Commercial Real Estate Agents – Your Blueprint for a Better Tenant Mix

In retail and commercial property today, the tenant mix is quite important to the property’s performance. Good tenants within the mix need to be retained, and low-quality tenants need to be replaced. This is a strategy and part of a tenant retention plan.

The suggestion here is that every vacant tenancy should be considered relevant to the property and the surrounding tenants. Whilst the landlord may require only the vacancy to be filled, the tenant replacement strategy should be to find the right tenant who will encourage more trade to the property and eventually sales to all the tenants.

Choose The Best Tenants for the Right Location

Here are some ideas to help you establish the right tenant profile across the property and improve the tenancy mix.

1: Retail Leasing Business Plan

Every medium—to large-sized property should have a business plan designed to support property performance. Within that property business plan, specific strategies will be related to income, expenditure, vacant tenancies, new leases, tenant movement, renovation, and refurbishment. A tenant retention plan will be part of this process and will include a tenant mix analysis.

2: Customer Base and Location

Look at the particular property in question’s location and customer base. This is highly relevant to retail properties. Is the customer base under any pressures of change, expansion, or contraction? These factors must be identified and built into the property performance plan.

3: Identify The Best Tenants

Look at the existing tenancy mix to identify the desirable and undesirable tenants. In most cases, you will want to keep the desirable tenants for the long term. Strategies will need to be developed to allow you to offer those tenants ongoing lease opportunities. Standards will need to be set regarding market rental, incentives, rent reviews, and options to be used in each case.

4: Tenants to Replace

Any undesirable tenants and the property should be assessed for the chances of replacement. The leases with these tenants will need to be reviewed for expiry dates, and good provisions, options, and lead times will need to be made to allow replacement tenants to be found.

5: Market Rental Assessments and Predictions

The market rental in the local area should be assessed every six months. The assessment will take into account the changes in market rental with the competing properties in close proximity. What will the market rent do in the property over the next 12 months? That is something to think about.

6: Vacancy Rates and Future Supply

A monthly assessment of vacancy trends should occur for different property types. This will prepare landlords for the required adjustments to lease incentives and lease terms and conditions. Consider the supply and demand factors that apply to the property type and the location. How are things changing? What do you need to consider when there are shifting vacancy rates and changes to tenant supply in the property market?

7: Predicting Leasing and Occupancy Changes

The supply and demand for leased space in the local area will change throughout the year. Any oversupply should be identified as early as possible, as it will impact market rentals.

Check out the new property developments that are going through the local planning office. Whilst there is always a lead time to construction and property occupancy, any new leasing project will pressure existing nearby properties.

Leasing Conclusion for Agents

As a local real estate specialist, you must understand precisely what the property market is doing with market rentals, incentives, prices, and vacancies. Contact landlords, tenants, and property developers to stay ahead of the market.

Create graphs and statistics to support your leasing strategies and recommendations to landlords. Merge facts about market rents, incentives, tenant requirements, lease terms, and rent review strategies into those numbers.