The process of leasing a retail shopping centre is quite special. It is not just a matter of finding a tenant and negotiating a lease. The chosen tenant must match the needs of the tenant mix, the property and the customer demographics. There must be a plan to the process of leasing any vacant premises.
So often you see landlords choose a tenant to solve a vacancy issue, only to see the poorly selected tenant underperform over time, and then drag down the tenants in the adjacent premises. If a tenant is trading poorly or is not matched to the property it can be easily seen by other tenants and shoppers.
Here are some leasing tips and ideas to help you get your tenant mix and vacancy profile under control.
- Check out the other properties in the local area to ensure that you understand supply and demand pressures. How much vacant space is available in the local area and competing properties?
- Are there any new property developments coming into the market over the next 24 months that could have an impact on upcoming vacancies and lease renewals?
- What are the rates of rental that apply to retail properties locally now? Be aware of the differences between regional, community and local shopping centres. Inspect the properties to assess presentation, location, age, and shopper demographic.
- Are there any incentives active in the leasing market today? To a large degree those incentives will be driven by supply and demand for premises. Check out the types of incentives to ensure that you know what the market is looking for.
- Understand the base building designs that can have an impact on tenant selection. Small tenancies should be well selected to balance the clusters of tenants nearby. Clusters of tenants encourage shoppers to move from shop to shop in the one general location.
- What are the customers looking for when it comes to retail products, goods, and services? To assess this you will likely need to consider other local properties and see what their tenant mixes are doing and offering. How successful are those other properties and why are they successful? Should you replicate some of those positive tenant placements?
- Before you start marketing and leasing any vacant retail space in your shopping centre, set yourself some limits on rent, rent type, incentives, and lease conditions. When you have something to work with that has been approved by the landlord you can control the inspection and negotiation process. As part of that process, understand market rents and just how your property is positioned relative to that.
- Consider the branding ability that will come with any new lease in the shopping centre premises. Set some controls on the signage and branding to be used by the tenant. All tenants should have limits placed on signage size, colours, placement, and illumination. In this way you can control the visible appearance of the shops to encourage logical retail appearance and attractiveness.
Retail leasing is not hard; it is just very different. Marketing and presentational issues come to the fore in retail shop leasing. You should only choose a tenant that works for the property and the tenant mix.