Shopping Center Managers – How to Assess and Improve Retail Shopping Center Performance Comprehensively

woman with shopping bag
Understand the reasons behind and for a successful shopping center.

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.

You  can get more tips and ideas about retail property performance in our eCourse ‘Snapshot’ right here.

Tips to Leasing Vacant Shops in Retail Shopping Centers

man in fruit shop
Retail shop leasing is special.

A vacant tenancy in a retail shopping centre can be massive drain on retail business and customer sales for all the tenants surrounding it.  For this reason a vacant tenancy has to be resolved quickly and efficiently.

If you have too many vacant tenancies in the one property it can set the foundation for a decline in retail trade.  Customers like to visit a property that is attractive, vibrant, convenient, and that has the required tenant mix.  Vacancies can impact that profile.

Over time a decline in customer sentiment will have an impact on market rental for the landlord.  Your primary focus in leasing and managing a retail property should be to maintain occupancy at a sensible market levels.

To lease a vacant tenancy some real strategies are required.  In a ‘rising market’ the leasing process is not so much of a problem, but in a ‘slow or declining market’ the vacancy challenge can be significant.  Here are some rules to help the process.

  1. Stay very close to the existing tenant mix and the leases supporting that mix.  Some tenants will from time to time have challenges and problems in business or occupation.  Keep communicating with the tenants regularly to understand their challenges and help them through any occupancy issues.  In a ‘down’ market, a vacancy can be very hard to lease.  It can be a drain on rent and outgoings for a very long time.
  2. Make sure that you are working well in advance when it comes to lease renewals or option negotiations.  Most leases will have time provisions that apply to the renewal or the option process.  That being said, there is nothing to stop you working earlier with the tenant to achieve a satisfactory renewal or option agreement.
  3. Some existing tenants in the property may require expansion or relocation.  Be open to their business needs, and identify alternative locations within the property that may suit or solve the expansion or relocation problem.
  4. Review other properties in the local area that may be competing with you and your tenancy mix.  Look for the challenges and the opportunities existing in their tenancy mix.  Approach their more successful tenants to see if relocation is possible.
  5. Given the sales performance of your current tenancy mix, look at the segments that are quite successful and the others that are not so.  There will be reasons for a tenants result in sales.  It could be the product or service offering, the tenancy location, the tenant themselves, or the marketing process.  Some of these things can be solved through careful management procedures.
  6. Monitor the clustering affect within your property where some tenants seem to be feeding sales off each other.  The mix can be improved through improving the clustering process.  Identify the tenants that can work with each other with the same customer type.  For example, a coffee type tenant could be placed alongside a ladies fashion tenant and a ladies shoes tenant.  A coffee tenant would be extending the customers time in the general area and potentially the sales potential.
  7. Consider the placement of the anchor tenants in the property and how they interact with specialty tenants nearby.  Proximity to the anchor tenant will be a leasing advantage for some tenancy types.
  8. Create a tenant retention plan that encourages ongoing occupancy for those priority tenants in the mix.  The retention plan will also help you when it comes to replacement strategies and removing poor performers from the mix.
  9. Leasing decision should be based on available occupied space, the prevailing market conditions, market rental, lease incentives, and occupancy costs.  Stay ahead of these industry trends and challenges.  Look for any new or upcoming property developments that could interfere with or change these factors.

If you do have a vacancy in the property, and a long term lease seems to be difficult to achieve, look at all short term occupancy opportunities with some of your other tenants, or casual tenants from elsewhere.  Short term occupancy at a lower rental will still help you achieve the vibrancy in the property and maintain the customer’s interest.

You can get more tips like this in our regular newsletter right here.

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.

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.

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.

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.

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.