Posted on

Attracting Tenants to Your Tenant Mix

Every property is unique and special.  Each property has got a mixture of negative and positive issues emanating from the design and layout.  To set up a productive tenant mix you have to do the best with what the property offers design wise.

A successful property requires successful tenants, and not just tenants that pay rent.  This is where tenant mix is critical.  To do this you need to know:

  • Rents
  • Lease terms
  • Fitout construction rules and costs
  • Incentive alternatives
  • Option structures
  • Rent review alternatives
  • Tenant preferences

Tenants are selective in what they lease.  They want the best, and in this market you have to provide it if you are a property manager or a landlord.  Your property has to be the best available offering in the property market at the moment. 

Consider this question.  What are the top 4 reasons why someone should occupy your property as a tenant?  If you do not have a solid set of answers then you have a problem.  Your property should provide something that the other properties do not have or find it difficult to offer.  Your property has to be the best available.  You should be a property magnet to attract the tenants.

So where do you start when attracting tenants to your tenant mix?  The features of the property and the design of the property will be the base from which you consider where the tenants are going to be placed.  Look at the design and consider where the customers will come from inn and around the property.  What will be the ‘ant track’ by which the customers walk and pass through the property?  Any corners or turning points in the ‘ant track’ are likely to be high traffic areas and if handled correctly will be the source of higher rent.  At these corners you want smaller tenants with a vibrant retail offering.

The successful retail property is totally about the tenants and not much else.  Without the tenants then the property will likely fail.

Look around.  Details of physical features of properties should be noted so that you can build on opportunities and positive aspects of the property with potential new tenants.  

All the information gained should be included on an appropriate and organised listing form and recorded as both hard copy and as part of a computerised listing package.  Ultimately you will be producing a leasing brochure and information package to present your exceptional property to potential tenants in its best aspect. 

All investors and owners of commercial property have differing investment and ownership needs. This then leads to the core decisions that they will make when you locate a tenant or adjust the tenancy mix.  It could be that the client has a preference to hold the property for a short period of time and then undertake a redevelopment or expansion of the property.  This will have significant impact on how you would construct the tenancy mix and lease profile for the property.

To handle these facts you interview the client and discuss the investor’s property requirements before proceeding with any part of the professional leasing and tenancy services that comes with commercial real estate. You need to match your leasing and tenancy services to their property holding needs.

Your skill is in assessing the potential leasing and tenant balance of the property and then shaping the leases to support the rental income needs is essential.

You can get more detail on this at our website here http://www.commercial-realestate-training.com/

Posted on

Property Inspection Tips for Retail Property Managers

When you look around a retail property it pays to do so with an eye of a customer.  If you manage or lease a retail property it is the customer that will impact everything in the end result.  Without customers the tenants cannot trade and therefore the rent cannot be paid.

So in walking around a retail property you can do look at specific things such as:

  1. Can you get access to the property without difficulty both on foot and in a motor vehicle?
  2. When customers enter the property is the car park easy to understand and use?
  3. Look at signage at logical entrance points.  Are they of high standard and of similar design?  Signs for tenants should also have some controls both in size and placement.  Nothing looks worse than a property where signage has been poorly controlled.
  4. Does the property feature some pylon signage at the entrance way that presents well and gives the property an identity?
  5. Is the mall or common area for the property uncluttered and clear so that all tenants can display their location and offering?  Look at the sightlines in all directions from the front of all shops.
  6. If public transport accesses your property, does it do so in a way that deposits people safely at the main entrance?  When they leave the public transport zone can they enter the common area mall and find what they want quickly?  You will need a series of Directory Boards at key entrance points for this purpose.
  7. Check out the common areas and the services and amenities that the public would use in the property.  Do they give the best impression and are they functional to standards that will impress the shopper?  Are the common areas ‘user friendly’ and attractive?
  8. Lighting and illumination will complement the common area and customer useage.

A great shopping centre is a balance of tenant mix, surrounding the functional common areas in a way that encourages sales.  A customer will only spend money when they ‘feel good’ about the property.  You should be the manager of ‘first impressions’.  Make sure the tenants support the process.

Posted on

Neighbourhood Shopping Centre Leasing Strategy

The neighbourhood shopping centre is the first level of retail investment property and is closely integrated to the community.   The tenant mix should be of a convenience shopping nature.   That will be the key to its success.

When designing your tenant mix strategy for the neighbourhood property, think about convenience and basic needs of the immediate community.   Is the surrounding community growing and in what way?  What do they spend their money on and how frequently?  Are they younger families or older retired families?  These questions dictate how they will spend their money.

Sometimes to really answer these questions you need a survey undertaken from the surrounding homes and families.   They know the neighbourhood better than you do and can usually tell you what the community thinks about the property and what it is missing.

Once you have your answers to these basic questions you can then move on to finding the right tenants.   As you do, give due regard to nearby competition properties and new property developments as they will have an impact on your property. 

Once you know who you want for your tenant mix and property, it’s time to pursue them:

  • Set up your target businesses by type.   Given that your property is convenience in nature you will likely need tenants in the categories of fast food, fruit and veg, baker, newsagent, chemist, hairdressing, liquor retailer, smaller supermarket.   Choose your tenants well with due regard to established trading history from other properties.
  • Cold-call the small family businesses in the area and particularly in competition properties as they will likely be interested to talk to you about your offering.   They will also tell you about the performance of the other properties.   This market intelligence is invaluable.
  • Follow up with the property managers and franchise managers or retail franchise chains.  Cracking into a well known retail chain might take several letters and follow-up phone calls.  The seeds of interest you plant today may take weeks or months to germinate but consistency and persistence will get you through the door.
  • Follow up with the supermarket chains for relocation or new premises opportunity.   The supermarket industry is highly competitive and most chains would like to keep the opposition away from getting into their ‘patch’.   The rentals on the supermarket anchor tenant are lower than the specialty tenants and they will be selective on paying their share of outgoings for the property, but you will get an anchor tenant for a long lease term to support your property.   Choose well.
  • Pay attention to the local media in new ways, with ears and eyes open for business prospects.  Even in a slow economy there are businesses that are successful.   Convenience shopping does not disappear; it just changes priority and offering to the shopper.   Read the newspaper daily, listen to the radio and watch your local TV stations not just for business news, but for ads from retailers that seem successful.  You’ll find out who’s growing, who’s moving and who (by their absence) is almost dead in the water.
  • Use local telephone books, the internet, industry groups, chamber of commerce directories and publications from local economic planning offices to tell you who’s who in the marketplace and who might be interested in moving.  Make the calls and ask the questions.  It is the secret to building a great tenant mix for your property.
  • Visit other shopping centres at different times of the week to examine the operations of potential tenant prospects.  Learn to think like your targeted retailer, understanding the operation’s strengths and weaknesses.  Know what it’s like to turn the key in that shop and what it takes to stay in business.
  • Always return every phone call from a prospect or an enquiry.   A potential tenant with a dynamic operation may be prospecting you and your property.  It doesn’t matter how off the wall or strange a person or idea sounds.  You might find some gems of occupancy among the strange and different ideas.
  • Know your trade patterns for the subject property, and that is peak trading days, traffic patterns across the property, popular established tenants, how the community uses the common areas, how the car park supports quick access to the property for the convenient shopper.
  • What is the branding of the shopping centre and do you need to do any face-lift upgrades of common areas?  Tenants will not move to something that is degraded, lacks identity, and is poorly maintained.  Poorly presented properties are a common problem in owner managed premises where the owner is inexperienced or at the smaller end of the investment scale.  You must spend money on the presentation of retail property, otherwise the rental, customer interest, and tenant base will diminish.
  • It is likely that existing tenants and potential new tenants to a property will talk before any decision is made to accept a new lease offering.   Tenant harmony and relations is therefore critical to future property occupancy and rental success.   Happy tenants usually mean good property performance.

Understand how real estate leasing brokerage can fit into the overall picture for the shopping centre.  The leasing broker or property manager can always open the door to valuable prospects, but it’s up to you to also sell the shopping centre and its future in the community.   When you know the community well, you have the keys to a great tenancy mix and property performance.

Posted on

Tenant Mix and Analysis for New Leases

Every retail shopping centre property is different and should be assessed individually to ensure that you locate the new retail tenant well in the tenant mix.  When you get the balance wrong it will impact your foot traffic, rental, customer interest, vacancy factors, sales, and other tenants.  So what should you do?  Gather all the right property information and take the time to assess what you find; this is well before you make a placement change or tenancy decision.

 The old adage ‘position, position, position’, still rings true with retail property tenant mix.  Each property is a mixture of good, average, and bad locations.  To assess this and improve it you should immediately understand:

  • the entrances points to the property
  • visitations needs and decisions of the average customer
  • the way in which people travel into and through the property
  • the car park interaction, access, and usage
  • public transport impact on the property
  • common areas of the property where people congregate
  • the time spent in the property by customers
  • the days of the week that people prefer to shop
  • what people want when they shop
  • the most popular tenants and the reason why they are so favoured
  • Are your most popular tenants leaving in the future and if so why?
  • the most unpopular tenants and the reason why they are so disliked or avoided
  • signage impact and placement across the property at all points of entry and exit
  • tenant lease duration and termination dates
  • existing vacancy factors and threats that could destabilize the tenant mix

All of these factors will put you on the track to a reasonable property assessment and improvement.  A visit to other nearby shopping centres will also help you to identify what impact those properties are having on your property.

Customer surveys and questions taken on different days of the week will help you know what the community thinks about the property and its benefit to the customer.