Wednesday, October 16, 2013

Shopping Center Performance Analysis and Performance Tips

shopping mall people walking
Understand your shopping centers performance


In reviewing the performance of any retail shopping centre there are many things to look at.  As a type of investment, the typical retail property is dynamic and active in many ways.  A true property professional will review all the facts before getting involved in property marketing or any sale or lease.  Many things should be understood first before any action is taken.

What makes a retail property so different?  It is integrated heavily into and involving the stakeholder’s interests; the stakeholders are the landlord, the tenants, customers, financiers, managers and leasing specialists.  In an ideal investment situation the retail property manager would be balancing the tenant mix to improve retail sales and lessen the vacancy rate, and then to take steps to improve the landlord’s net income.  Within those two issues there are many things to look at.

It can be said that retail property managers are perhaps the most specialised in the property industry.  Their knowledge, skill, and systems will have a major impact on the property overall.  On that basis the retail management fees paid today in a quality property should be substantial to cover the time required in property control and optimisation.  The management processes and leasing activities in a retail property are intense.  Mistakes or omissions made can impact the property in many different ways.

So here are some basic factors to help you get started in checking and optimising retail property performance from the aspects of the leases and tenants.  You can add to the list based on location and property configuration:


  1. Tenant mix – review the tenant mix in all respects.  That will include lease documentation, critical dates, tenant offering, sales performance, and lease longevity.
  2. Lease terms and conditions – in a property you will have many leases.  All of them will have lease terms that are unique to the premises and the lease situation.  You must know about the leases before any sale or marketing proposal is contemplated.
  3. Sales figures – most good retail properties will be tracking sales turnover by retailer.  This will be done as a standard term and condition of the lease.  The numbers will show segments of trade and the MAT average over time.  MAT stands for Moving Annual Turnover and it will show how the sales figures are trending in retail segments in a shopping centre. It is a valuable analysis.  It helps you see weaknesses in trade, tenant mix, lease structure, and clustering.
  4. Vacancy factors – given that you have leases in a property, you are likely to have vacancies as well, together with the threat of a vacancy with tenants getting to the end of lease occupancy.


Looking at all of these things you have the basis of understanding just how the tenants and leases impact the property and its current cash flow of rental.  From that point onwards you can look at other associated issues such as outgoings, net income, and customer interaction.