Tenant Mix and Optimisation

When it comes to managing or leasing a shopping centre, the tenancy mix will be fundamental to the success of the property.  Inevitably there will be vacancies in the property and on that basis the process of tenant retention and tenant attraction should occur.  As real estate agents managing shopping centres, there are a couple of things that you can do.

These are two separate strategies to be developed and implemented within the shopping centre performance plan.  Shopping centre managers and leasing managers would be well advised to consider the implementation of the programs. 

Here are some comments regards the implementation of each:

1. Tenant retention programs are designed with one target in mind.  That is to retain the good tenants existing in the property now.  The best retention program is a forward looking strategy incorporating negotiations of rent reviews, new leases, and options in the coming 24 months.  If the tenant is a desirable tenant for the property, then they should be retained at the end of lease term with either an option extension term, or a new lease.  Undesirable tenants should be removed from the property, however in doing so there should be a replacement strategy using existing tenants or new tenants from nearby properties.
2. Tenant attraction programs are designed to encourage tenants from other properties to take up vacant space in your property.  This then says that you should be monitoring any nearby properties and competition shopping centres to attract the good tenants towards your property.  The program itself will require standards and benchmarks to be set in your property business plan regards the rents and the incentives to be offered to tenants, as part of leasing vacant premises in your shopping centre.

In a retail property with multiple tenancies, a focus on the vacancy factor and the tenant retention index will assist you to stabilise the income for the landlord; remembering that income is rent and outgoings recovery, the overall process is quite important to the future of the asset.

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