A retail property and particularly a shopping centre is a special asset in many different ways. It takes skill and knowledge to make something of property performance.
There are numerous things to put in the retail ‘balance’. Special strategies are required. Are you up to the retail challenge?
Understand the retail facts
So what are the variables that make this so challenging? Consider these for starters:
- Tenants struggling to make sales – Some tenants will always struggle given that they may not be offering the right products or services. They may also be inexperienced in retail trade and sales. If you have a difficult tenant in a property it is perhaps better to move them on at the end of their lease (assuming that they can trade until the end of lease)
- A tenant mix that just doesn’t work for one reason or another – A poor group of tenants with weaknesses will quickly slow customer interest and repeat visits. That weakness then leads to sales decline. You must quickly fix a retail shopping centre tenant mix if you have issues that are weaknesses and impacting property performance.
- Vacancies currently in the property or those that can be expected – When you have empty shops to resolve, ensure that you are coming up with immediate strategies such as creating short term occupancy and placing marketing material in the empty space. Customers will see the vacancy so build some ‘vibrancy’ into the empty space.
- Market rentals and strategies for the property – Understand what the rents are doing for the property type in your region. How does your property compare?
- Outgoings recovery from the tenants – The lease documentation will be important when it comes to outgoings strategies and recoveries. The rent types used in the property will also have an impact.
- Customers and their spending patterns – At different times of the year the sales results change for the retail sector. Watch the process and how it is impacting your tenant mix.
- Lease documentation that is complex and critical to occupation – Understand all of the leases in the property. Some will be better than others.
- Landlord net income requirements – The landlord will have expectations when it comes to the net income they achieve. The expenditure in the property will place pressures on cash flow. Understand how those things work in your retail property.
- Retail sales patterns for the region – Always look at shopping and sales trends for the region. Understand if your property is being pressured by other properties locally. Understand why that is the case and try to fix the weakness.
- The configuration and presentation of the property – It is a fact that any retail property will be higher in upkeep so costs and strategies will be required. The presentation and functionality of the property has to be at the standards expected by customers. In that way the customers can keep coming back to the shopping centre. A retail property will soon be in decline if maintenance and presentational factors and lacking.
Every one of these issues can demand specific focus and effort from you as the specialist broker to bring about a resolve for all concerned.
So if you are a retail property manager or specialist leasing manager, you will know the importance of what I am saying here. Are you up to the retail challenge? Can you handle these issues in a comprehensive way? Plan and improve retail property performance from a base of personal retail skill, knowledge and strategy.