When it comes to leasing and managing a retail shopping centre today, you need a source of good tenants to underpin your tenancy mix and vacancy profile.
Many retail tenants come and go from the property as part of the typical tenancy mix churn. There is no point waiting for the vacancy to occur in your tenancy mix.
It pays to take action before the event and keep in contact with the right types of tenants that can move into your property.
Shop Leasing Facts
Here are some observations regards retail leasing as it applies to shopping centres.
- MAINTENANCE: If the property is not well maintained it will detract from occupancy and customer visits. The property becomes too hard to occupy and generate sales. Landlords that cut corners on property maintenance usually find the elevation in vacancy rates and lower market rentals becomes a problem. There is a distinct partnership between the tenants, the landlords, and the customers. All parties need to work together to create harmony in a retail shopping centre. Maintenance of the property will be part of that. Develop a maintenance plan for the property that attracts customers and tenants alike.
- MARKETING: If the property is not marketed into the local shopping community, it is quite possible that surrounding properties will attract more of your customers. The marketing process in retail shopping centres is part of the annual business plan to support rental and tenant stability. It is not unusual for landlords to contribute towards the marketing of the shopping centre in addition to the marketing contributions of the tenants. So what is the marketing plan for the property over the coming 12 months? Those decisions should already have been made taking into account seasonal festivities, the region, the climate and the community. The marketing plans for shopping centres today are complex and include websites, social media, community groups, tenant involvement, and customer factors of attraction. When you get the marketing plan on paper as part of the property business plan, you can improve it year by year.
- LOCAL PROPERTIES: You can find new tenants for your property in other retail properties nearby. This says that you should be monitoring the activities of all competing shopping centres and the relative tenant mixes. Tenants will leave other properties for various reasons, and in most circumstances will want to establish trade in a nearby location. It is important that you identify the right tenants and not those that are struggling to establish their business. Focus on the right tenant groups that can balance your tenant mix. Work with the tenants in other properties well before they get to lease expiry.
- FRANCHISE GROUPS: Keep in contact with the local retail franchise groups, and the franchise tenancies. These groups will have property people that select new retail premises for incoming and new business owners. It is a wise move to understand their business model and their desired property type. Some of those franchise tenants will have a need for other locations. Typically these franchise groups will also have a specific lease document that they use when they negotiate for new premises. This is not normally a problem although the documentation does need understanding on the part of the landlord and the landlord’s solicitor. There may need to be some negotiation within the lease document to allow the landlord to have some desired points of control over the duration of the lease term.
There are always groups of tenants that are more successful than others. There are always properties that are more successful than others. Identifying these opportunities and working with them will help make you a successful commercial leasing agent or property manager.