When you lease a retail property and particularly a retail shopping mall or shopping centre, it is critical that you understand and optimise the tenant mix for the property. A good tenant mix will help you with tenant sales, repeat customers to the property and much more.
It should be said that a successful retail property is a fine balance of a number of things. Here are some thoughts on that:
- You should choose the right tenants for the property. That can be a difficult task because you must identify what the surrounding area and customer based is looking for.
- Placing the right tenant into the best location will help you build clusters of tenants in zones within the property.
- Upcoming vacancies will threaten the income for the property. Always keep an eye on the leases, and the intentions of the tenants in situ.
- The market rent for the property is one thing, but the rent that a particular tenant can pay is another. Some tenants because of the nature of their business will have limitations on just how much they can pay in rent. That may not be the same figure as the market rent for the property.
- The landlord for the property will have investment plans that can impact the property performance and renovation requirements. Good planning is required to keep those factors in balance to everything else.
So given all of these things, you can see just how important the tenant mix is to a retail property and its ongoing financial performance. If you have a pending or current vacancy in the property, you do not just fill it with the first tenant that comes along; you plan the process and set some clear targets as to the tenant that you require and just how you will locate them.
Here are some rules to help you establish your tenant mix and strategy for your property. You can add to this list based on your location, the landlord, and the property today.
- At the beginning of any review of tenant profiles and requirements, look at the existing leases. Understand just how those leases work today when it comes to rent, rent reviews, expiry dates, options, outgoings recovery, renovations, relocations, and critical dates.
- Talk to the landlord to understand just what they want from the property and just how long they intend to hold the asset as an investment.
- Talk to the tenants in the property so you can identify any weaknesses in trade or operation.
- Survey the customers for the property as part of identifying exactly what they are looking for in tenant services and goods.
When you have this raw data and information, you can start to analyse the property and where it is headed from a tenant perspective.