When it comes to owning and managing a retail shopping centre the last thing you want is a large number of vacancies. It gives the shopping centre a negative image and detracts from the trade of the tenants. In an ideal world, you should be retaining tenants within the tenant mix to increase the trade for the property.
One of the key things to consider with managing a shopping centre is to stagger the lease expiries and the lease options. There is no reason to have tenancies expiring at the same time or near each other, unless you are doing a refurbishment or renovation strategy within the building.
So vacant retail space occurs for one of the following reasons:
- The lease has come to an end
- The tenant is in default under the terms of the lease
- The tenant has vacated the premises
- The tenant has negotiated an early termination
- The landlord wants to take control of the premises
- The tenant has failed to exercise the lease option
Given all of this and if the vacancy has occurred, it is fundamentally important to keep the vacancy well-presented and or occupied by short-term tenants. Other tenants in the shopping centre are likely to cooperate with short term and low cost retail displays or points of sale.
The best shopping centre strategy is to maintain stable levels of occupancy and minimise vacant space. On that basis the property manager is performing the correct service for the landlord when it comes to income optimisation.
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