Shopping Centre Managers - Key
Strategies to Strengthen Your Tenant Mix
Many a retail leasing manager or shopping centre manager will know the difficulties that
arise with some retail tenants from time to time. They arise principally because the retail
tenant in the shopping centre is so closely geared to their livelihood and business
operations. When trade is up, all is good; when trade is down, there will be problems.
The retail shop in its location may be the only way in which tenants generate sales. When
the economy is soft, and or the landlord does little to help the growth of customers
visiting the property, things become a real problem for all concerned very quickly.
There is a strong link between tenants, customers, and the landlord. If any one of those
factors is weak or unstable, the retail property can struggle.
If a landlord or property manager does not support the retail tenant mix in the property,
the end result can be tenant frustration, and eventually a higher vacancy factor in the
property. That will have a flow through to poor market rents and a property that is seen to
be struggling in the eyes of the shopper.
When customers get the feeling that the property is struggling, they will start to shop
elsewhere. Customers want to feel good when they shop; the retail property should look
good, be well maintained, and give the customers a positive shopping experience.
When a shopping centre is underperforming from a trade perspective, it has direct impact
on most if not all the retail tenancies. Given that most of the tenant's success will rely on
sales turnover of the single retail business, an underperforming shopping centre with poor
customer visits can be a major source of frustration.
So here are some tips to make a shopping centre work for all parties:
1. Understand what the local shopper demographic is and if it is changing in any
2. Pay close attention on other competing properties nearby in case they are on the
hunt for your tenants.
3. Any anchor tenants in your property should be carefully nurtured so that the
drawing power that they create is maintained and strengthened.
4. The success of your shopping centre is partly built around the existing tenant mix.
Any weaknesses in the mix should be addressed or relocated.
5. Your leases with existing tenants should be closely watched for rent reviews,
expiry, and option activity. Any negotiations between the landlord and tenant
should be started as early as practical to solve issues in a controlled way.
6. Maintain the property so that the tenants and the customers feel comfortable as
they go about their business and shopping requirements.
A shopping centre does not have to go through frustration of high vacancies and tenant
volatility if the landlord is flexible and responsive to a balanced approach with tenant
pressures. A fair rental that allows the tenants to operate effectively and successfully is
far better than a property with aggressive market rentals and high vacancies.