Shopping centers operating under horizontal property ownership (condominiums) are legally required to hold owners’ meetings at the beginning of each year to evaluate the management’s performance, approve financial statements, and determine increases in administration fees, among other things.
This year, these meetings face one of their most crucial decisions: approving the annual budget. This is not merely an administrative formality or a simple cost-containment exercise; it is, in essence, an act of corporate governance that defines the competitiveness, sustainability, and asset appreciation in the medium and long term.
In the current context, this responsibility takes on an even greater dimension. The sustained and significant increase in the minimum wage has directly impacted the cost structure of shopping centers, where payroll and operational services represent a significant portion of the annual budget. Attempting to approve budgets disconnected from this economic reality does not reduce costs; it simply shifts the risk to service quality, security, maintenance, and ultimately, the asset’s value.
The False Dilemma of Saving
Often, a misguided dilemma is raised at meetings: reducing the budget to alleviate the administration fee. This approach, while understandable from a short-term perspective, usually generates structural consequences. Indiscriminate spending cuts end up affecting the most sensitive aspects of operations: personnel, preventative maintenance, marketing, and brand positioning.
A shopping center doesn’t compete solely on price; it competes on experience, trust, security, foot traffic, and reputation. All of these elements depend on consistent and ongoing investment.
The Brand: An Asset Built, Not Improvised
The shopping center’s brand is one of the most valuable assets of the co-ownership. It attracts visitors, supports retailers, sustains lease payments, and protects occupancy during adverse economic cycles. However, the brand doesn’t sustain itself, nor does it survive budget cuts.
Investing in marketing, communications, activations, customer loyalty programs, and brand positioning is not a luxury or a dispensable expense: it is a strategic investment. A shopping center that stops communicating, innovating, and engaging with its community loses relevance, traffic, and, progressively, value.
The second major asset is the building itself. Its preservation cannot depend on reactive criteria or budgets stretched to the limit. Preventive maintenance, infrastructure upgrades, physical and technological security, and regulatory compliance are factors that directly impact user perception, daily operations, and property value.
Postponing investments in the building is usually more costly than making them in a timely manner. Deterioration is not stopped by voting; it simply accelerates when adequate resources are not allocated.
Assembly members: vote with vision, not fear.
Being an assembly member means understanding that the budget must respond to the market, the real inflation of costs, and the demands of the competitive environment. Voting responsibly does not mean approving unnecessary expenses, but rather ensuring that the co-ownership has sufficient resources to operate effectively, protect its assets, and maintain its value.
An underfunded budget is not synonymous with efficiency; it is often the prelude to decline. True efficiency lies in allocating resources with technical expertise, strategic vision, and an awareness of the value of the assets.
In times of profound economic change, shopping centers need informed, responsible, and responsible board members who understand that every budget vote is, ultimately, a decision about the future of the asset they share.
Fuente: Miguel Ángel Pardo para Mall & Retail.
https://www.mallyretail.com/actualidad/mall-y-retail-boletin-606-noticia-9