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.

Big Tips in Tenant Mix Analysis for Commercial Real Estate Agents

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.

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.

Commercial Property Managers – End of Month Reporting Tips to Landlords

When it comes to managing a commercial or retail property, the landlords that you work with will have specific needs and requirements for the monthly report.  In the monthly report certain things will need to be monitored and tracked to ensure that errors and omissions do not ‘slip through the cracks’.

Many a property manager has suffered the consequences of overlooking critical dates and critical issues in a particular property that they manage.  For this very reason, the end of month report can be a very efficient way of monitoring current and future activity within the particular property.

Gone are the days of simply giving the client a financial report at month end with little commentary as part of the property management process.

Landlords expect property managers to provide a comprehensive and detailed property management process.  It is not simply a matter of collecting the rent and chasing arrears.  There are many more things to do when it comes to commercial and retail property performance.

Here are some tips and ideas that can be incorporated into your monthly report as it applies to your property management clients and landlords.

  1. The property income is always of concern to the landlord given that they need to match the income to their financial obligations and investment targets.  The income should therefore be tracked on a daily basis to ensure that lease arrears are identified as soon as they occur.  Some tenants will frequently stretch the required lease payments and make a late payment.  The reality of the situation is that any late rental payment is in fact a default under the terms of the lease.  The property manager needs to see this late payment of rental as soon as it occurs, and take the necessary action in accordance with the instructions that the landlord provides.  As part of the monthly report, give the landlord a summary of income paid, income charged, and defaulting tenants.  Always seek instructions from the landlord regards these defaulting tenants and the required processes of income recovery.  A defaulting tenant can sometimes be converted back to ‘lease compliance’.
  2. The expenditure in a property will be both controlled and uncontrolled depending on the expenditure type.  There are also some accounts that are ‘seasonal’ and quite large; for example they will usually be municipal rates and taxes, insurance, and energy costs.  The property should always have sufficient funds to pay for these large and significant outgoings.  For this very reason, a complex property with a lot of tenants will usually have an expenditure budget reflecting the timing of these outgoings activities and costs.  The property manager should track the expenditure activity monthly to the budget, so that they know how much money they should hold back from the landlord as part of the end of month income remittance.  It can be very embarrassing to all concerned when the property runs out of money at month end and the electricity supply is turned off to the building.
  3. The maintenance in a property will shift and change from time to time.  Some maintenance in a property will be planned as part of the overall maintenance budget whilst others will occur as a result of unexpected breakdowns and repairs.  The maintenance of the property should feature in the expenditure budget as part of the annual property business plan.  At the end of each month the maintenance routines and the maintenance costs should be tracked against the existing and approved property budget.
  4. The tenancy mix and the existing leases within the property will have lease factors to be tracked.  They will include rental changes, rent reviews, lease options, make-good requirements, insurance obligations, and renovation strategies.  The list of possible actions and critical dates spinning out of the lease are quite large.  When you take on a new property always review the leases comprehensively thereby defining any future critical dates that will require action and momentum at a particular time.
  5. The cash flow for the property will be optimized through a series of rent reviews, leasing strategies, new tenancy placements, and vacancy minimisation.  The property manager should be managing these issues in a productive and comprehensive way.  In doing this the property manager should be helping the landlord minimise cash flow disruption and instability.
  6. Lastly it should be said that the local market property conditions should be detailed in your monthly property management report.  In this way the landlord can be completely appraised of the changes to the property market and the factors of supply and demand.  When the landlord is briefed in this way, they understand the pressures of lease negotiation and tenancy placement.  This knowledge will help when it comes to finding tenants and negotiating new leases.

This list is not finite; however it gives you a good idea of the complexity of the monthly property management report that can be created for your clients.

Take a proactive position when it comes to managing your particular property portfolio for your clients, and provide detailed comprehensive monthly reports.  That will allow you to maintain and grow your property portfolio over time.  It will also show your professionalism as an expert commercial or retail property manager.

Commercial Property Managers – How to Prepare a Budget for Your Property

When you manage a commercial or retail property, the budgetary process and assessment will be a frequent part of the property performance and monitoring system.  An accurate property budget will help you with the overall property performance throughout the year.  That being said, the budget that is created for a property needs to be completely accurate and relevant to the local property market.

Here are some tips that can be applied to the compilation of a budget in commercial or retail property management.

  1. Meet with the landlord of the property before you do anything else.  Understand the intentions of the landlord that can have an impact on the property performance.  It could be that the landlord intends to sell the property inside the next 12 months.  That single factor will have major impact on the compilation of the property budget.  Income and expenditure would be handled differently if the property is to be sold verses retained.
  2. It goes without saying that you should understand the existing tenancy mix and the intentions of the tenants within the property.  Meeting with all tenants regularly will help you stay on top of these issues.  If a lease is to expire or renew, the  cash flow for the property income will need to show those changes.
  3. Most property budgets are initially prepared on a spreadsheet with due regard to the timing of changes in income and expenditure throughout the year.  This then says that the spreadsheet will reflect the monthly changes of property income and property expenditure.  You will need to understand the rental escalations, rent reviews, and options as they apply to each lease within the property.
  4. A good property budget will allow for vacancies to occur in keeping with the prevailing market conditions.  Review the local property market to understand the supply and demand of future space in the particular property type.  You will also need to set some expectations and assumptions as they apply to the local and regional economy.  Part of that process will include an assessment of the local business demographics and expected changes within the community.
  5. In preparing for a property management budget, look at all the competing properties in the region or general location.  Those properties are likely to place pressure on existing vacancies, and prevailing market rentals.  An abundance of vacant space in the local area will directly flow through to a reduction in market rental overall, and potentially a similar case in your property.
  6. The financial history for the property should be gathered for the last two or three years.  That history will allow you to understand rental changes, vacancy factors, and expenditure escalations.  That information will help you greatly in creating a new property budget.
  7. A significant part of the expenditure in any commercial or retail property will include uncontrolled outgoings that have a significant impact on property costs.  They will normally be in the categories of municipal rates, energy, and insurance.  These three factors take up a large percentage of the building outgoings annually.  Estimating the escalations in these categories can be difficult so you will firstly need to refer to the appropriate rating bodies, Energy Supply companies, or relevant insurers for an estimate of expenditure change.
  8. Talk to other property owners and property managers in the local area to compare property outgoings and expenditure costs.  Given that the commercial and retail property market is so specialized, the sharing of this information is very common.  Without this information it is very hard to compile the property budget.

A commercial or retail property budget is not a difficult thing to compile, however it does take time and a reasonable amount of preparation work.  As mentioned earlier, always take notes regards your assumptions as they apply to the budget.  During the year you can refer back to your notes when something seems to be out of balance with the property budget.

If you want some more tips on commercial property management you can get them in our Newsletter on this site.  Just register.

Retail Shopping Centre Managers – Anchor Tenant Leasing Strategies

In larger retail properties today, you need a quality anchor tenant that is location based.  They have to be closely aligned to the local community and the demographics of the area.  For this reason, leasing managers and property managers should select anchor tenants well and ensure that the anchor tenants will build a customer base into the local area without difficulty.

A strong anchor tenant will encourage more shoppers to a retail property and help the specialty tenants with their trade and sales.  The link between the anchor tenant and the property is therefore high.

To help the anchor tenant with this close alliance with the property, consider the following factors:

  1. The anchor tenant should be encouraged to market their business into the local area.  It is wise to have some guidelines established for that process to occur.  The anchor tenant’s lease can set out some guidelines for that.
  2. The specialty tenants should join with the anchor tenant in a regular marketing effort to promote the property.  The specialty tenants can have a clause in their lease that requires them to pay a percentage of their rent to the marketing fund of the property.  The property manager should administer the marketing effort on behalf of the tenants and the landlord.
  3. The lease for the anchor tenant will need to be a lengthy period of time to give the property some stability over the long term.
  4. Look at how the access to the anchor tenancy is obtained by customers and how that access can incorporate involvement or profiling of the speciality tenants in the property.  Follow the ‘foot traffic’ to see what marketing effort can be established in the ‘corridor’ or pathway to the anchor tenant entry.
  5. The pylon sign on the property will be critical to the image and exposure for all tenants.  The anchor tenant will feature in the signage and then all specialty tenants should be on the same pylon sign.  Look at the pylon sign placement to passing vehicle traffic and pedestrians.
  6. If the local area is serviced by public transport, get some marketing material and posters into the transport systems and drop off points.
  7. Understand just how tenants access the property and how long they stay in the property.  What do they buy when they visit?  These questions will help you understand what the tenant mix requires to strengthen trade for the anchor tenant and the specialty tenants.
  8. Get marketing brochures into the local community and give special attention to seasonal sales or celebrations.  The community will get involved with your property if you create the right atmosphere.

There is a fine balance between the tenants in the property, the community, and the landlord.  The property manager or leasing manager for the property has to bring all of that together.

Retail Centre Managers – Tips for Improving Shopping Centre Performance

Retail property performance is a fine balance of a number of relationships between the tenants, the landlord, and the community.  When the balance is correctly established and maintained you can see the retail property and the tenants thrive.

In pressured times like that of today where retail trade is impacted by the internet and economic sentiment, the retail property manager has to be very close to a number of key issues in their managed property.  In that way they can stave off many of the problems that can occur with the property over time.

Here are some factors to monitor and address:

  1. Tenants with lower levels of stock should be observed and questioned.  The lower levels of stock may be the result of a recent stocktake sale, or they can be the result of a shift in sales results.  You are looking for tenants that are not performing well in sales or that are changing their service or product offering to that which is not permitted under the terms of the lease.
  2. Changes to the staffing of tenancies and businesses will be an indicator.  If the employees in the tenancy business are under constant change, it is wise to understand what is going on and why it is happening.
  3. Tenants that need to relocate should be worked with.  If their business is under pressure, it is better to achieve a process of cooperation to help them in stabilising.  Any alternative is likely to involve a protracted vacancy and that is not going to help anyone.
  4. Tenants that do not maintain presentation of premises or stock will drag down the other tenants in close proximity.  Quality lighting and good levels of presentation are really important in retail property.
  5. Clustering advantages or pressures in a property can help you either way when it comes to sales and tenant mix.  Look for the tenants that can build sales from each other.  Build clusters of tenants that work for you.  The results will be a stronger market rent.
  6. Anchor tenant weakness or trade problems should be addressed quickly.  Any customer perceived weakness in the anchor tenant will soon reflect in a property decline in sales.
  7. Lower levels of sales in the property or with some tenants will be a concern.  The sales in the property should be tracked by tenant and by tenant category; in this way you will see how the property and the tenants are tracking in the local community seasonally.
  8. Shifts in customer demographic will produce a change in sales.  Look for those changes and help the tenants to act early.  Profile your community at least once per year and ask the customers what they expect from the property and what they like about it.
  9. New property developments to occur in the local area will detract from your customer base.  Watch out for new properties coming up for sale or lease that shift the balance of supply and demand.
  10. Higher incentives in getting a new tenant to your property will occur from time to time depending on the supply and demand for local retail space.  Be flexible and adaptable when it comes to incentives for new tenants.
  11. Competing properties in the local area can be taking some or all of your trade.  Monitor these other properties frequently and watch for changes in the anchor tenant offering.  If the anchor tenant changes, it is likely to shift the retail balance in the entire local area.
  12. Aggressive landlords that attempt to push the rental of the property too high can threaten the tenant mix stability and the viability of a tenants business to operate.  Tenants will soon spread the word of any difficulty with the landlord, and that can have an impact on the property overall.

A retail property is a special place for shoppers and tenants.  Manage your retail property well and with a base strategy that encourages trade for all concerned.