When it comes to the leasing and managing of commercial and retail property today, it is wise to adopt a tenant mix strategy that encompasses the requirements of the landlord and the special attributes of the property.
The designing of a tenancy mix can be quite a specialised process. Local market knowledge will assist you greatly when it comes to establishment of the plan and implementation of the tenant placements.
Here are some ideas to consider as you create the tenancy mix analysis and plan for the landlords that you work with.
- Before you focus on the particular property, do an analysis of competing properties in the overall general location. That analysis should include their tenancy mix, customer demographic, property improvements, and vacancy factors. Determine whether those properties are successful or struggling when it comes to property performance and tenancy placement. You can also talk to the tenants within those properties to ascertain the overall success of property performance and lease convenience. The weaker properties in your location may be suitable targets when it comes to attracting tenants to move towards your property.
- Undertake a lease review of your subject property. Look at the critical dates that apply to lease expiry, rent reviews, lease renewals, relocations, and renovations. All of these dates will have some bearing on the tenancy mix strategy and approach to be created. Make sure that all of these dates have been suitably activated and that no critical dates have been overlooked. Also look for the dates that are soon to be requiring action on the part of the property manager or leasing manager. Those dates will require a specific and immediate strategy in your tenancy mix analysis.
- Review the customer demographics that apply to the local population and the business community. The history of the area will show you how properties have changed over recent years. The existing customer demographic will show you what customers are looking for now, and this will be of great relevance when it comes to a retail property. When you understand the existing customer demographic, you can consider the potential changes that will arise in coming years. Most particularly you should be focusing on the next five years as part of your tenancy mix analysis. Beyond that time it is hard to make any predictions.
- Visit the local planning office to get details of any new property developments or changes to property zoning. Some properties and new developments can have major impact on the function and performance of other nearby property investments. Property developers will normally attempt to shift tenants in their direction through the attraction of incentives and variable rental structures. Beware of the new developments nearby and get the required details of current rents on offer.
- Study the existing leases within your property and talk to the existing tenants. These tenants will share a lot of information regards property performance and local customer requirements. If your property is of a retail nature, customer requirements will be critical in the overall tenancy mix strategy and plan.
- Get details of the other market rentals in the local area that apply to properties of similar type and age. As part of that process, try to pick the trends of market rental over the last two years to see if the rents have declined, escalated, or remained static.
- The outgoings that apply to property occupancy will have an impact on the landlords net income and tenant occupancy. Those outgoings could be part of the lease and rental recovery strategy use by the landlord. Review those outgoings to ensure that they are compare of all to local market trends and are not above the averages when it comes to property operating costs. Any investment property with higher outgoings will be harder to lease and will therefore require a specific leasing strategy to offset the outgoings cost problem.
So these are some of the ideas that can be applied to establishing a tenant mix strategy. When you have this information, you can move into the second phase of the process which will involve the choice of tenants, tenant placements, and clustering.