There is a fine balance between a shopping centre landlord, the tenants, and customers if you want to improve property performance; they are all stakeholders. Each has a role to play in making a shopping centre successful. Any weak links in the stakeholder relationship can destroy the tenant mix, the market rental, and the property performance. The shopping centre manager is the ‘glue’ to hold the retail renovation or upgrade project together.
Here are some tips to ensure that a shopping centre makeover is successfully planned and implemented:
- Look at the conditions of the current retail property market and the local shopper demographics. Is the property market slow or strong when it comes to retail spending and customer sentiment? What is its future when you look at the typical customer? How will your property satisfy that need and growth?
- Are there any pressures from other properties that are frustrating your progress and property performance now? Can you address those pressures and reposition your property?
- Define the goals of your property upgrade. What will the rental structure and lease profiles in the property look like after the renovation? Will the capitalised increase in net rent improve the value of the property to the expectations of the landlord and the financiers?
- There will be limits as to the amount of money that should be spent on the property upgrade. If you overspend, the whole ‘return on investment’ equation is threatened.
- Look at the leases to ensure that any threats to rental payments and lease occupancy are well understood before the project gets the final sign off to commence.
- After the renovation, what will be the factors of attraction for the property from both a tenant and customer perspective? Compare those factors to the competing properties locally. Look for strengths and weaknesses in each competing shopping centre.
- Gather a team of experts around you who can estimate accurately all of the variables in the renovation. Those things will include rents, incentives, fees, advertising, marketing, tenant mix, relocation strategies, and lease documentation.
When you have the base information ready you can get estimates of the cost of the project and establish a time frame. An informed landlord and shopping centre manager can make a property makeover plan a successful part of the retail property strategy.