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Renovation Strategies for Retail Shopping Centers Today

A retail shopping center is a business within itself.  It is a cash flow produced from the tenancy mix and the customers to the property.  The shopping center manager and or shopping center leasing manager should be well versed when it comes to optimizing the performance of the property.

A successful shopping center is a fine balance or equation when it comes to the following issues:

  • The rental for the property produced from the existing leases
  • The minimization of vacancies across the property given the existing tenancy mix
  • Market rent reviews that are negotiated as part of ongoing occupancy
  • Lease renewals with the high value tenants that you have chosen within the mix
  • Stabilization of anchor tenants and their interaction with other tenants across the property
  • The renovation and refurbishment strategies that apply to the common areas, tenancies, and exterior building.

With a focus on the last point in this list, you can easily be seen that renovation and refurbishment is a critical component of retail property performance.  The wear and tear factor that applies to a retail shopping center is much higher than a commercial or office building.  This then says that the shopping center needs to be carefully managed when it comes to appearance, renovation, and the overall shopping experience.

People shop for just two or three reasons.  Those reasons are:

  1. Requirements for their necessities of food, convenience, and clothing
  2. A feel good experience when it comes to buying the discretionary items of life
  3. Goods and services required to replace worn out items

A shopping center therefore has to have a mixture of tenants that satisfy all three needs.  The tenancy mix within a retail property is therefore critical to ongoing customer interest.  A retail property without customers will die very quickly.

Taking all of these things into account, the renovation strategy that you adopt for the Retail Property should be woven into the intentions of the tenancy mix, lease renewals, new tenants, and customer spending patterns.  Here are some rules to the process:

  1. There will be better times of the year to renovate the property.  Understand the patterns of the shopper as they apply to shopping throughout the year.  These patterns will help you understand the best times to undertake renovation.  It may be that renovation is only partially undertaken in different zones of the property as the year progresses.
  2. Prior to any renovation commencing, communicate the fact to the broader customer community and tenants.  Let them know what is going on.  Send flyers through the tenant customer sales activity, as well as the local mailing distribution lists.
  3. The renovation of the tenancy should be well publicized and well marketed.  If you know the replacement tenant to move into the renovated area, put that information on to the surrounding billboards and protective hoardings.
  4. As part of refurbishment, you may wish to change the size of tenancies and or the type of tenancies.  This therefore becomes part of the overall business plan for the property.  Plan the clustering is of tenants around particular zones and traffic areas.  Take special care when it comes to the entrance ways to the property given the image that renovation and refurbishment can have at the entrance way.
  5. It is normal for a landlord to justify the renovation of a property based on increased return.  That return will normally come from an improvement in market rental.  Market rental will only increase if you create more tenancies, renovate on a rising market, or bring new tenancies into the property that are of high quality and cash flow.  Be very careful when it comes to the expectations of tenant and income profiles over the coming financial period after innovation.  Many a landlord has made a mistake when it comes to income expectations.

All of this then says that the renovation or refurbishment can occur providing you balance the tenants, customers, leases, and seasonal sale patterns to the renovation requirement.  Plan the process, and everything should do quite well.

You can get more tips like this in our Newsletter.

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Commercial Real Estate Agents – Dont Be Hard Pressed for Listings this Year

It is a common event that some agents will be hard pressed for commercial real estate listings during a working year.  The problem develops when you are not prospecting correctly or enough.

The knee-jerk reaction is to go and get more listings and most particularly anything that you can find.  That is a big error; quality is the key to the process.  If you want to be a top agent, you must have quality stock.  Don’t waste your time on low quality listings.

Here are some tips to help you with your listings and the prospecting process for them:

  1. It doesn’t really matter that you have only a few listings.  What matters is the quality of those listings.  Quality can be many things but it usually relates to price, rent, location, availability, and improvements.
  2. I have seen many if not most top agents earn more money from fewer transactions each year.  This means that they are very selective to what they work on and when.
  3. Look at the cycle of the property market in your area.  Most markets will have a pattern to them.  Commercial and retail real estate will usually cycle in and out of the market every 5 to 7 years.  This is because the property investor or property owner needs to change.  This then says that you should identify those properties that were bought about 4 years ago.  They will be the next properties to come back into the market.
  4. Every time a competing agent puts a signboard on a listed property, use that listing as the chance to talk to nearby businesses and property owners.  Those nearby people may be seeking to compete with the other agents listing.  You are best placed to help them.
  5. The property market today will have trends when it comes to property choice.  As you advertise and promote more local property you will soon see what properties are desirable.  Selective prospecting will then be a priority.

Many times I have had agents ask me about best ways to get the details of property owners and make contact with them.  There are no easy short cuts to the process.  The best way to prospect is to consistently make it a part of your daily diary.  Two or three hours are what is required.  When you devote the time you will get momentum and that will eventually bring results your way.

You can get more tips for listing commercial real estate in our commercial real estate agent newsletter right here.