In managing a retail shopping center the issues and tasks to understand are many. The right person with the right experience should be selected for the property management position. Errors or strategic mistakes are likely to have a major impact on property performance and tenant trade. That will then have a flow through effect to the rental structure and the vacancy rate.
The bottom line on managing a retail property is that the right tenants must be chosen for the mix. It is difficult for a property to fail if the right tenants have been chosen and well located within the property. Every tenant should be selected on their match to the customer and the location within the existing tenant mix.
Certainly a retail property is a fine balance of a number of key factors, but the best property in the right location still requires the correct tenants. The tenant profile will attract more customers to the property over time, and that is exactly what a top retail property requires. Better levels of trade help the tenants thrive and that has a flow through to the landlord’s rental rates and recoveries.
So how do you know what the customer is looking for by way of tenant services and goods? In simple terms you should get a market survey undertaken of customers and their shopping interests. Here are some considerations for that:
- Determine the primary market from which the customer will be drawn. A full 80% of business should come from this precinct. Get some maps of the roads and highways around the property; look at the roads and understand how and why people would stop in at the property for goods and services.
- If you are managing the property now, you can undertake a survey on site over a number of days of the week. You can also spread that process over a few weeks so you are capturing the complete shopping habits of all the people that visit the property.
- If the property is new or still to be constructed, then you should to do a marketing survey by ‘door knocking’ the area locally.
- What is the demographic of the local area? Is it made up of predominantly young families, middle ‘nesters’, or older retirees? Will your property need to adjust to the different profiles? How will that impact the tenant mix?
- Review the competing properties through the town or suburb. You will find that they have factors of tenant mix, vacancies, rental, and customer profile that will be useful in your property consideration. Look for the strengths and weaknesses in those other properties and then understand how they could have an impact on your property location.
Shopping centers are vibrant and busy properties to manage. On that basis you should select the right people for your team and ensure that they are managing the property to the needs and profile of the community. Match the tenants in the tenant mix to that equation.
John Highman is a leading commercial real estate coach who has helped many commercial salespeople and agents around the World promote and grow their real estate business. You will find a full archive of helpful commercial real estate tips and strategies at http://www.commercial-realestate-training.com/