In retail property today, the typical retail shopping center is something special. There are factors to understand with tenants, landlords, marketing, income generation, sales, and tenant mix. You could say that a large retail property with multiple tenancies is a bit like a ‘big ship’ on a journey to a port called ‘Property Performance’.
The retail journey can be a challenge and all the issues within the property have to be optimized. A retail business plan is something that will help pull everything together.
In this audio program, John Highman talks about the ways to compare retail property performance today. You can get the audio here:
When it comes to managing retail property and most particularly shopping centers, you really do need to know your tenancy mix, your landlord’s intentions, the demographics of the local area, and the customer interaction with the property. Here are some tips from our Newsletter.
The success of a retail property will be built around those four factors and on that basis a dedicated management style needs to continually monitor the success and the progress of the property in the following criteria:
Understand the tenancy mix with regard to its offering and relative success. Within the tenancy mix there will be clustering and placement issues relating to the tenants and how they interact with each other. A lot of success can be gained by placing like type tenants near to each other so that the shopping intentions of the customer can be continued in the same zone within the property. Keep the customers spending in the same zone of the property with similar products or associated products.
The leases within the property underpin the income profile for the landlord. The income can be in various rental types including gross rental, net rental, turnover rental, and outgoings recoveries. They all impact the cash flow for the landlord and each tenant will have a different relationship to the landlord with these rental payments; the relationship will be reflected in the leases.
The success of the retail property is highly geared to the interests of the customer and the return shopping that they may do. You need customer to come back frequently and generate more sales and purchases. At least two or three times a year you should be surveying the tenants and the customers to understand their interests and observations regard the property itself. When customers start to lose interest in the property, the tenants start to suffer and the landlord will lose rental. On that basis you have a marketing role when it comes to promoting the property to the community.
When it comes to retail tenancy space, it is advisable to monitor the sales activity of the tenants and the tenant groups. In this way you can identify if any tenants within a group are underperforming and then take steps to resolve the problem. If for example one food tenant was making far less sales than the other food tenants nearby, you know that something needs to occur to make sales improvement in parity with the other occupants in that category. It may be that the tenant in question is simply a bad choice for the property, however this needs to be identified and solutions need to be developed.
A retail property is a dynamic and diverse type of property asset. It is not something that the first time property investor should look to acquire until they have the experience. For that matter it is also not the easiest property for the first time property manager to manage. Only experienced people should get involved with retail property after they fully understand the complexities of property performance and income optimization.
There are many other things that you can add to when it comes to the above list. Importantly are systemised management process works very effectively in Retail Property.