A tenant mix analysis should be undertaken regularly in any retail property and on that basis at least every 6 months as part of the business plan for the property. In this way you can see how things are tracking for the tenants, the anchor tenants, and the customers to the property. Early identification of problems in the mix can help you prevent larger problems in the property over time.
Given that a retail property is geared to sales and customer interest, the tenant mix will be highly important in your annual property business plan. When you set the right strategies for the mix, you can market the property into the customer base and local community, thereby strengthening the sales outcomes for all concerned.
A retail property success and performance is closely geared to the success of the tenants. A successful retail property will generally have consistently low vacancy factors and good market rents even in tougher retail cycles and property markets.
A professional and experienced Retail Centre Manager will have their ‘finger on the pulse’, when it comes to the tenant mix. They will have the plans and changes in mind that allow the property to improve. The landlord and the tenants in the property both then have positive outcomes with their vested interests.
Here are the main reasons why you should focus on the tenant mix and getting it right.
- Low vacancy rates will be apparent in the property. The tenants will not want to leave as they know they are participating in a property where the landlord and the property manager are really shaping the property in a positive way.
- Higher market rentals will be achieved given that the property is performing better than competing properties nearby. That then will extend into a higher property value for the landlord.
- With the existing tenants their renewals will be less of a hassle and the negotiations will be easier. The tenants will not really want to move away from the property and lose their income or business stability.
- The rent reviews in the property will be easier to negotiate given that you will have plenty of other ‘market rent comparables’ to use in and from the same property. It will be harder for any disputes or disagreements on rents to be justified or disputed.
- A good tenant mix will give you the ability to move tenants around and into better positions when the opportunity arises.
- Renovation strategies and relocation strategies can be incorporated into the lease negotiations thereby making it easier for you to shape the property and the mix at the right time in the future.
When you focus your efforts into the tenant mix for the property, you can build a better financial result for the tenants and the landlords. Use the above factors as part of a checklist in shaping the tenants and the negotiations that you undertake.