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Tenant Retention Plans and Strategies in Retail Real Estate Today

woman with shopping bag
Tenant retention plans will help you grow your retail tenant mix in the correct way.

Tenant retention today has become an important strategy in property performance, particularly with retail shopping centres and retail investment properties.  Every commercial and retail leasing agent should provide a comprehensive and detailed tenant retention strategy to those property owners that need the service, or own the larger properties.

A good retention plan will give you as the retail leasing specialist opportunities for future leasing, renewal negotiations, tenancy relocations, and property changes.  All of that means better commissions.

A leasing expert in this market is of high value to any landlord with a high quality retail property.  This leasing churn produces fee opportunity and market intelligence.  Most property owners and landlords will not have the tools or the market intelligence to design their own tenant retention strategy in this regard.

So a good tenant plan will have particular factors to help property performance, and strengthen the tenant profile for the landlord.  Ultimately this will encourage rental income and lower the vacancy factors.

Here are some factors to help you establish the retention plan in properties and listings of suitable size and complexity.

  1. Get to know the existing tenants within the property.  This will normally involve meeting with those tenants to talk about customer activity, customer trade, and property requirements.  In most circumstances, the tenants within a retail property can give you significant and valuable feedback to help your plan creation and consolidation.
  2. Get professional surveys undertaken of shoppers using the property on various days of the week.  In medium to larger shopping centres, it is quite common for the survey to occur on a quarterly basis.  The survey would normally take two weeks to implement so that you cover the necessary variables in daily shopping.  The results of the survey will tell you what customers are looking for and what they think about the property today.
  3. Visit the local council or planning approvals office to understand the activity of other property developments coming into the market soon.  Obviously you should look for new property developments that could destabilise the balance of supply and demand when it comes to tenancy leasing.
  4. Review other properties in the local area to understand their factors of vacancy, market rental, and customer base.  You can also selectively talk to some of their tenants to get feedback regards shopping trends and property performance.  Obviously it should be said that this approach should be suitably confidential and sensitively handled.  Many other property managers and property owners may feel threatened if you make this process too public or obvious.  Simple questions asked in a creative way as you purchase a newspaper or an ice cream can give you some good tenant feedback to work with.
  5. Given your existing retail property, determine the tenants that are more attractive and less attractive to the future of the asset.  The attractive tenants will feature in the retention plan differently and more intensely.  Some of the less attractive tenants will disappear from the plan when you can find better ones.
  6. If you have an anchor tenant or perhaps a few anchor tenants in your retail property, it pays to talk with them regards property trends and sales.  They will give you valuable feedback from their perspective as a major retailer.  Most leases with anchor tenants go for many years.  Make sure that the tenant is locked in for the longer term and that they are well integrated into the overall tenancy mix activity.

So these are some of the foundational factors that will help you move towards a good tenant retention plan.  Over time you can consolidate our real strategy across the entire tenancy mix.

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Retail Leasing Tips and Ideas for Commercial Property Agents

woman walking in fruit store
Retail shop leasing requires real estate agents with special knowledge and excellent negotiation skills.

When it comes to your career as a retail leasing expert, market knowledge will help you greatly when it comes to market share and market dominance.  The retail property market is quite specific and special.  There are many factors to consider and be aware of the as part of the specialized leasing task.

Retail property today is experiencing some challenges.  The shifts in retail spending and due to the pressures of the Internet are quite apparent.  There are also other pressures on retail that apply due to the global economic downturn.

That being said, retail spending doesn’t disappear, it just changes.  That is why a retail property experts and particularly leasing specialists are perhaps some of the most skillful in the property market.  They know what works and what doesn’t.

Here are some factors that require constant attention as part of servicing the retail leasing industry and shopping centers today.

  1. It is wise to have a solid awareness of the significant and larger retail properties across your region.  They will have pressures of change, refurbishment, expansion, and contraction.  Those pressures will have influence on nearby competing properties and the movement of successful tenancies between each.
  2. Franchise groups are now on a significant part of retail property performance.  In many respects, they require occupancy opportunities in certain locations and property types.  It pays to keep in close contact with the franchise groups for this very reason.  They will have critical criteria that must be satisfied when it comes to a new tenancy and property occupation.  They will usually share this information with the other retail leasing experts that could assist them with finding another tenancy.  It is all so common for those retail groups to provide their own special lease documentation.  Whilst this is convenient, it also has some concerns for some landlords.  If you are involved with a lease negotiation of this type, the landlord for the property (your client) should have a good property solicitor acting on their behalf in the scrutiny of the franchise lease document.  In most cases, the franchise lease document will coincide with the terms and conditions of the franchise business agreement struck between the franchisee and the franchisor.  Landlord flexibility is required to make this balance work.
  3. Rental strategies in retail property will vary from property to property and location to location.  The rental for a tenancy is simply not just the commencing rent.  It is a combination of many things including the commencing rents, the rent review profile, any lease incentive, and outgoings recovery.  The right combination of these things will help improve the occupancy for the tenant and the landlord.
  4. In any retail property, the tenancy mix will be important to the stability of occupancy and relationships between tenants.  In larger shopping centers, this problem manifests itself in many ways.  It pays to consider the clustering of tenants in zones within the property.  In this way you can build on the sales relationships between like tenants in the cluster.

Retail leasing experts will usually spend significant time in the marketplace reviewing the performance of nearby properties, and meeting with retail tenants.  These factors will produce market intelligence and feedback that allows the retail leasing expert to bring experience and relevance to the clients that they act for.

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Embrace Retail Tenant Mix Analysis in Shopping Centre Leasing Today

woman shopping for groceries
Retail tenant mix analysis is a special skill for specialised property agents.

A retail property is quite special when it comes to tenant mix.  In many ways the tenant mix will shape the future of the property.  The success of the market rent for the property will come from the relevance and stability of the tenant profiles and the anchor tenants in the property.  Are you an expert in all of these things?

In saying all of this, if you are a retail property manager, shopping centre manager, or perhaps a retail leasing specialist, you really should spend time on understanding the factors that strengthen a tenant mix profile in a retail property.  In this way you bring better value and knowledge to your clients and property owners.

Retail property leasing and performance is really the pinnacle of skill and speciality in investment property today.  Most of us that know the retail shopping centre industry well, find retail property very interesting and challenging.

A successful retail property is a balance of many things; as a retail specialist, you need to know what those things are and how to work with them.  Good clients pay well for top retail property agents to help them.

Here are some of the important factors that come into a tenant mix plan and tenant retention plan for a retail property today.

  1. From the outset you must know what your customers want and how the property interacts with the local community.  For this reason it pays to survey your customer base and find out what they think of the property and its tenant offering.
  2. Talk to the tenants in the retail property.  They will have factors that they can share regards shopper requirements and buying patterns.  Also note that some tenants will have different ‘stories’ to tell in this regard given their retail offering and position in the property layout.
  3. Work closely with your anchor tenants so you understand just what they are seeing in shopper buying patterns and movement.  Integrate the anchor tenant to the specialty tenants in the property to optimise mutual trading advantages.
  4. Do you have common areas in the property where people and shoppers are encouraged to congregate and spend time?  Do you have a food court in your common area layout that will help the shopper retention factors in the property?
  5. Look at the lease terms and conditions for all the tenants.  As part of the tenant retention plan it pays to negotiate any lease renewals early so you know just how much vacant space is coming up for renewal; then you can plan how you want to use it.
  6. Expansion and contraction factors in a retail property are always happening.  Some tenants will need more or less space; that is why you should create and how you should manage your tenant retention plan.  Look after the good tenants in the property and manage the poor tenants out of the property at the end of their lease term.  Over time the market rental can be underpinned by better tenants working in cooperation with each other.
  7. Should you give tenants any options for a further term in a lease negotiation?  Not necessarily is the right answer.  The final decision on lease options will be based on the overall tenant mix, the property renovation requirements, and the landlord’s investment plans.  Most large shopping centre owners do not like giving options for a further lease term given that it takes away a lot of control that they would otherwise have in a shop location and its position in the tenant mix.

Some of these factors can give you real control on the future of a retail property.  Formulate your tenant plan and put it into motion.  Over time this will help your retail property perform more effectively as the retail trading environment and economy shifts and changes.

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Commercial Property Management Handover Tips

woman wrestling with cables
Choose the right information in any commercial property management handover.

When you take over another commercial property from another property manager, or perhaps even a landlord, it is really important to ensure that you capture all of the right information that has an impact on the property today and into the future.

Any errors that are made in the property management handover process can impact the property significantly into the future, and make your job significantly harder as a property manager.  Unfortunately the previous records relating to the property may not be complete or accurate.  Your questioning process needs to identify this challenge and work through the issues that it provides.

So here are some tips that relate to the handover strategy and your systems.

  1. Ask for complete and accurate financial records relating to the income and the expenditure activity in the property over the last 12 months.  You will need a detailed breakdown of the income and expenditure records for the financial year to date.  This will be essential when it comes to reconciling the property at the end of financial year.  The integrity and accuracy of those records should be questioned and checked.
  2. It is always desirable to get records of previous property reconciliations and budgets for the two or three years prior to your appointment.  This will help you in budget analysis and creation in the forthcoming financial period.  When you create a budget, keep detailed records of your assumptions and findings.  This is best done on a spreadsheet that is archived for future use in other financial years.  All of your assumptions will be critical to your budget tracking process throughout the year.  Simple things can be forgotten and complicate the overall property performance.
  3. Get copies of all lease documentation that apply to the current tenants and the tenancy mix.  Those documents should be checked against the current rental invoices as they apply to the property.  Copies of correspondence relating to previous rent reviews and options should be obtained.
  4. Look for situations of rental rebate, incentive, or discount.  Some of these things can exist for a number of years under an original lease agreement.  If that is the case, they will need to be merged into the new income budget for the property.
  5. Meet with the tenants as quickly as possible during the handover process.  The meeting is a personal process to be undertaken by the property manager, and will remove any uncertainty from the ongoing relationship with tenants.  They should understand who you are and how to contact you if any property matters occur from the date of handover.
  6. Every property is unique and special when it comes to maintenance matters.  It is wise to meet with the maintenance contractor’s for the property as soon as possible after the date of handover.  These contractors’ can tell you of the events to look for when it comes to property performance, repairs, and break down.  They will also give you a summation of expected future property performance within their specialty of plant and equipment.
  7. When taking on any new property, give special care and focus to the subject of essential services compliance to the current building codes.  Some properties will have issues of compliance that will need to be addressed.  Also look for any orders or notices relating to property occupancy or usage.  Failure to address any of these items can see the property lose its ability to function as a property investment.
  8. It should also be said that the terms and conditions of each particular lease should be checked to see if any matters of occupancy remaining outstanding or need to be policed.  Obligations can exist on either the tenant or the landlord in a variety of ways.

So these are some other main things to look at when it comes to a commercial or retail property management handover.  You can develop a checklist of the process which will keep you focused on task and allow you to maintain accuracy in any new property management portfolio.  Always keep notes of the handover process so that any misunderstandings or omissions can be proven at a later date.

If you want more free tips on commercial or retail property management you can get them in our newsletter or at our website http://www.commercial-realestate-training.com/

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Commercial Realtors – Leasing Opportunities with Franchise Tenants

blur of people walking through shopping centre mall
Franchise tenants can work well in your tenant mix in a retail shopping centre.

In commercial and retail real estate today, there is a significant shift in leasing to franchise tenants in the tenant mix.  The reason being, that franchise groups bring a brand name and a business model to any vacant area in a property.

Not all franchise tenants are the right choice for a commercial or retail property.  Due regard should be given to the existing mix of tenants and just how the franchise tenant will integrate into the overall property.  Some of these franchise tenants can create extra demand on the property such as:

  • Security
  • Access to the premises
  • Rubbish and waste disposal
  • Car parking
  • Customer access
  • Hours of operation
  • Marketing and display of signage, etc.

So a lease for a franchise tenant should be carefully considered and negotiated.  That being said, many franchise tenants will have their own lease to submit to the landlord of a property.  Whilst that is convenient, the landlord should carefully consider the differences between the franchise tenant lease and the standard lease for the property.  In most cases the lease provided by a franchise tenant focuses on just one thing; the running of the franchise business.

Here are some tips for negotiating leases with franchise tenants today:

  1. Meet the tenant on site and walk through the factors of occupancy that are critical to the operation of their franchise business.
  2. Understand that the franchise business will have a business agreement that will need to integrate with the duration of the lease of the property.  Some landlord flexibility may be required to make that match.
  3. Ask questions about special occupancy needs such as grease traps, air conditioning, cleaning, refuse, and customer involvement.  If there is a cost to be considered, ask about who pays.
  4. The make good provisions at the end of the lease will always be important.  The landlord requires clean and reinstated premises.
  5. Understand just how the tenant will be integrating their marketing into the property and what signage they will require for the process.  They will need to position signage where consistent branding messages are conveyed to the customers and passing traffic.
  6. If the tenant operates outside of standard property hours of operation, it will be necessary to consider the costs that occur as part of that process.  The costs should be directed to the tenant to pay as part of the lease structure.
  7. As to who will be the lessee in the property will be a valid and important question.  Normally the franchise group does not want to lease a tenancy space unless it is of prime importance to their business model and operation. That is why they only directly lease the prime locations.

A franchise type tenant is a good tenant; they just need extra attention to ensure that the lease in the property works for both parties.

Asking questions in the lease negotiation will always help with the future occupancy for both parties.  Look for any issues of challenge and deal with them upfront.