The performance of retail properties and shopping centers is constantly under pressure. This is because there are always plenty of tenants in a retail property, and rental income varies greatly depending on the tenant mix. Tenants may be subjected to business or occupancy pressures.
A “game plan” is a good idea for shopping centre managers to create and implement to achieve property performance and results sustainability. This ensures that centre managers stay on task and do not overlook any critical issues. The larger the retail property, the more complex the problem.
Factors to Consider
So what could a “game plan” be for your retail property? To answer the question, there are a few things to consider, such as:
- The property improvements
- The location of the property and its history
- The tenant mix
- The customer shopping patterns and demographic
- The client’s investment plans
- Comparable properties
These issues or questions aim to fully appreciate things as they are now and how they may change in the future. Shopping centre management and leasing strategies are strategic processes that the centre manager personally drives. Skills, experience, and recommendations are critical to successfully managing a retail property.
Planning for the Retail Game
Here are some suggestions to assist shopping centre managers in developing a “game plan” for shopping centre management and leasing. You can add to the list depending on the property and your location:
1. Tenancy Mix
Understand the tenancy mix as it is today and the pressures it will or may face. Since you are working with many different tenants across a retail property, each tenant is under a lot of pressure regarding sales, business, and occupancy.
Some tenants are superior to others. Because each tenancy is a unique standalone business, regular meetings and business updates are recommended to ensure that the tenancy mix is stable, and threats are minimised.
Minutes, documentation, and progress reports can be used to support regular tenant meetings. You can also incorporate those strategies into the shopping center’s retail business plan.
2. Business Planning Retail
Following the previous point, every shopping centre should have a business plan in place before the start of each fiscal year.
This business plan can consider income, expenses, vacancies, maintenance, and critical dates. Incorporate an income and expenditure budget based on the current tenancy mix and anticipated changes in rentals and leases into the business plan.
The good news is that the business plan can be shaped and changed monthly or quarterly as the year progresses. In retail property performance, you cannot predict everything but control the variables and opportunities.
3. Known Market Trends
Examine and research the market trends relevant to the property and location. Other retail properties in the area will have an impact on your retail shopping centre.
Look for pressure points as well as opportunities. Understand how and why your customer base may visit your shopping centre. Attempt to increase customer visitation and, as a result, sales across the tenancy mix.
4. Improving the Tenant Mix
How can the tenant mix be improved? There are also numerous leases to review and comprehend; expansion, contraction, and relocation factors can be incorporated into the tenancy mix to increase customer interest and retail sales.
Managing the tenancy mix is a strategic process that changes annually to account for economic pressures and retailer performance.
Priority tenants, shop design and relocation, market rentals, vacancies, and tenant retention should all be part of the tenancy mix plan. Consider keeping your better tenants while moving or removing the weaker ones at the appropriate time.
5. Vacancy Predictions and Plans
What are the vacancies and leasing plans for the rest of the year? Changes can occur in your shopping centre for reasons you may not notice until the last minute.
Have a leasing programme ready for any shops at any time as part of the property’s business plan.
The leasing programme should consider targeted rentals, market rentals, shop design, lease incentives, and the ideal terms and conditions for a new lease.
As a result, the leasing plan benefits the property investor in terms of future targets and opportunities.
6. Critical Dates Watch
Create a critical dates calendar for all the leases in the tenancy mix and any other occupancy documents. For the next two years, the critical lease dates calendar should be forward-looking.
Rent reviews, options, lease expiry dates, rental changes, and any other changes generated by the lease document for each tenant should all be considered with a calendar.
Game Plan Summary
When it comes to managing and leasing shopping centres, these are some of the essential factors that can serve as a basis for your “game plan”. However, it’s essential to remember that every client and property is unique, so your plan should be tailored accordingly.
By taking these factors into account, you can have some level of control over the retail property’s performance and direction, considering the current economy and location.
This level of control and direction ultimately benefits the client, allowing you to make clear retail recommendations about improving the property’s performance and moving forward strategically.