|Choose your retail tenants well for your shopping center today.|
If you are managing or leasing a retail shopping centre, you will understand the importance of the tenancy mix and the leasing strategy. When you select the correct tenants for the property, you can build on the property performance and the market rental. Over time, you will also reduce the factors of vacancy.
Every retail property should have a defined strategy relating to selection of tenants, and leasing conditions.
The strategy can be set out in separate documents relating to the property business plan. Those documents should be called:
- The tenant retention plan
- The tenant mix strategy
- Leasing standards
- Vacancy marketing and management
So there are these four separate documents that help you build the tenancy profile for a quality retail property. They form separate parts to the property business plan.
Before I go too much further, it should be said that every quality retail property should have a well-structured business plan. The plan should be reviewed every month and every quarter so that the key performance indicators to the property can be adjusted with the shifts in the market conditions.
Given the four documents mentioned earlier, there is a degree of investigation and research required as part of creating the separate strategies. Here are some notes to help with that:
- Understand your shoppers and why they come to your property. Every day you should track the numbers of customers visiting the property and understand how they get there. You will see fluctuations during the week with different types of customers and sales activity. Recognise that there are patterns that relate to retail tenant sales, and customer visits. Look for the patterns as you establish your tenant and leasing strategies.
- The people that visit your property will get there through a number of different modes of transport. Look at the interaction between public transport, roads and freeways, taxi’s, motor vehicles, and foot traffic. All modes of transport need to be well supported at the property. Part of the transport review process should include the operations of the car park, the security for the property, lighting, gardening, and visual appearance. Understand what your customers see when they arrive at the property; understand what they do when they move into the property and through it. Ensure that the overall retail experience is positive and encouraging for customers to stay at the property and return conveniently and easily.
- Choose the best tenants in the relative retail categories. The shopping patterns and the customer demographic will have some reflection on choice of tenancies. Will your property require a high degree of neighbourhood shopping and convenience, or will it require a mix of services and destination tenants?
- Destination tenants are a major draw card for the property providing they are matched to the needs of the shopper. Destination tenants include the post office, banks, specific retailers, and franchise groups.
- Anchor tenants will offer stability to the property over time. That being said, they also need to interact with the speciality tenants to encourage overall retail vibrancy.
- Look at the competing properties in the local area to understand their strengths and weaknesses. You will see some factors of opportunity and change that you can react to. Learn from the other properties and the other tenancies. Understand what works and what should be avoided when it comes to tenancy mix and leasing strategy.
- Look at the vacancy factors through the region to pick the trends of market rental, vacancy activity, tenant enquiry, and property offering. Ideally your property should be offering the best value for the asking rental. In that way you will encourage ongoing tenant enquiry.
- The market rental locally will be impacted by existing vacancies, gross and net rentals, occupancy costs, new property developments, and the supply and demand relating to the region. Review all of those factors as part of understanding your retail property performance.
So there are quite a few things to look into as part of the leasing strategy and tenant retention process.
When you have the correct information to start with, you can make some quality shopping centre leasing choices regards quality tenants and property offering.
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