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edition 10 (224)
October 2017
Property management

Money in the dustbin

How shopping centres can profit from tenants’ refuse

Tomasz Cudowski

Money in the dustbin
Magda Derwisz has worked in the operational management of shopping centres for twenty years

Owners and tenants are becoming more educated, the right regulations are in place, and technological progress has also been taking place in this field – but in spite of all this the waste management in shopping centres continues to give their managers sleepless nights. What are the most difficult issues and how best can they be dealt with?

The problem is a seemingly simple one. “Issues related to the segregation and recycling of rubbish in shopping centres are normally stipulated in the regulations of the centre, usually in the form of an annexe to each lease contract,” explains Magda Derwisz, who has worked in the operational management of shopping centres for twenty years. “It is the owner who decides on the approach taken for the waste management in their centre – and the tenant has to comply with this. However, individual arrangements are sometimes possible,” she adds

Waste collection usually comes in two forms in shopping centres: the mixed rubbish is removed by a municipal company, while the waste that can be recycled (mostly waste paper) is handled by the firm that offers the best rates for its collection. Waste paper can be a source of revenue for the centre or at least a tool for reducing its operation costs. As a result, the most common practice is outlined in the regulations, which state that all the recyclable packaging that enters the shopping centre, but that is not taken away by customers, is the property of the centre.

Changing habits

Managers are generally in agreement: the greatest challenge for the shopping centre owner is how to enforce tenants to play their part in the waste segregation. “Unfortunately, there is no standard method for doing this,” admits Magda Derwisz. “As in the case of the waste management in our homes, everything depends on particular people’s attitudes. So you need to educate them properly and subsequently monitor the entire process,” she believes.

It is difficult to train large numbers of tenants to get into the habit of crushing their rubbish. This activity might seem to be a rather banal one, but, if done on the right scale, it can have a significant impact on the volume of the waste produced and as a consequence on the costs of its collection. Organic waste is a specific type of rubbish, mostly produced by the food court and grocery stores, and its recycling is mostly organised by the tenants themselves – the regulations of the centre usually obliges them to sign a separate contract for its collection and to have a separate, air-conditioned room for the temporary storage of the waste.

Difficult settlements

If the structure of the centre allows for it, the best approach for the manager is to oblige tenants to sign individual contracts related to the waste collection. “Unfortunately, this is usually possible only for a handful of retail parks, when individual tenants have their own back facilities in the delivery areas for the containers they have hired,” admits Bogdan Ciesielski, the technical manager of Outlet Białystok and Galeria Sieradzka. “NGI, which is the owner of a dozen or so retail centres in Poland, has such a fortunate layout only at Galeria Łęczyńska in Łęczna – where each tenant organises the collection of waste themselves,” he adds.

One question arises: what about the waste thrown away by customers or generated during the cleaning? Shopping centres can also deal with this in a similar way, by signing agreements with tenants for any waste removed from public areas to also be deposited in their containers. In their lease contracts, tenants usually give a figure for the amount of rubbish they will be generating and they are then charged for its disposal based on this. Such agreements can also based on a per sqm rate, by making the fee proportional to the area leased. “However, this is unfair in the majority of cases – a 100 sqm footwear store generates completely different kinds of rubbish on a different scale than a 100 sqm restaurant,” argues Bogdan Ciesielski.

Because of this the source of the waste has to be determined for the fees to be fair – and so a good administrator has to become something of a keen investigator. “When we order the collection of ten containers each month according to the tenants’ declarations and it turns out that the rubbish does not even fit into twenty containers, we have to find out which tenant has underestimated their capacity,” explains Bogdan Ciesielski. “And, although this might be surprising, it is not difficult to establish who threw away more rubbish than they were entitled to – usually because cartons or boxes have characteristic features, or they are marked or have stickers, although we have had cases of the stickers being removed… Tenants also tend to keep an eye on each other, because nobody wants to pay someone else’s bills. Because of this it is extremely rare for managers to turn this into a matter of collective responsibility by increasing the overall fees for the waste collection. Nonetheless, they do admit to sometimes being tempted to do so. So any underestimation of the amount of waste produced could turn out to be costly for the tenant. The waste that ends up piled up on the floor next to a full container also has to be cleared away by the waste collection company, and because this has to be done by hand the additional bill for such a service could be rather steep,” he emphasises.

Binmen or conmen?

The relations between shopping centre managers and waste collection companies could be the topic of another article (or even a series of articles, most of which would make your blood freeze). The invisible hand of the market might have been expected to cement the relations between ordering parties and contractors, who, at least in theory, should embrace two common goals: care for the environment and shareholders’ assets (in that order). But in practice this varies... in many cities (particularly medium-sized ones) only a few waste disposal firms have the right equipment for removing shopping centre refuse and are therefore in a position to be able to offer reasonable rates. As a result, there is a significant lack of healthy competition and managers’ options are limited in terms of the selection of contractors. “When I was put in charge of a large shopping centre in Opole, I quickly came to the conclusion that the mall was paying over the odds for the refuse collection,” recalls Magda Derwisz. “There was no compactor – the machine for compacting the waste – but the waste collection company was charging for the volume of the waste removed. It turned out that neither this waste collector nor any other company in the area was inclined to provide a compactor,” she adds. All the refuse companies had convinced the manager that a compactor would not fit and there would be problems involved with emptying it – and they maybe had a point because the back facilities of the centre were indeed small and narrow. Furthermore, according to these companies’ calculations, the usage of a compactor would be completely unprofitable – hiring one would be more expensive than any potential savings to be made from compacting the waste. “It took me half a year to find a firm that could eventually deliver the desired device,” sighs Magda Derwisz. “By the way, we have also changed the method for calculating the amount of waste – the volume-based fee was replaced with a weight-base fee. It turned out that we had been paying for the ‘collection of air’ for many years. But thanks to having the compactor, the collection of waste now takes place once a week instead of every day and the bills have been reduced by... 50 pct.

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