Wednesday, June 5, 2013

How to Improve Your Retail Tenant Mix in a Shopping Center

Improve your retail tenant mix for better sales

When it comes to managing the tenants within a retail shopping centre, you must give due regard to the overall tenant mix strategy, and the requirements of the customers in the area.  A successful tenancy mix will always underpin property performance in both market rental and vacancy profiles.  As part of your business plan for the property, you should incorporate tenant mix improvements at every opportunity.

This logic would suggest that an individual lease requirement or vacancy should be looked at globally across the retail property and the market.  There is a requirement here to understand exactly what tenants you require within your property to boost customer trade and stabilise the market rental.  

Individual shop locations should be looked at with relevance to customer foot traffic and exposure, but you should add to this consideration the factors of tenant clustering and proximity to other tenants in location.

So the strategy behind the successful tenancy mix needs to be incorporated into the property business plan and the tenant retention plan.  At the start of each financial year, choices need to be made in preparation for lease negotiations, and tenant placements.  

You should also expect that your retail property will have some vacancies throughout the year that will require repositioning and filling.  It is always good to have some flexibility when it comes to tenant relocation and positioning.  A planned vacancy can help you with that process.

Here are some ideas to help you with optimising the tenant selection and placement process in your retail property or shopping centre:
1.       Undertake a review of the market rental in the local area and region.  To achieve this, you will need to connect with other shopping centre managers and property owners of competing properties.  Understand the acceptable levels of market rental that apply to quality local retail properties.  Determine if those rentals are applicable and compatible to your property.
2.       Undertake a shopping centre survey of customers; this should be done on a quarterly basis.  Understand what the customers are looking for when it comes to retail products and services.  From the survey you will always be able to identify the priority tenants within your property.  A tenant retention plan can then be structured to retain your good tenants, and remove your underperformers at lease expiry.
3.       Understand how the anchor tenant within the property can and does have an impact on customer visits and overall trade.  Could the anchor tenant be encouraged to do more marketing or get involved with the specialty tenants as part of building the property profile and overall performance?
4.       Review the competing properties in your area for tenant stability, vacancies, and expansion or change.  Also look for the threats of new developments planned or under way in the area.  From this review process, you can quickly identify what customers are looking for and how that can be achieved.
5.       Given the number of customers that visit a retail property on a daily basis, the wear and tear factor as well as property appearance features highly on the list of customer and tenant concerns.  Shoppers and customers will stay away from a property that does not provide convenience, good service, a safe environment, and a pleasant presentation.  They like to feel good as they shop.

Lastly, it should be said that the tenants within your retail property will have a good idea of what customers are thinking and doing.  Speak to your tenants regularly so that this valuable information can be interpreted and optimised.  In this way the tenancy mix can be strengthened and shaped.