In retail property and shopping centres you really do need to know your tenant mix and its volatility. A good tenant mix and tenant retention plan will help strengthen your property income, market rental, and capital value of the property.
So if you as a specialist real estate agent take on a leasing appointment or property management appointment to improve the tenant mix in a property, there are some things to consider; you do this as part of the services and processes that you put in place.
Here are some strategies to handle the tenant issues in a retail property:
- Review all your leases at the very start. You must know where all the income and tenant weaknesses are or could be. What you are looking for initially is rent reviews (current and coming up), options for renewal, lease expires, refurbishment requirements, and permitted uses. Many of these things will involve critical dates in one form or another. Get those critical dates locked into an action plan and talk to the landlord accordingly.
- Assess the market rental that applies to the property today and how that compares to the prevailing market conditions and other properties that are comparable.
- Assess the outgoings for the property and do an expenditure assessment of the property for this budget year. Your tenant rental structure will need to provide strategies in setting the right rents.
- Anchor tenants and specialty tenants in the property should all be looked at. Some tenants will be more essential to the property than others. These decisions will be set in your retention plan. Any leases that are coming to an end with redundant tenants will require a replacement program to support and protect the tenant changeover.
- Customer needs can be assessed with a regular customer survey. Each quarter in the shopping centre you can survey both the customers and the tenants as to what they are wanting in the property and are seeing with shopping needs.
- Review competing properties so you know the current vacancy factor and how it relates to your property. Age and location of competing properties will also impact your assessment.
- Sales numbers across all tenancies will help you decide just who is successful in trading and who is not.
- Seasonal marketing for the tenants will change as will the customer door counts across the selling week and season. Understand the patterns of trade as they apply to the tenant type and the location.
You could say that tenant retention and tenant mix strategies are the more specialised part of the property and agency industry. That being said there is some good commissions and money to be had by property specialists that really know their market and can provide a comprehensive service to clients.