From Vacancy to Vibrancy: Revitalizing Shopping Centres Through Strategic Leasing
When you have a retail shopping centre to lease or manage, there are many tenant and leasing issues to investigate. Finding a tenant to fill a vacancy is not just a matter of placing any tenant that can pay the rent; it is finding the right tenant that matches the property, the customer base, and the tenancy mix. A strategic leasing plan best addresses requirements.
Start by assessing all the facts you have and can see as part of the leasing plan. That will be your target customer base, current sales levels, best tenants, the anchor tenants, and local area demographics. Also look for the property weaknesses as they will be there.
Look around the property. Ask questions about the property, the tenant mix, and the people visiting. Where are the weaknesses and opportunities? What needs to change? What are your priorities in addressing upgrades, tenant relocations and changes, and property performance?
Download retail property checklist here
Checklist for real estate agents in sales, leasing, or property management.
Get the fully detailed retail property and shopping centre checklist in PDF form for your ongoing reference and use in sales, leasing, or property management activity with investment properties.
Retail Leasing Stakeholders
Establishing the leasing plan requires considering all the shopping centre issues and stakeholders. A checklist is an excellent way to approach this, as there are potentially many issues to raise and consider.
Not all retail properties are the same, given the location factors and layouts, so build your leasing plan around what you have in the property, what can happen to improve it, and know what your leasing targets are over time. It can take years to complete a property change program that has a leasing outcome. As every tenant gets to the end of lease, you then have choices to make and replacement occupants to be found.
Consider the property design, vacancy factors (current and new), and the competing properties in the region. Do a full assessment of the competing properties to identify who they attract as customers, how successful they are, and how they compare to your property.
Building the leasing plan
Once you have considered all the abovementioned factors, you are ready to start creating your shopping centre leasing plan. Given property changes and economic pressures from the location, you can and should update the leasing plan every quarter.
Leasing Plan Strategies
What are you trying to achieve with this plan? When the leasing plan is drafted and approved, it is merged into the retail property’s business plan. Every retail property should have a business plan that addresses and includes all these issues:
- Tenant mix review: Who are your best tenants, and why is that? Use your better tenants as a ‘customer magnet’ and encourage sales in the clusters around the better tenants.
- Anchor tenant review: How many anchor tenants do you have, and are they well integrated into the customer shopping patterns and requirements? How are the anchor tenants tracking now, and can they improve in any way? Staying close to anchor tenants is always a good idea so you know that they are doing in advance with tenancy upgrades and changes. How are your anchor tenants tracking today in trade?
- Market rents: As you consider your market rents, assess the activities and rents in nearby retail properties that could be competitive to your property. Market rents are variable and include incentives, gross rents, net rents, face rents, and effective rents. Tenancy size and type will also place pressure on rentals.
- Specialty tenant review: Complete a SWOT analysis of your existing tenant mix and rank all the tenants into merchandise groups and ‘suitability’ categories.
- Service tenant review: You will have a few of these, so know what they do for your property performance plan.
- Other tenants reviews: This could be broad and include car detailing, bulky goods retail, pad retail tenants.
- Zones and property layout: Get some plans and drawings of all the particular areas, such as the entranceways, malls, common areas, food courts, fashion zones, car parking, and transport drop-off zones.
- Special situations and considerations: In a retail property, you will work towards change situations. Understand what they are and how they can impact occupancy.
- Maintenance and capital work programs plus property upgrades: A shopping centre is a property of high maintenance and upgrade activity. When tenants leave or move, there are opportunities to lift the property presentation or get things done. That is where the maintenance and capital works programs are valuable.
- Retail marketing of the centre and the tenant mix: As a final note in considering and structuring your leasing plan, consider the marketing plan for the property, how it works, and when it would be good to change or move tenants around. Build a timeline for those changes and a budget of rents and costs.
These elements will help you establish and implement a leasing plan for the tenant mix in your retail shopping centre. Establish the plan as soon as you take over the property and then update it quarterly.
