The process of tenant retention and replacement is critical to the success of a retail shopping center or mall. So many retail shop tenders are located in the one building, all seeking to create sales from the customers that visit the property.
To help with this process you need to construct a tenant retention plan as part of the agency services that you offer. That plan should be merged into the business plan for the property and your landlord client.
This then indicates that you can bring a superior leasing service to your clients and help them with the bigger picture of property ownership and income generation. A successful tenancy mix will help underpin income for the property and the market rent.
Given that the retail property market is under some change at the moment, that underpinning process can be a very good idea. It can radically help with refinancing and property values.
As a general rule a good retail property requires a great retail lease. Generic lease documentation is a waste of time and will detract from the property in both tenant management and at the time of sale.
Here are some ideas to help you establish your tenant strategy and retention plan for a retail property:
- Look at the supply and demand for properties and tenancies currently. To do that you should consider the upcoming property developments that are in the planning phase as well as the established lettable space currently available in the local area today. Newer properties can attract tenants from older promises. The only way you can fight against the problem is with a stable tenant mix, lower rents, and good customer numbers visiting your property.
- Vacancy rates will change throughout the year so track the numbers in case there is going to be an oversupply. To offset the pressures of oversupply you will need to have lower rentals and a good customer base. It is an expensive process for tenants to move property and that fact will always be in your favor.
- Competing properties will be targeting your tenants so be prepared for it and constantly keep in close contact with your tenants.
- Market rentals will shift and change annually. Most landlords like to raise the rent at every rent review, but be careful to watch the 'value' versus 'occupancy cost' equation. There is a 'break point' in occupancy costs where tenants will move.
- Anchor tenants bring stability to your retail property. Most anchor tenants are tied to the property on a long lease. Watch the trade of the anchor tenant and how it integrates with the specialty contracts. Get everyone in the property to work together.
- Lease expire dates and lease option dates are critical dates from a leasing and management perspective. Track and action the dates early.
- Priority tenants will exist in the property. Who are they and what are you doing for them?
- Permitted use clauses will protect the tenant mix and the tenant offering. Make sure that all tenants comply with the permitted uses in their leases.
- The clustering of speciality tenders should occur to improve customer offering and sales.
- Property marketing should occur to underpin the tenant mix and bring more customers to the property. The marketing process will be part of the business plan for the property.
The customer demographics and growth patterns will underpin and affect all of these things. Understand the local area and work with the needs of the community.