When you are involved with a shopping center from a leasing or management perspective, the tenant mix is something that you will spend a lot of time on. Given that most leases exist for a number of years the changes to tenant and lease location take time to implement. The changes that you make to the mix and the tenants that you bring to the property are likely to impact customer attraction and sales across the property.
The requirements of setting rules to tenant placement and selection apply from the smallest of shopping centres to the very largest. That is where the leasing manager and property manager bring specialist skills to the process. Consider these facts:
- How does your tenant offering compare to other nearby retail properties of similar type?
- What are the strengths and weaknesses in your group of tenants?
- What are the next steps in improving your retail property performance using the tenants as the drivers of change?
- How are retail sales now given the impact of customer sentiment and the economy?
These questions will have relevance to the leasing and marketing strategies for the property.
Many times I have been involved with fixing retail shopping center leasing problems both large and small. Some of the most common problems I have come across include:
- Too many lease expiries coming up at the same time and thereby risking rental returns and outgoings recovery.
- Tenants not trading well and consequently creating a ‘sales black spot’ in the property.
- Poor levels of presentation and shop front control of the retailers thereby sending the wrong presentational message about the shopping center
- Lease terms and conditions that do not match the investment targets of the landlord
- Customer comfort not being considered or encouraged in property design and common area use, thereby impacting customer retention and retail sales per visit.
- Tenant volatility and mismatch causing fragmentation or lack of tenant cooperation in property marketing and promotion
These and other factors can be planned and controlled; that is why a retail property business plan is a major part of establishing and controlling property performance.
The success of a retail shopping centre will largely hinge on the selection, the placement, and the number of tenants chosen for the overall tenant mix; those decisions should be based on retail offerings matched to the customer profile. Understanding the customer is part of that process.
To give your retail property an injection of sales and underpin market rental, consider doing a customer survey at least twice per year. Determine factors such as these:
- What your customers are looking for in retail product
- How much they spend per visit
- How many times they will visit the property per month or week
- How they get to the shopping center
- Determine the dominant retailers per location and merchandise type
- What they think may be a good choice of new tenant
- What other nearby properties they may also visit for other products and services
When you know these things, you have something to work with when it comes to property and retailer promotion. The success of any retail shopping center largely hinges on the choice of tenants, the marketing process for the property, and the landlord involvement in helping the tenants trade successfully.