Brookfield Prepares To Lay Off A Fifth Of Its Retail Property Employees
Brookfield Properties is planning to lay off about 20% of its retail division staff, who oversee the company's portfolio of more than 170 shopping centers. The retail division currently employs about 2,000 workers.
The decision to make the cuts would "align with the future scale of our portfolio,” Brookfield Properties' Retail Group CEO Jared Chupaila said in an email to employees published by CNBC, which broke the story. The reductions will include workers at the company's headquarters, as well as leasing agents in the field.
Chupaila didn't specify how much the "future scale" of the company's retail holdings would differ from its current holdings. Brookfield, which is part of Toronto-based investment giant Brookfield Asset Management, became a major mall owner in 2018 when it acquired Chicago-based GGP for $9.25B, a deal that included 125 of GGP's malls.
Brookfield Properties is adapting to the contraction of physical retail in other ways as well. During the company's most recent earnings call in early August, Chupaila said that Brookfield is testing tech that will help it reuse empty retail space.
"We have begun to test and trial ... solutions for last-mile delivery and other fulfillment solutions where we can use otherwise unused space, the back end of shopping centers, to help consolidate the packages and provide greater convenience to the couriers," he said. "All of which is expediting the delivery of the product and the volume of the product that could be delivered to the end customer."
Brookfield Properties is also pivoting in a big way to logistics space investment. Its portfolio in that sector is about 20M SF so far.
Just during September, the company has closed on the acquisition of a number of logistics properties, including the 1.2M SF Passport Logistics Center in Dallas, the 125K SF 10800-10810 NW 92nd Terrace in Medley, Florida, and the 80K SF 241 Clinton Road in West Caldwell, New Jersey.
Brookfield is hardly the first landlord to cut its retail-associated workforce or otherwise react by contracting in the face of the coronavirus pandemic. As Chupaila pointed out in his email, the company was waiting and assessing the impact of the pandemic on retail before making the move.
Earlier in the crisis, Simon Property Group furloughed about 30% of its workforce and laid off an unspecified number of others. CBL, another major owner of malls, is preparing to file for bankruptcy to shore up its position. Simon and Brookfield cut a deal recently to buy bankrupt retailer JCPenney Co. for $1.75B.
Retailers have closed stores and dismissed workers over the course of the pandemic so far, though some of them have returned to work as retail sales improved over the summer in response to pent-up consumer demand.