|Choose the right tenants in your Retail Tenant Mix|
Retail shopping centres are an important part of the local and regional economy in most towns and cities. They are also critical to the success and growth of the regional demographic population. Retail shopping centres support the requirements of the community with day to day consumables, and also more specific purchases associated with clothing, lifestyle, family, and the household. That is why the design of tenancy mix and leasing within a shopping centre is so important. Here are some tips from our Bulletin for Retail Leasing Agents this week.
Retail Property Leasing is SpecialThat being said, the leasing strategy required for retail properties and retail shopping centres is quite specific and specialised. Only some real estate agents will have the required expertise and knowledge to successfully manage and lease the medium to large or shopping centres.
A good shopping centre will serve the customers within its demographic completely and successfully. Vacancies within the property will be minimised, and tenants will be encouraged to generate more sales in serving the customers.
Fine Line Between Tenants and LandlordThere is a fine balance in a retail property between the landlord, tenants, customers, and property manager. A retail shopping centre should be built and around the requirements of the consumer. Any decisions regarding property performance or tenancy mix should be made on the basis of the total property and not just the single location.
Here are some of the key tips to apply to the marketing process with vacancies in any retail property.
- Monitor the activities of other shopping centres nearby. They will have pressures of occupancy, and tenancy mix. They will also have the tenants that may require relocation or adjustment to another property.
- The anchor tenants in any other retail properties locally should be monitored for movement and change. The shift of an anchor tenant away from a retail property can create significant disruption in property performance and tenancy mix. You can monitor the other anchor tenants simply by walking through their premises and observing the levels of stock, layout, presentation, and customer trade. It is very easy to see weaknesses in a retail tenancy.
- Keep in close contact with your existing tenants and tenancy mix. It is very common for other agents to be approaching your tenants for relocation. A close working relationship with your tenants will usually preclude the involvement and threat from other agencies. Your tenants should feel comfortable in approaching you with their business challenges and needs as they apply to their lease.
- Address the vacancies before they arise by monitoring lease expiry dates. Every lease will have some expiry date or some date associated with a lease option. Any dates of this nature inside of the next 12 months should be worked on as a current issue. There is nothing wrong with negotiating a lease renewal or a new lease early.
- Rent reviews in a retail property can create friction between tenants and landlord. This is particularly the case when it comes to market rent reviews. Understanding the pressures of supply and demand in local retail property will help both parties come to a sensible outcome with a market rent review.
- Allow the tenants to expand, contract, or relocate at the end of lease term as their business needs may require. Successful tenants invariably look for other space in which to relocate or improve their profile. Your retail property should be adjusted to support appropriate levels of presentation and customer sales. In this way your good tenants will stay at the end of lease. Understand the other changes in lease occupancy adjacent to your good tenants. Some upcoming expiring leases could be offered to existing successful tenancies adjacent. Importantly, the tenants within your tenancy mix should support the needs of the customer and the growth of the property. In this way the market rental will be underpinned and escalated.
- Directly approach all the relative businesses in your local area for potential relocation. Successful retail businesses in all other locations should be identified and found. Arrange direct meetings with the proprietors of those businesses. Discuss them with them the requirements of future occupancy, relocation, and change.
- Work with the franchise groups locally and regionally that may require alternative space for tenant occupation. Franchise groups are fast becoming a critical component of a successful retail shopping centre. These groups will usually have key components of occupancy that must be satisfied. The leasing manager or property manager for a retail property should take the time to understand the requirements of each retail franchise group. When a vacancy is known to be coming up, a direct approach can then occur to the appropriate franchise groups. It is also the case that a franchise group will likely have a standard lease structure and policy. Within reason these can be negotiated to satisfactory terms and conditions for your landlord.
- Ensure that the vacant space is correctly marketed and presented. Some shopping centre managers will share their vacancy needs and tenant requirements with the other retail agencies nearby or in the local area. There is nothing wrong with a conjunction arrangement when it comes to leasing retail premises. Many specialist retail real estate agents will work together when it comes to the leasing of major shopping centres and any complex tenancy mix.
- When it comes to any lease negotiation, never let the tenants have the keys until the lease is correctly signed, all monies have been paid, and the guarantees are in place. The same process also applies to the commencement of any fitout works.
A successful retail property is a reflection of good tenant management and vacancy minimisation. This is a process for specialists that understand retail property.
Need more tips on Retail Leasing or Shopping Centre Management? You can get that in our regular bulletin for Retail Property Specialists.