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Attractive Shopping Centers Create Better Customer Sales and Tenant Results

If you are a specialist in retail shopping centre leasing and management, you will understand the importance of retail property appearance and design.  Customers like to feel comfortable, safe, and happy as they move around within shopping centres and look for the goods and services that they require.

A good shopping centre experience will encourage immediate sales and repeat business.  You really do want your customers coming back to your shopping centre in a regular and ongoing way.  The benefits to both the tenants and the landlord are significant over time.

Shopping Center Facts

Consider the following facts:

  1. A GREAT PROPERTY: A successful shopping centre will attract more customers and tenants in an ongoing way. It is quite easy to see when a shopping centre is trading at successful levels; the customers to a retail property can also interpret and see those issues.  When the tenants are successfully trading within the property, the retail sales are likely to reduce both tenant mix volatility and vacancy factors.  So the focus here is to make your shopping centre visually successful in every way possible.
  2. VACANCY CHALLENGES: If you have any vacancies to work with, then do so selectively and professionally. Keep a close eye on your lease expiries coming up and your lease renewals.  Negotiate those issues early and directly with the tenants involved.  Don’t let vacant shops remain vacant for too long.  Put covers and hoardings across vacant shop areas.  Put advertising material and marketing material on those holdings.  What you want to do here is remove the visual negativity of the vacancy from the property and the customers.
  3. PROPERTY PRESENTATION: Set some standards within the property relating to retail tenant signage and shop presentation. The signage for retailers should be commonly positioned and designed.  Good signage will always help with the level of sales and the customer experience.  Signage specifications will maintain the quality and the positioning of that signage.
  4. VISUAL STANDARDS AND ILLUMINATION: Lighting standards will always help with property presentation and believe it or not sales. Most retail shopping centres today are trading at all hours and on that basis seven days a week.  The lighting strategies within the retail property, in the car park, and within tenancies should be suitably specified and maintained.  Poor lighting directly reflects in poor retail sales.  The lighting within the common areas and within the individual tenant shops should be specified for maximum retail impact and customer safety.
  5. WHAT CUSTOMERS THINK: Understand the customer experience from the very time that they enter the property. Look at how customers into the car park, how they move through the car park and into the shopping mall or shopping centre.  Look at the factors of signage, lighting, security, and common area design.  Are the services and amenities of suitable quality to encourage customer use and help them stay longer within the property?  If you can extend customer visit time, you can potentially improve the levels of sales across the tenancy mix.
  6. TENANCY FACTS: On a final note it is worthwhile recommending that you do a full tenancy review and a tenant mix study with any shopping centre on an annual basis. It is a professional service that you can provide to the landlords that you work with.  What you want to do here is understand where the threats to the tenancy mix are potentially derailing tenancy sales opportunity and or customer visits.  The right tenants chosen for the property will encourage shopping centre success over time.  Any weaknesses within the tenancy mix should be resolved or remove over time.  Understand what the customers expect and require when it comes to the standard shopping experience.  Undertake a customer review all marketing survey on a regular basis so that the tenant mix changes are driven from customer information and tenant mix performance.
  7. KNOW THE FACTS: Delve into the facts about the property. When you take a serious look at your tenancy mix, you can see the challenges, the strengths, and the weaknesses with the anchor tenants, and the specialty tenants; a full tenancy review should occur each year as part of the property business plan.  Split your tenancy mix up into desirable tenants and those that should be removed at the next leasing opportunity.  Also look for the missing tenants within the tenancy mix that you can target and find when vacancies arise.  Visit other local shopping centres on different days of the week and at different times of the day to see how they are performing from a tenant mix perspective.

So there are plenty of good things that you can do here when it comes to retail property performance and shopping centre tenancy review.  Maintain the appearance and the function of your shopping centre so that it can attract the best tenants and for customers.

The activities of customers and tenants are always linked when it comes to shopping centre performance.  As the leasing manager and or the property manager, you are the best person to develop effective and direct strategies across those issues.  Over time that means you will be help in the property performance and landlord results.

You can get more tips about Shopping Center Management and Leasing in our eCourse ‘Snapshot’ right here.

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Commercial Real Estate Brokers – How to Improve a Retail Tenant Mix

In any retail property or shopping centre a specific tenant mix strategy is essential to encourage sales and trade for the tenants, whilst also underpinning retail property performance for the landlord.  The retail plan or strategy helps with key issues such as lease negotiation, tenant selection, retail tenant clustering, and occupancy targets.

Any retail property should have a tenant mix plan as part of the annual property performance scheme.  Something has to draw customers to the property in an ongoing way.  That is where the plan and the mix become important in the leasing process.

The Base Strategy

So, in doing this a number of things come together to make things work successfully for both the tenants and the landlord.  You could say that a successful retail property is a product of a finely balance landlord priorities, tenant placement, and tenant occupancy relationship; the retail leasing strategy is at the centre of all of that.

So what are the elements of a tenant plan for the landlords that you work with?  How does the mix become important in the performance of the shopping centre in your location?  The suggestion here is that all the tenants and leases within a property should be looked at in a ‘global’ fashion and compared to property market conditions and opportunities.

The Vacancy Factors?

If a vacancy exists in the property, then the ideal tenant to fill the vacancy should be located into the cluster of other tenants within that property precinct.  That is why you do a mix review to answer questions like these below:

  • What are customers looking for in the property?
  • How many tenants do you have in each of the retail segments? (e.g. fashion, food, sports, travel, etc.)
  • Given the retail segments in the property, what are the most successful and why is that?
  • Understanding the sales numbers from the property, what are the successful rental generators by tenant type?
  • What will be the ideal lease duration in that location?
  • What market rents should you ask for the target tenant type and location?

When you know the answers to these questions then you can move ahead into the specific decisions impacting the lease negotiation in any shop vacancy that you may have. You can then improve the retail tenant mix.  Those questions to put you on track would include:

  1. LEASE DURATIONS: Given the other tenants in the vacancy proximity, what will be the lease duration and expiry date that will not overlap or complicate other vacancies in the same general area of the property?
  2. RENTAL ESCALATIONS AND OPTIONS: What will be the standards of rent reviews and lease options to be set in seeking a new tenant? In most cases you will want these issues to favour the landlord and their investment targets.
  3. THE BEST RENTAL TYPE: Will you need a net or gross rent for the location? Your decision will impact incentives and outgoings recoveries for leasing the space.
  4. TENANT MARKETING STRATEGY: How will you market the space? Your targeted group of tenants will require a specific marketing approach; generally that will be a mixture of direct mail, cold calling, door knocking, and industry publications.  You can also talk to other tenants in the property in case a clear match of new tenant can be encouraged through existing contacts.

So there are some things that can be done here with any single vacancy in a retail property.  The tenant mix becomes an important factor in property performance and optimisation.