In a retail shopping centre, a tenant mix analysis remains the most important part of property performance. When you get the tenant profiles and mix well balanced you can drive more sales to the property and strengthen the rental for the landlord. It is an ‘equation’ of property performance, and it should be respected.
In these times where retail shopping and shopping centre performance is under some pressure, it is essential that you do a property business plan once per year and bring into that plan key elements of activity and planning. The parts of that plan should include:
- Tenant mix analysis
- Tenant mix strategy
- Lease standards
- Anchor tenants
- Vacancy management plan
- Vacancy marketing
- Income and Expenditure analysis and benchmarks
- Customer profiles
- Sales records for tenant segments
- Marketing strategies for the property
- Landlord lifecycle plans
- Tenant retention programs
- Capital expenditure and refurbishment initiatives
- Maintenance planning
- Competitor analysis
So let’s go back to the point of analysing the tenant mix. Here are some ideas to help you get started with that.
- What anchor tenants do you have in the property and how long do they have remaining in occupancy? If your anchor tenant is important to the property and the mix (that is likely to be the case), you will need a renewal or replacement program that is in place to resolve any vacancy threat.
- Specialty tenants should be well matched to the property and the shopper. The placement of specialty tenants should occur in ‘clusters’ that encourage sales and shopper attention. If a shopper purchases goods in one shop, the adjacent shops should be complementary to potentially extend the sale potential from each shopper purchase.
- Some of your tenants will be ‘destination’ in type. That means you will see people visit that shop regardless of its location. A post office is a good example. In a shopping centre it is good to have a few of these destination tenants and spread them into locations where they benefit the overall tenant mix.
- Look at the ‘permitted use’ as detailed in each of the tenants leases. For example, and when it comes to food courts, it is important to ensure that the ‘permitted uses’ and ‘exclusivities’ noted in each lease are respected. One of the most common problems in a food court is the sale and providing of ‘coffee’. If you have a major coffee shop retailer in the shopping centre, you could be destroying its trade by allowing every other retailer to sell coffee. That is where a ‘permitted use’ strategy is useful.
Taking all of these issues, you can plan the tenant mix and tenant profile in the property. A successful retail property is all about strategy and planning. If you manage or lease a shopping centre, it is your job to recognise that fact and implement the plan.
by John Highman