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:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
If you are a commercial real estate leasing agent, you can get plenty of market traction if you work with local tenants and business owners. They tell you things and that then leads to listings and better commissions with quality property transactions.
Always err on the side of leasing quality when it comes to any property listing or property choices. Why is that? Consider these things:
- Quality properties create better levels of inquiry
- The rents are higher per unit of area
- The commissions are better due to the higher rents
- The tenants are drawn to a quality listing
- Modern buildings offer a level of improvement and services that most tenants require
What are the Leasing Positives?
There are some good things evolving from working in property leasing and resolving tenant needs. Think about these:
- Leasing leads to Property Management – Many landlords are open to property management services when you have just solved a complex leasing issue for them.
- Leasing leads to Sales – A lease today is likely to be a property sale in the future, particularly if you do a great job for the landlord property investor.
- Tenants share local property information – Local tenants will tell you many things about their location and other nearby businesses.
- Landlords want help with tenant placement and tenant mix – Whilst a landlord may have a fully occupied property right now, many leases may be in need of upgrade and renegotiation at the right time in the future. As a general rule, weaknesses in leases can be negotiated away over time with better leases and rents.
- Rental and lease strategies are highly specialized – There are many different types of rents and leases; they can be mixed and matched to the investment requirements of the landlord and or the occupancy needs of the tenant (it just depends on who you are engaged by as a client). You can drill down into market rent strategies and leasing alternatives. That will then make every lease negotiation more valuable for the clients that you serve.
So you can do a long way in the property market as a specialized agent or broker by starting from a ‘leasing base’. Understand the linkages between the 5 points mentioned and build your skills and property market around them.
In closing on these points, recognize the differences between office, retail, and industrial property. Understand the leasing opportunity in each property type, and then choose the segment that offers you the most market activity over time.
You can get more commercial real estate broker leasing tips in our ‘Snapshot’ eCourse right here.
In commercial real estate brokerage leasing and sales you can find plenty of leads and opportunities when you target building occupants in a regular and ongoing way. Research your listing territory by building and then split those buildings up into tenants and businesses. Make direct contact.
Some business segments and industry types will be under pressures of change at different times during the year. Local economic circumstances and business sentiment will drive property change for some businesses and industry types.
The Canvassing Process
Assuming you can get this process underway, here are some concepts to feed into the commercial real estate canvassing process:
- Their business intentions – When you take and review all the tenants in a location, many will have future intentions to feed into their movement and growth plans. Customers and staff all place pressure on a business and with how things are done. In a manufacturing segment where industrial property is involved, property configuration and use also rises to the top of the ‘planning’ list. Most property decisions are made just before or after a change of financial year. If you stay in regular contact with business owners and leaders, they are likely to remember you when a property challenge or change arises.
- Factors of expansion and contraction – Some businesses need more or less space. Canvass your territory every day and look at how some businesses seem to be trading. If the property is of an industrial nature you can usually see pressures of change and occupation in and around the property. Observe what you can. Ask plenty of questions. Meet more local people.
- Relocation requirements – Some businesses need to be located close to transport, highways, raw materials, and customer markets. Find out how those factors integrate into your location and property types.
- Difficult landlords – Some landlords are notoriously challenging and unsupportive of tenant occupancy and comfort; those landlords can focus too much on rental returns and less on property performance. Over time that can lead to a general exodus of tenants from a property. Look for tenants that are disgruntled with the landlords in property ownership. Check out locations for distressed tenant mixes and properties with higher vacancy factors. There will be reasons for issues like that happening.
- Occupancy costs – Every tenant is concerned about paying rent and other occupancy costs. You should know what the rental averages are for a property and a lease by property type and location. If a property is aggressively rented, the vacancy factor is likely to climb over time. Distressed tenants are likely to move. That then is a leasing prospect and opportunity.
Look further into buildings, tenant lists, property occupancy, and business activity. You will always find leasing opportunities with tenants wanting to change location.
Many agents specialise in just industrial real estate, be that sale or leasing. That focus can be a good thing because the industrial segment can be quite unique when you consider the factors of large manufacturing and warehousing.
When you are listing a property that is industrially zoned or perhaps already has an industrial use, you need to get to the key issues of the property and how it relates to other industrial properties locally. Comparisons will help you understand future opportunity and marketing potential for the asset.
Important Facts to Investigate
Here are some factors to investigate when assessing the potential of an industrial property from a sale or lease perspective:
- Zoning – There are differences in industrial zoning, and therefore the types of work, manufacturing, and or business that can be generated in an industrial site or warehouse. Check out the zoning regulations that apply to the location and the listing; understand what types of business and manufacturing can occur on the property.
- Orders or Notices – Some industrially located properties are impacted by factors of the environment and location. Ground water, soil toxicity, topography, and stored or manufactured chemicals are just a few factors that will impact the use and or occupancy of the property. Ask about orders or notices that may have been issued to control the way things happen in the property.
- Warehouse and building floor area – There will be locations in the property that are used in a specific way. The configuration of those particular areas may suit or typify the standards of a particular industry; that means some of those areas could be redundant to the next property occupier. Review the areas and understand them. Typically you are looking at the spaces relating to warehousing, office, laboratories, storage, power plants, machinery, production, loading bays, and hardstand. There may also be special requirements associated with the certification of plant and equipment such as cranes.
- Warehouse size and construction – Storage of goods today involves pallet stacking, forklifts, floor loading, and staging areas. Every industrial business will have factors that are quite special in the way they receive, move, and store goods. Clear span warehousing will help with the logistical factors of goods movement, pelleting, and storage. Modern warehouses tend to incorporate clear span design.
- Access – Most industrial businesses today require truck access and special loading and unloading facilities. The efficiency of the moving of goods can be a big part of cost control and customer service for any industrial business. A large loading dock and infrastructure will be helpful for many occupants of business types.
Given all of these things, a good industrial property will be situated in a location that is well supported by service infrastructure such as electricity, gas, water, roads, rail, and airports. Why not do your full property assessments before you decide on the best way to market the industrial property to attract potential buyers and tenants?
When you work with investment property clients from a leasing or property management perspective, it pays for you to set defined goals that match the client’s targets. Unfortunately some agents have little or no idea what the client is targeting for their investment over time; that then leads to slower negotiations and leasing problems.
When an agent is aligned to the landlords focus and investment targets, the whole leasing and property management issue gets a lot easier. That then leads to a happy client and potentially increasing fees for brokerage service. A good outcome don’t you think?
Landlords are Very Special Clients
So what can you do in working with these special clients? Here are some ways to get closer to a landlord and their focus issues for property performance:
- Set investment targets at the start of the year – The investment targets for a property will normally take into account market rents, rent reviews, options, and the supply and demand for lettable space, vacancy factors, and the existing tenant mix. Investment goals are then built around the realities of the property and the location.
- Review asset performance – The performance of the property from a base of income, expenditure, occupancy, and risk will always be valuable in the planning process. Set your budgets based on the reality of the property.
- Track tenant changes and the tenant mix – Critical dates will exist in a property with regards to tenant leases, and occupancy decisions. Understand those leases and all the issues that evolve from them.
- Look at income opportunities – The rental income for a property can be improved by adding extra lettable space, or improving the quality of the property. Short term rentals can also be established as third income streams (the concept is very common in shopping center leasing).
- Review capital works and expenditure – Each year the expenditure of the property can be checked and reviewed for the upcoming year; that’s where the budgeting process is valuable. That full assessment will involve works estimates, tendering of contract services, and property valuations.
- Updates on incentives – Like it or not, lease incentives are part of attracting new tenants to a property or perhaps retaining current tenants. The landlord should consider the impact of incentives on upcoming lease negotiations. Decisions can then be made early.
- Lease rent review and options – Protect your leases, the tenants in the tenant mix, and your levels of market rent. The critical dates evolving from rent reviews and options are all part of the process. Understand all your leases in a comprehensive way and explain to the landlord the upcoming changes and decisions that should be made.
All of these facts allow you to make specific recommendations to your landlord clients as part of a leasing and or property management service. Information supported by market evidence and documentary facts will help make your services and relationships with your clients much more positive.