A Super Market Reputation
Lascorp Development Group (Aust) Pty Ltd was founded by Michael Lasky in the early 1970s. Before Lascorp, the Lasky family had owned and operated an independent supermarket on Camden Street in Balaclava, Melbourne. They had started their operation in the mid 1930s, becoming one of Australia’s first self-serve supermarkets in the 1950s. In the early 1970s they were approached by Coles to sell their store and then redevelop the site under the Coles brand. Michael’s father, Myer Lasky, was looking to retire, and Michael took the opportunity to project manage the redevelopment on behalf of the family.
Through his initial redevelopment of the family store site, Michael became well acquainted with Coles National Director of Property, Arthur Coles. Malcolm Bamford, the General Manager of Lascorp Development Group, relates that Arthur saw potential in the abilities that Michael displayed throughout the development project. “He said to Michael: ‘Look, you seem to have a bit of talent for this, why don’t you do some more new stores for us?’ So, you could say that Michael’s career as a property developer was born out of selling the family business,” says Bamford. By 1972, Michael had stepped into a full time development role and Lascorp was born.
During the 1980s Michael diversified into a variety of new business interests, including mobile phones, Fresh Food Groceries and strategic holdings in public companies. With the downturn in the early 1990s, Michael again refocussed his full attention to the property development field and at this point his son, Matthew, joined the business. Lascorp exists today in a very unique place in the market by being a specialist retail project developer, with a particular focus on supermarkets, larger format stores and convenience shopping centres. They have particular strengths in identification of development opportunities, site acquisition and, amalgamation, and new Greenfield developments. They have also acquired existing shopping centres and retail properties that have the potential for better returns through redevelopment and upgrades. All of these efforts require strong project management capabilities and services, which Lascorp provides in spades.
Continuing the history
Today, Lascorp has expanded its development abilities to a point where it might be considering up to 20 different projects at any one time. “Most of our projects take quite a bit of time to come to fruition, some up to four or five years, and some will drop off completely,” says Bamford. “So we always need a number of projects under consideration to provide a steady flow of projects ready to commence development”.
Lascorp first started out developing exclusively for Coles, but in the late 70s and early 80s, Lascorp broadened its focus to undertake developments for Woolworths.
The downturn following the Global Financial Crisis in 2008 has emerged as another major challenge for the Group, with the valuations of completed projects falling approximately 15 per cent, development margins have been dramatically reduced and accordingly some projects have become unviable and many independent developers are no longer in business. “The only way to recoup those losses is to either build cheaper, buy land cheaper, or charge higher rents and in the current environment this has been difficult to achieve,” he says. “Lascorp itself was reinvented seeking new sources of funding and de-risked our portfolio through the sale of a number of potential projects to the major retailers. The fact that the company, undertook three shopping centre developments during 2009 at the height of the GFC is testament to our financial strength and ability to adapt.”
“What has happened in the last few years since the GFC is that Woolworths and to a lesser extent Coles, have both stepped into the breach and have become significant developers in their own right.” This isn’t direct competition, as the main objectives of the major retailers are to maintain their retail growth, as opposed to making development profits. Whilst their development activities have increased, both major supermarket chains are still more than willing to work with us to generate new opportunities,” he says. Bamford himself is an accredited property valuer and has worked in the industry for over 37 years in the fields of valuation, funds management, portfolio management, real estate agency and property development.
He says that despite the challenges, there continues to be a steady flow of new opportunities for Lascorp and the business never stops investigating new opportunities. “I think we have a great business model,” he says. “Lascorp itself is not the end developer of the properties. Lascorp is a service company that runs the businesses, employs the staff, puts the deals together and gets the necessary approvals. Prior to the construction, we establish an ownership vehicle, or pre-sell the project and the development is undertaken by the long term owner of the property” he says. The Lasky family still has a large influence and a say in every project that the Group is involved with, and their guidance has continued to be the backbone to the success of the business. “They still hold a strong ownership role within the various projects that we undertake,” Bamford reports.
The proof is in their work
“Over the years Lascorp has developed an outstanding record of identifying development opportunities, acquiring strategic sites and achieving town planning approvals, which in many cases are extremely difficult and involve a great deal of community consultation and a close working relationship with Councillors and Council officers.” says Bamford. “Whilst in the past Michael has been involved in many different project types, including office, hotel, industrial, a marina and even a golf course residential estate, the key to Lascorp’s success in recent times has been their specialisation in the retail field and through this they have developed very strong relationships with the major retailers and a detailed understanding of the town planning process and dealing with the needs of local communities.”
“We regularly see less experienced, or less specialised, developers attempting the retail development process and ending up either failing to achieve a planning permit, or a compromised planning permit or comprised centre design, which ultimately leads to a poorer performing shopping centre and a less valuable asset,” says Bamford.
The other great strength of Lascorp is risk management, which the Company applies at every stage of the development process. Sadly many developers without this disciplined approach to risk management are found wanting as the economic cycle turns.
Over the years as the business has grown, the shopping centres they had developed have been retained in the Group’s ownership. To better serve the interests of ownership syndicates, Lascorp has developed a secondary business known as CRAM (Commercial Real Estate Asset Management Pty Ltd). This business specialises in property management of retail shopping centres and undertakes the management on behalf of these syndicates. “So with properties where we have retained an ownership, they tend to be managed by CRAM,” says Bamford. He also states that this secondary business was a logical extension from the development company, and that the businesses work hand in hand. “CRAM is a property and asset management business, and is overseen by Michael’s son, Matthew. It remains independent from the development side, managing a portfolio of about 200 million dollars worth of property and in recent years the portfolio has expanded to include industrial and commercial office investment properties.”
For the future, Lascorp has no immediate plans to significantly change its business model and will continue seeking out development opportunities which are supported by population growth, strong locational attributes and interest from the major retailers. Lascorp adopts a conservative approach to property development and has considerable expertise in the management of risk throughout the development process. This strategy has served Lascorp well for the past forty years, and we see it serving us well in to the next forty years.