that we’re striving to achieve.
2017 and 2018 are going to be busy years for the expansion of Bundled Services at Kimco, as we’re now planning to expand the program to other regions. First, however, we have to complete the rollout of the Western region, which occurs in two phases- the first started April 1 and the second will start July 1. In 2018, we’ll begin the rollout into other regions.
Stay tuned for future updates on the program!