When it comes to leasing and managing a retail property today, the tenant mix strategy and analysis process becomes critical to rental stability and minimising the vacancy factor in the property. Given that this property market is under some pressure currently, you as the leasing manager or property manager need to protect your tenancy mix and the income that comes from it.
A good tenancy mix will reflect in the stability and growth of trade for the smaller tenants in the retail property or shopping centre. That being said, you still need to have the right tenants in the property that satisfy the needs of customers.
Here are some ideas to help you with improving the tenancy profile across your property.
- Maintain close business relationships with all of your tenants. When it comes to managing or leasing a retail property, you should be meeting your tenants quite regularly; that will usually be two or three times a month. Retail tenants are quite volatile and will react quickly if sales are down or the property is performing poorly.
- Understand the leases as they relate to each tenancy. That will include rent reviews, lease expiry dates, lease renewal options, make good provisions, outgoings recovery, and other critical terms and conditions. Make sure that all of these issues are correctly captured into a diary based software program that can tell you well in advance of the actions that you need to take. As a general rule, any issues that are to occur inside the next 12 months should be commence early. In this way you will be well prepared for protracted and slow negotiations if they are to occur.
- Understand what the customers are looking for when it comes to visiting your property. The best way to do this is through some survey process on the property over a period of two weeks each quarter. You will then get a reasonable idea of shopping needs, and customer requirements. You will also identify the weaknesses in the property that can be addressed before they have impact on sales. It is a fact that retail shopping patterns are changing, however they will not disappear. You simply need to adjust your tenancy mix over time to suit the requirements of today’s trends in retail marketing.
- Develop a series of clusters within your tenancy mix. These clusters should be comprised of specially selected tenants that complement the retail offering of each tenant nearby. A customer can then move from one shop to another as they purchase goods. You can also choose tenancies for your cluster that retain the customer’s interest in the property and the location. A coffee type tenant in a cluster will extend the shopping potential of the customer in the cluster zone.
- Within the property you are likely to have one or more anchor tenants. They should have been chosen for their relevancy to the surrounding customer demographic. You can then position the specialty tenants and the clusters based on the location of the anchor tenants.
- It is interesting to note the different shopping habits between males and females. Generally speaking the shopping patterns of females is far more complex to that of males. A female spend far more time in the property moving from shop to shop and looking at many different things. A male will generally go to the property to purchase one or two things and then leave.
It is a fact that customers expect a vibrant property when they visit. This will include presentation, other customers, and great tenants. For all of these reasons, you will need to balance your tenancy mix accordingly.