The tenancy mix in a retail shopping centre is critical to the property performance. Without care and strategy any neglected tenant mix can destroy the trade and cash flow for the landlord and tenants in the property.
The tenant mix forms part of the property strategy and business plan. Every good retail property should have a business plan that includes key issues such as:
- Existing tenant mix
- Lease terms and conditions
- Current tenants lease expires and options
- Rent levels, rent types, and rent review strategies
- Current tenant locations
- Customer numbers and history
- Trade turnover for the tenants in categories and by months
- Refurbishment and relocation plans
- Vacancy plans
When leasing a retail property with multiple tenants the landlord should give due regard to these questions:
- What the customers to the property need and want in the property
- How the customers shop and when
- How much they spend when they shop and on what
- How the local area and surrounding suburbs are changing and if that will impact on shopping trends
- Tenants that extend the visit time of the customer at the property
The property and leasing manager for the property should therefore research the local area and the customers to the property before making key decisions and directions in the tenant mix.
Tenant Mix Plan
To create a tenant mix plan or strategy for the retail property the above information is critical. Conducting surveys of the surrounding areas should be part of the process. Any errors in tenant mix should be avoided by carefully understanding the shoppers and what they want in the property.
Give due regard for who is shopping at the property and why. As part of that seek to understand the ratios of shoppers in each category. Here is a typical example:
- Young Families with children
- Young Families with no children
- Singles
- Retirees (late versus early)
- Families with teenagers
- Families with no kids now (left home)
- Income profile for the average shopper
- Workers in the area each day
- Tourists or people that pass through (near transport corridors)
The list may go on subject to the area in which your property is located. Importantly the list will give you a profile of the people that shop, when, and why. From that process you can make some tenant mix decisions in your property.
To get tenant mix ideas in your local area you should visit other properties that are comparable with or better than the property you are working on. See what is working for them and what is not. Talk to the tenants in those properties to see what they think about the current shoppers and the trends.
Tenant mix and strategy is all about gathering facts before you make decisions. The property can then be optimised for the future.
