Third-party property managers are aware from the day they’re hired that the assignment could end abruptly upon the sale of a property or portfolio. It’s a part of doing business in that world, and in 2025, retail property managers may be competing to keep or pick up a lot of business.

As CBRE noted in its U.S. Real Estate Market Outlook 2025, retail real estate’s strong fundamentals should fuel robust transaction activity and hasten the return of institutional capital to the sector. This bullish shift in investment sentiment will motivate owners to sell, and partnership disputes, investors’ defined hold periods and their execution strategies also could prompt them to sell.

Thus, in addition to responsibilities like collecting rent, accounting, generating traffic and cleaning and maintaining the properties, third-party managers may even play a role in preparing assets for a transition to a new owner while pitching themselves to keep the gig. In that scenario, “our job is to maximize the value at those projects that happen to be put up for sale,” said Pat McGinley, president of management services at Vestar, which manages 30 million square feet of shopping centers: 12 million square feet that it owns and 18 million square feet as a third party. “But we also want to make sure that anyone who buys that asset will see the level of management sophistication that we’ve put into the project.”

Once a property trades hands, the new owner might stick with the asset’s existing third-party manager, might bring on different third-party manager or might bring property management in-house. Summit Properties USA, for example, went on a $700 million acquisition spree focused on Midwest and East Coast shopping centers in early December and then announced it would manage the roughly 13 million square feet internally. It cited its desire to be hands-on as it invests hundreds of millions of dollars to redevelop and reposition the assets. Principal Zohar Levy said: “The recent establishment of our internal management platform will accelerate development and enhancement initiatives, enabling optimal management of the centers and benefiting both the tenants and the company's efficiency.”

Another reason an owner might bring management in house is if the asset is ready for autopilot, meaning it’s at full occupancy, there are no rent defaults and there are plenty of foot traffic and sales, said Gavin Farman, who leads Avison Young U.S. retail services, which oversees 27 million square feet across the country. By optimizing a property or portfolio’s performance, “you can work yourself out of a job,” he said. “If your property doesn’t have a lot of hair on it — if there are no issues that you need that retail expertise for — it’s easy for someone to say: ‘I’m just going to hire somebody [internally] to run it for me.’”

Making an Impression

Third-party managers don’t always have to give up the job once a sale or an upgrade is complete. General real estate investors and asset managers that have office, industrial and other assets in their portfolio tend to drive third-party business, Farnam said. “We try to provide the best possible service, and if there’s a new ownership group coming in, we try to help them in every possible way we can with their evaluation of the property to the extent the current owner will let us. We’ve seen a lot of this and can use it to our competitive advantage.”

NewMark Merrill Cos. — which owns and manages more than 12 million square feet in the West, Colorado and Illinois — retains its third-party management role through about 80% of property trades, said president and CEO Sandy Sigal. Even when it doesn’t, contact with a new buyer throughout the deal pays its own dividends. “We typically don’t get a surprising phone call from an owner one day telling us that the property has been sold,” Sigal said. “The more likely outcome is that [the previous owner has] told us they’re going to sell the asset and the [new owner] may have even talked to us about buying it. It’s almost never a bad thing for us because often we form new relationships with investors with whom we do all sorts of business.”

Heated Competition

The property management landscape is getting more competitive. Small management companies — for which it’s harder to automate lease administration, collect and analyze mobile data, and implement other scaled tech solutions — largely have dropped out of the game and furthered consolidation, Sigal said. That culling is taking place alongside a decade-long dearth of new shopping center construction and the coincidental repurposing of obsolete retail assets. That, too, is limiting new management and leasing opportunities, said Paul Chase, managing director of agency leasing and development for JLL retail property management.

JLL’s scale and its diversity of services give it an edge when it comes to new leads. Its third-party management arm for example, can get introductions to the buyer sin JLL Capital Markets’ latest retail sales, he explained. “When there’s a lot of movement in the market, our capital markets team is usually at the table and we have an opportunity to win that business,” he said. “It’s normal to have some turnover, but our retention of property management business is very strong and we have all these relationships where we’re getting leads all the time.”

Vestar, meanwhile, just exited Texas after an asset it managed was sold. But McGinley expects to reenter the state in the near future. The company is familiar with Texas markets and owners, and it has existing clients looking to expand in the state. Over the past decade, Vestar has also added institutional investor-owned properties to its management portfolio. Its third-party management business has grown by about 50% over that time, he said. “Once you are qualified for an institutional level of intense service, it opens the doors to other institutional investors,” he said. “The strategy has been a real boon for us and is a huge part of our business plan going forward.”

Property managers also are talking with ownership groups that are looking to rotate capital into retail assets or expand their retail exposure after standing pat for the past few years. That’s another reason to believe that investors are becoming more bullish on retail real estate this year, Farnam said. “For us, that’s good and bad,” he stated. “We’re probably going to see some sales activity at properties that we lease and manage right now. Hopefully we’ll be able to hang on to those properties, but sales will also open up new opportunities.”