Tying Down the Real Facts in Shopping Center Management and Leasing
When you are about to lease and or manage a shopping centre, there are things to understand and get under control. All facts require full investigation and documentation. In saying that, an active tenant mix and customer base in a large shopping centre can complicate and make more urgent those investigations.
So where can you start with this? The basic rule from the outset is that all questions and investigations should be documented and orderly. Information will lead to choices that can impact the property for years to come. There is a property investment focus here to work with. There is a landlord client that is looking for improved property performance and cash flow stability.
Retail Shopping Centre Facts to Investigate
Here are some questions and ideas that will help you with this idea and property focus:
- Where are the vacancies and risks? There is likely to be some vacancies existing today and or some coming up. Look for them and address them. Put in place leasing strategies and solutions to solve the vacancy pressure as quickly as possible.
- What is income doing now? The income for a shopping centre will involve rent, arrears controls, expenditure pressures, and capital works. Review the income for the property today and look for anything that could frustrate property performance for the long term.
- What is the tenant mix for the property, and does it work? The choice and placement of tenants in the asset will strengthen or weaken the investment performance of the property. Understand the tenants and all the supporting documentation so that critical dates and rent collections are fully under control.
- How are sales in the merchandise groups? A successful shopping centre will have a strong sales performance across most if not all the merchandise groups. The weaker tenants should be encouraged and supported with marketing ideas and guidance.
- Who are the top tenants in the tenant mix and why is that? Know your better tenants and help them to strengthen their sales position. That will then have some flow through effect to other parts of the property and the greater tenant mix.
- What are the upcoming critical dates? These are the important dates in leases relating to expiry, options, outgoings recoveries, renovations, and relocations. Look for the dates and ensure that they are all fully satisfied and up to date.
- What do the tenants think when it comes to occupancy, and how are relations with the landlord? A positively performing tenant mix is usually closely aligned to the plans and activities of the landlord. Ensure that the landlord understands the balance of the tenant-landlord relationships in the property. Keep positive communications flowing between the landlord and the tenants. The centre manager is the right person to do that with due regard to property performance and all strategic decisions.
- What are the existing matters of risk? Risk can be physical or financial, so look at the fuller property and how things are tracking today. Investigate everything relating to the landlord, the tenants, and the customers. Are there any problems or ‘weak links’ between or across those groups when it comes to risk and property performance?
- How does the asset perform for occupants? This then is an assessment of the property and how it currently services customers, tenants, and the landlord. It is a ‘flow on effect’ from the risk assessment mentioned earlier. Compliance to building and health and safety codes will come into that review.
- Where are the leases and can you review them? All leases and associated documentation should be reviewed in full. There will be unique communication situations or factors of compliance between the landlord and the tenant that will be set out in the lease. Understand those things and ensure that all parties are fulfilling all obligations and dates.
So, these are just the start of the shopping centre review process. Questions like these and others will help you get the property fully set for ongoing occupancy and or investment growth. That then is a positive way to improve asset performance.
