The tenancy mix in a retail shopping centre is critical to the property performance. Without care and strategy any neglected tenant mix can destroy the trade and cash flow for the landlord and tenants in the property.
The tenant mix forms part of the property strategy and business plan. Every good retail property should have a business plan that includes key issues such as:
Existing tenant mixLease terms and conditionsCurrent tenants lease expires and optionsRent levels, rent types, and rent review strategiesCurrent tenant locationsCustomer numbers and historyTrade turnover for the tenants in categories and by monthsRefurbishment and relocation plansVacancy plansWhen leasing a retail property with multiple tenants the landlord should give due regard to these questions:
What the customers to the property need and want in the propertyHow the customers shop and whenHow much they spend when they shop and on whatHow the local area and surrounding suburbs are changing and if that will impact on shopping trendsTenants that extend the visit time of the customer at the propertyThe property and leasing manager for the property should therefore research the local area and the customers to the property before making key decisions and directions in the tenant mix.
Tenant Mix Plan
To create a tenant mix plan or strategy for the retail property the above information is critical. Conducting surveys of the surrounding areas should be part of the process. Any errors in tenant mix should be avoided by carefully understanding the shoppers and what they want in the property.
Give due regard for who is shopping at the property and why. As part of that seek to understand the ratios of shoppers in each category. Here is a typical example:
Young Families with childrenYoung Families with no childrenSinglesRetirees (late versus early)Families with teenagersFamilies with no kids now (left home)Income profile for the average shopperWorkers in the area each dayTourists or people that pass through (near transport corridors)The list may go on subject to the area in which your property is located. Importantly the list will give you a profile of the people that shop, when, and why. From that process you can make some tenant mix decisions in your property.
To get tenant mix ideas in your local area you should visit other properties that are comparable with or better than the property you are working on. See what is working for them and what is not. Talk to the tenants in those properties to see what they think about the current shoppers and the trends.
Tenant mix and strategy is all about gathering facts before you make decisions. The property can then be optimised for the future.
John Highman is an expert real estate author, conference speaker, and coach. He helps Real Estate Agents to improve their market share, listings, and commissions. You can get a free ebook of real estate tips and tools right here at http://www.commercial-realestate-training.com/
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