As a retail shop leasing expert you can easily get confused and frustrated in finding new tenants and working with some landlords. The pressures of fixing a vacancy and restoring a retail property to full occupancy can be overwhelming; that is certainly the case if you have a large retail project or shopping centre to lease. The market rents, incentives, landlord targets, and lease terms can vary greatly; you need to know what you are doing before the lease negotiation starts.
So the message here is that you should stop trying too hard in retail leasing and simplify your processes to the things that really matter. Break down the issues and the requirements into chunks of activity that can bring you results.
Retail shopping centre leasing is relatively easy when you know lots of tenants and you work your database of contacts accordingly; constant contact is required. It is then simply a matter of focusing negotiations on the facts of the market relative to the property and the landlord. Essentially you are bringing the parties together.
Here are some factors to help focus your efforts in improving retail shop leasing and property performance for the landlords that you serve:
- Look at all the competing properties locally so you know what the leasing and vacancy trends are doing. You may even be able to attract some tenants from other properties. To help with that, track the changes to the tenancy mix in competing properties as well as maintaining contact with other successful tenants in each property.
- Franchise retail tenants and chain retailers are of value in most retail properties. Today we have retailers that specialise in merchandise categories such as ladies fashion, shoes, menswear, gyms, electrical goods, and fast food. The advantage of the franchise tenant is that they bring an established business system and brand to the shopping center. The franchise group will usually scrutinise the tenant before they find a property and lease situation to negotiate.
- Landlord targets will vary. If the landlord is biased towards long term property success, then the lease terms are likely to be more important to them than the starting rent. If however the value of the property is an issue for the landlord, then market rents and passing new income will be a critical point of consideration. That’s where an experienced retail leasing specialist can bring great opportunity to a retail shopping center and the plans the landlord may have for its future.
- Clustering of tenants becomes an important issue when you are leasing a larger retail property with a few entrances for customers, and zones of retail shops. The clusters of specialty tenants should attract sales in each zone, and then encourage movement across the property by customers to pass to or through the anchor tenants.
- Merchandise mix and tenant mix factors are parts of the property business plan and the tenant retention and leasing strategy for each year. A vacancy and a lease negotiation undertaken should be matched to the property business plan; in that way you do not make too many mistakes in tenant placement. That then helps you underpin customer interest in the property and thereby retail sales.
- Renovation and redevelopment issues happen quite frequently in a retail property (at least once every 8 to 10 years on average). On that basis every negotiated lease should be considered for its associated presentational issues and impact on the property renovation plans. A lease should be negotiated to expire at a time when renovation of a zone of the property could be undertaken or changes to the tenant mix could be done. Many landlords will not give lease options in their shopping centre for the very reason that the options can interfere with renovation requirements.
As I said earlier, the retail leasing part of our property market can be simplified to make things a lot easier. It is a matter of focusing on the needs of the tenants and the landlords. It is very hard for a landlord to ignore the leasing agent with a complex and up to date retail tenant database.