Tuesday, August 7, 2012

How to Prospect for Commercial and Retail Property Tenants Today

retail shop front on street sidewalk
Prospecting for Tenants is really important in retail property.

When the property market is slow and tough, the tenants in any commercial or retail property become critical to the cash flow for the landlord.  Whilst some may say this is the normal case at any time, a tougher property market will create huge pressure on the landlord when it comes to balancing the factors of income and expenditure on a monthly and annual basis.  The business plan for the property becomes even more specific and special in the strategy of ongoing occupancy.

Internet Impact on Retail Sales

It should be said that many businesses are going through change due to the impact of the Internet on their products and services.  In some cases, retail tenants are disappearing from shopping centres for this very reason.  This does not mean that shopping centres will disappear, they will just change.  Leasing executives look for the influences and match new tenants into the change factors.

So a commercial or retail property requires a tenancy prospecting strategy.  This can be implemented by the property manager, or the leasing executive.  Either way the strategy should be implemented to prevent income decline.

A good prospecting model for new tenants looks something like this:

  1. Close attention to the existing tenancy mix should occur on a weekly and monthly basis.  Look for tenants that are under pressure or requiring change.  That could be expansion, contraction, or relocation.  Your good tenants should be encouraged to remain in occupancy at all costs.  As to how that may occur, is always subject to negotiation and alternative premises availability.  Importantly the tenant should be encouraged to stay in the property if you believe they are good for occupancy over the long term.  A good tenant should be looked at in balance with the entire tenancy mix and with any anchor tenants that are in the property.
  2. Identify any competing properties in nearby close proximity.  They will be a source of alternative tenants for your property.  Look for any pressures that may exist in those other properties and that may encourage tenants to leave.  Direct contact with other tenants in other properties will always be a wise strategy.
  3. Make connections with franchise groups and franchise brands.  They are likely to need alternative premises from time to time.  Importantly you can understand their occupancy needs and specific leasing strategies.  They may be suitable to merge into your property at the right time when the right vacancy occurs.
  4. The local business community should be networked in an ongoing way.  Other tenants and other businesses will provide the necessary churn and change when it comes to filling vacancies.  Direct contact every day with new businesses and business identities should occur.
  5. Look outside of your regional area to the national businesses and tenants that could be considered suitable prospecting targets.  Merge them into your prospecting perspective.  There will be other tenants in other cities that may have not yet considered your city for suitable occupancy.

Prospecting for new tenants should occur on a daily basis.  That is the only way the income for a property can be protected.  If you manage or market the vacant space across a number of properties, it is important that you specifically look to solving the vacancy challenges as they can be predicted or arise.  Monitoring the tenancy mix and developing a strategy is all part of the process.

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