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.
When it comes to taking an inquiry from a tenant in commercial real estate, it pays to have a comprehensive checklist or process to support questioning and to track the requirements of the tenant.
So every property inquiry is likely to be quite unique given that every business and corporate tenant will have special factors of occupancy to take into account; every enquiry should be matched to the required property across a number of criteria.
Here are some ideas to help you determine exactly what the tenant is looking for:
- Before you say too much and give away valuable listing information, understand exactly who you’re talking to, get their contact information, and ask plenty of questions to understand how they have reached the point of calling you. Sometimes you will find that the inquiry is actually being made by another agent or broker within your town or city. It is questionable in that case whether you would tell them too much about the listing.
- If the person approaching you will not share their contact details and property requirements openly and honestly, then it is best to restrict the information that you provide across the telephone.
- Find out if they have been inspecting other properties locally with the other brokers and agents. That fact can frustrate your discussions, negotiations, and property introductions.
- If the inquiry appears genuine then it is time to arrange a meeting, and potentially an inspection of the property. The ‘face to face’ process in our industry is really important.
- The tenant may be operating a business in another location. You can inspect that other property to understand space requirements and fit out design. You can also understand how they interact between business units.
- Ask the tenant about their customer interaction and resource requirements. Both of those factors are likely to impact property choice, design and location. They also may create special needs when it comes to car parking, property exposure, and the future need for expansion or contraction.
- The services and amenities in any property will be of interest in a lease choice or tenant negotiation. Find out what the tenant needs when it comes to communications, access, power, water, gas and air conditioning.
- The quality of property will impact design and layout. That will also flow through to environmental efficiency, and building operating costs. A landlord of a property today should be very careful when it comes to property outgoings. Excessive outgoings are likely to deter or derail a lease negotiation.
- Rental and outgoings budgets should be questioned and understood as part of taking the property inquiry. Some tenants have unrealistic expectations of just what they can get for the rent to be paid, when it comes to property choices in certain areas or locations.
So there are some specific things that you can question and resolve as part of taking any leasing requirement or inquiry. Be prepared to drill down on all the right facts before you arrange a site inspection with any tenant. Qualify the tenant for the listing or the inquiry in a comprehensive way.
When you work in commercial or retail property leasing, you need a rich source of tenants and business leads. There are a number of resources that you can use for that purpose, and on that basis it is simply a matter of selecting the ones that work for you and your property market. Develop your leasing strategies.
Here are some of the best leasing sources of business names and tenant identities:
- Check out all of the major buildings in your leasing territory. When it comes to buildings that contain multiple tenants, it is a matter of taking down or capturing the details from the directory board that is located in the property. The easiest way to do that is to take a photograph of the directory board on your mobile telephone. You can process and review the photograph later.
- From the details that you get in the previous ‘directory board’ step, it is a matter of telephoning down all the businesses in the particular buildings to discuss future leasing and occupation needs. Leases come to an end at some stage for all types of reasons. Some tenants prefer to move when that occurs, and on that basis you can be the source of market information and relocation opportunity.
- Get a copy of the local business telephone book as it applies to your location, town and city. It is preferable to use the telephone book in hardcopy rather than online. That is simply because the telephone book can be logically processed and marked off with a colored pen or highlighters as you proceed through it. Starting at the beginning of the telephone book work through every business name to find those businesses that are located in your priority suburbs and leasing territory. Whilst this process may seem tedious, it is simply a matter of reviewing one or two pages of telephone numbers each night in preparation for your prospecting processes the next day. One telephone book can take you an entire year to move through. You will however see that the system is quite easy to implement and soon you will be covering 5 to 10 pages a day as part of that process. One page of the telephone book should give you two or three numbers to call; cold calls lead to information and potential meetings with the right tenants. You may wish to choose a greater number of businesses given the filtering process and the criteria of targeted tenants locally.
- You can also get some good leads and opportunities from using the Internet methodically and specifically. In your town or city, there will be a business ‘Yellow Pages’ telephone book online that you can use for this very purpose. In most cases you can search the ‘Yellow pages’ based on targeted business types and by suburbs. From that search process you can get specific names of businesses and tenants to put into your prospecting activities and cold calling systems.
So these four strategies are quite simple. You can see why things need to be methodical and systemized.
When you create a large list of local businesses and tenants, and then take the time to understand their occupation needs from a leasing perspective, you are of high value to the landlords that you serve. Use your database as leverage in this way when it comes to winning a property leasing appointment. Tell the landlord about your database and how accurate and up to date it is. They will find it difficult to ignore an agent with a comprehensive and up to date database of tenants.
Leasing commercial real estate is something that can provide a good buffer of commission when sales listings and actual sales have slowed. It is also the case that a successful lease transaction can lead to a future property management or sales opportunity. This then says that all top commercial real estate agents should be prepared to lease ‘quality’ local property.
Notice that I said the word ‘quality’ when it comes to property selection. Determine the property size and type that will give you the appropriate fee for a successful lease transaction. Focus locally on quality, the good landlords, and the quality tenants. A lease transaction can take a reasonable amount of time to initiate and complete. On that basis you should only focus on the good deals and the good opportunities. Let some other agent have the small things to lease that have minimal fee results.
Here are some tips for taking enquiries from tenants today when it comes to leasing new premises or relocating:
- Make sure that you’re talking to the decision maker when it comes to the particular tenant. Get the contact details and the identity of the tenant sorted before you provide too much property information.
- Ask them about the property type that they are looking for when it comes to improvements, services and amenities, location, and permitted use. Also find out about the required lease term, the rental budget, and property usage.
- The tenant’s staff and the customers interacting on the property will create certain challenges when it comes to improvements and location. Car parking is a good example and case in point.
- There are big differences when it comes to leasing office, industrial, and retail property. Create checklists for each so you can ask the relevant questions with potential tenants.
- Is the tenant coming to you today from another property location? Are they new to leasing property locally? If they know nothing about the local area, you will need to fill in the gaps when it comes to business demographics, transport, communication, local area profile, and property usage.
- If they are coming to you from another property location, they may have some timeframe to satisfy or a property disposal requirement. Ask the right questions to get the complete picture. You may even find another listing requirement with the property changeover.
- Has the tenant looked at other listings with other local property agents? It is quite likely that they have seen other listings and may have current negotiations underway through other agents. It is good to know if this is the case so you can adjust your strategy accordingly.
Don’t be too eager to take a tenant to a property. Get all of the facts together prior to the inspection process so that you don’t waste your time with the incorrect strategies or listings. Match the tenant to the property before you leave the office; qualify them. If necessary take them to a number of properties to give them a comparison of current market conditions.
Get more tips like this in our Newsletter.
The retail shop leasing process is quite specific and special. It requires property agents that are very familiar with the retail industry and shopping center dynamics.
It is no secret that the retail shop industry is changing due to the impact of the Internet and the current economic circumstances globally. That being said, the retail shop industry doesn’t disappear it just changes. We are best placed has specialized leasing agents to help tenants and landlords move through the process of change when it comes to shopping centers and specialist retail properties.
Here are some tips to help you with creating your retail tenant mix and plans for shopping center leasing optimization:
- Check out all of the other competing properties in the local area. They will have factors associated with vacancy, tenant movement, and tenant success. Make a list of their tenants for direct contact and cold calling. Some of those tenants will be more successful than others. It is those tenants that you should encourage to move to your property.
- Look at the other competing properties with regards to property improvements, customer access, and customer profile. Also look at the factors of car parking, public transport, and property size. Are there any weaknesses in these factors that can be optimized in your property?
- The franchise groups in the local area will always be a good opportunity for tenant enquiry and new leases. It is simply a matter of understanding the properties that they are looking for. It is likely that they will have specific lease terms and conditions that apply to any premises that they negotiate on. You will need to brief your landlord on the standard terms and conditions that the franchisor requires. The franchise agreement needs to integrate with the lease of the premises. Your landlord needs to understand that fact so that the business can operate within the branding and business agreement requirements of the franchise group.
- With any larger retail property, it pays to stay ahead of any lease issues. They include rent reviews, options, and lease expires. Look at all of these events at least 12 months in advance. This then allows you to plan the interaction with the tenant given the conditions of the local property market.
- If you want to be a retail leasing expert, grow your knowledge with regard to business viability and different business types. Some businesses have different requirements as to cash flow and occupancy costs. If those requirements are exceeded, it is likely that you will have an unsuccessful and volatile tenant. Ultimately that will mean a new vacancy.
- With your existing tenancy mix, consider the factors of expansion and contraction as they apply to each particular tenant. Help the existing good tenants within the property to adjust the leasing needs and remain in occupancy.
- The anchor tenants in a retail property are very important to the overall success of sales, specialty tenants, customer visits, and market rental. Stay close to the anchor tenants as part of an ongoing lease strategy.
- Retail leasing and shopping center performance are quite unique strategies to be developed for each landlord and property location. It is not unusual to have a business plan developed for each medium to large property. In that plan you will have income profiles, expenditure management, maintenance plans, tenancy strategies, tenant retention solutions, and reporting requirements.
Retail shop leasing is perhaps one of the most interesting and rewarding segments of the property market today. That being said, it does require people that understand retail business and property viability.
In commercial or retail property leasing, it is important that you are prepared for the property inspections that you take with prospects. You only have a short time to create the interest of the tenant prospect and move them to a lease offer.
Here are some tips from our Newsletter.
So what is the focus of the leasing inspection? It should be to create the interest of the tenant and remove any questions that they may have regards the property. To do this you have to be prepared.
Here are some leasing tools that you can use as part of the leasing inspection of vacant premises:
- Be aware of the competing properties in the local area. The prospective tenant is bound to have seen those properties with other agents or at least be aware of the space availability and the asking rent. You will have to know the differences in properties and why one rent is more relevant than another.
- The asking rents for your property should be in parity to the market rents locally for properties of similar type. Have you checked that out? Is your asking rent within the reality of the current market rents? How will you pitch the rent requirement to the tenant when they challenge you? How can you sell that rent package? You will need to have your answers ready.
- Take some measurement tools to the property. That will usually be a laser measurement tool to calculate distances, plus a measurement ‘wheel’ that you can use to walk around the property. It is important that you do not certify areas and distances as you are not a surveyor, however you can give approximations to the tenant so they know approximately what factors exist in the property.
- Always have a camera with you to take photos of relevant parts of the property. It is remarkable where those photos will come in handy in later conversation with tenants.
- Take a list of services and amenities in the property, together with fixed improvements that may be relevant and important to tenants in occupation. Some tenants are very interested in communications and power capability in the premises. Ensure that you have the information at your fingertips.
- When it comes to inspecting office premises, the tenants like to know about the finishes that are required in any fitout changes. If your property is a modern property with quality finishes, there will be some guidelines to apply here when it comes to negotiating tenant fitout design and standards. Get details of these things from the property manager or landlord.
- The plans for the property will show as built factors relating to structure, electrical, air conditioning, hydraulic, and lighting. The plans will also show you where the riser is in the building for the tenant to tap into the property services.
- Take notes of all representations made and comments given in a leasing inspection. Those comments could become critical in the ongoing lease negotiations.
- Lastly you should have a reasonable knowledge of the outgoings to be paid by the tenant in the property. Those outgoings will be impacted by the type of lease to be used. Those outgoings should be in parity with other properties of similar size and type in the local area.
When you are fully prepared, the leasing process and inspection becomes much easier. Top leasing agents are always prepared to give the right information in the property leasing inspection.
You can get more tips like this in our Newsletter.