When it comes to leasing a retail property today, the challenges of the property market and the retail sector impose a lot of pressure on both shopping centre landlords and retail tenants. As retail leasing experts, we need to comprehensively understand the local property market in our location.
Given that the retail property segment is under some pressure from the shifts in customer and shopping behaviour, we now need tenants that are more suitable for prevailing and future levels of trade.
Some tenants have been significantly impacted by Internet generated shopping. That being the case, those tenants may not need to disappear from the existing tenancy mix, but they do need to go through some adjustment relative to ongoing occupancy. Relocation or contraction may be an alternative.
Here are some of the alternatives available as adjustments in a retail property.
- Identify the successful sales patterns behind your anchor tenants. Is likely that the specialty tenants can complement the anchor tenant offering.
- Destination type tenants will always attract people to the property. They should be positioned to encourage customer traffic through the property and engagement.
- All of the turning points and entrance doorways on and in your property should feature smaller tenancies. The larger tenancies should be positioned between the turning points of the property.
- Any tenants that are performing poorly due to a shift in customer purchase patterns should be encouraged into smaller tenancies. This is assuming that the subject tenant is offering a product or service that is still attractive to customers.
- At the time of lease expiry or lease option, negotiate with the tenants having due regard for customer spending patterns and overall sales figures. Your principal focus as a property manager or leasing manager should be centred on increasing customer numbers and sales results.
- If a tenant is trading unsuccessfully in the property, and the reasons are recognized as beyond the control of the tenant or the property manager, then it is better to achieve a change of tenant at the appropriate time. A controlled change of tenant is better than a longer term vacancy.
Existing good tenants within a shopping centre or mall will be the draw cards for other tenants to build around. This is where the clustering process becomes really important in retail tenancy mix strategy. Similar tenants within a single theme or complementary theme should be positioned near each other. In that way a single sale can be expanded to a complementary tenant nearby.
Shoppers like convenience and will spend more money if they are attracted to a complimentary product or service soon after the initial purchase. This is the basis of clustering within the tenancy mix.
It is interesting to note that the average shopping patterns between male shoppers and female shoppers differ greatly. Male shoppers will tend to visit a shopping centre for a single purpose if they are on their own. They are quite likely to spend a short amount of time in the property and are less likely to purchase more than one or two things. This pattern will change if the male shopper is in the company of others.
Female shoppers on average spend a greater amount of time in a shopping centre. They are also more likely to socialise with friends and purchase more items. Female shoppers tend to look at many things and move through many tenancies during the shopping visit.
A shopping centre needs to be designed for both types of shoppers. In this way you will encourage ongoing trade and purchases from the tenants within the tenancy mix.
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