Top Retail Tenant Mix in Shopping Centre Performance

retail shop flower stand
Get your tenancy mix and strategy just right in shopping centre performance.

When you take on an involvement in a new retail shopping centre, you need to assess the tenancy mix as it applies to the local community and the expected changes in local shopping demographics.  Here are some ideas from our Retail Management and Leasing Newsletter for Agents.

Throughout the retail trading year, there will be changes that have impact on the property and the retail trade.  Landlords and tenants within shopping centres need to work together given their vested interests in the success of the overall property.

The sooner you can assess the tenancy mix, the more effective you will be in optimising the future of lease negotiations and market rentals.  The property business plan will help you in establishing benchmarks and targets.

So let’s look at some factors that can apply in assessing the tenant placement and tenant mix around the retail shopping centre:

  1. Look at the property from the outside and move towards the centre.  Visualise yourself as a shopper in the local community.  Drive to the property and assess the experience of road access and car park usage.  After doing that, repeat the process with the public transport services that apply to the local area and integrate with property usage.  Lastly, you should access the property from alternative transport modes such as walking and taxi’s.  From all of these aspects you will see strengths and weaknesses that apply to customer access.  Some of these things can be responded to in a positive way to improve the customer experience immediately.  Make it easier for customers to get to your property and enjoy the experience.
  2. When customers reach your property, they will be entering from a number of entrance doorways.  All of the doorways to the property should have traffic foot counters installed.  In this way you will know where people prefer to enter and leave the property.  You will also have patterns of shopping access at different times of day and on different days of the week.  The counters should be monitored on a daily basis.
  3. As a direct follow-through from the previous item, you will then know where the majority of people come from and how they get into the property.  These facts will give you priority points within the tenancy mix for high profile smaller or specialty tenants.  The higher traffic areas and turning points within the tenancy mix should be reserved for smaller tenancies with broad customer interest.
  4. The common areas within the property will be important for customer service and congregation.  These common areas should be well maintained and welcoming.  In this way you will be encouraging people to stay within the property and enjoy the experience of shopping.  Take a survey approach to all factors of the common area on a regular basis including washrooms, seating areas, malls, and food courts.  Look for any weaknesses or matters that require upgrade.  Presentation is everything in a retail property.

The success of your retail tenancy mix will be driven from careful planning and strategic process.  It takes time to develop a good tenancy mix so set your plans early and integrate those plans into the lease negotiations if and when they arise.

Look at any spare space or under utilised space that can be used for smaller tenancies and further income generation.  The shopping experience should be encouraged through diversity and broad customer appeal.  Make sure that your existing tenancy mix provides the best quality of services and products to their customers.

Need more ideas with Retail Property Management or Leasing?  Get our Newsletter right here.

Tips for Doing a Tenant Mix Analysis

Shopping cart with gears
Devote time to your tenant mix strategy and analysis

When you manage or lease a retail property, the tenant mix will be critical to the property performance over time.  As a leasing manager or property manager for the landlord, you really do need to plan the placement of your tenants and have solid reasons for any new lease or tenant to be introduced to the property.   Here are some ideas from our Newsletter for Retail Property Agents.

This planning should be done at the beginning of each financial year as part of the business plan for the property and where you have just finished your income and expenditure budgets.  The tenant mix changes have relevance to the following:

  • Lease expiry dates that are expected from the tenants in the property now
  • New leases to  occur with known or current vacancies
  • Expansion or contraction of tenants within the property
  • The renovation and relocation issues that have impact on the tenancies during the year
  • Market rent reviews and lease options
  • The clustering plans that you have with like type tenants in similar locations in the property
  • The placement and activities of the anchor tenants in the property

So, all of these factors will have impact on the property in some way or form.  That is why they are merged into the business plans and marketing plans for the property during the business year.

When you get the tenant mix right, the rentals for the landlord are optimised, the vacancies are minimised, and the tenants get more sales.  The equation is critical to retail property performance.

Not all tenants will be ideal for the property or the customer base.  At time of lease negotiation it pays to ask questions regards some or all of these matters below:

  1. Will the new tenant serve the current customers with immediate needs?  Understand if you have other tenants in the property selling the same product or service, and if they are currently successful with that.  Introducing another tenant to the property could destroy the trade of the existing tenant.  There will be limits on just how much trade and sales you can get for a product or service currently.
  2. Be aware of the current shopper demographic and understand just how that is catered for in the existing tenant mix.  Will future and expected changes to the shopper profile and local community give you growth over the coming years?
  3. Where are the existing properties that compete with your property and how does that impact your property and tenant profile?  You will need to visit these other properties regularly to see how they are tracking with sales, vacancies, tenant mix, and customer visits.  It will be necessary to profile those centres and properties on different days of the week and at different times of the year.
  4. Are any new property developments expected in your area that could shift the balance of the customer and the sales that you get currently?  New properties are likely to be a threat to your rental base and heighten your vacancy factors.  Keep your rents in check so your property is better value for existing tenants.  You already have customers, and the new property does not.

When you keep a close eye on your tenants and the property performance, you can strengthen the income profile for the property over time.  As a general rule, look 24 months out so you can track potential property changes and make the necessary shifts in strategy.

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