In a retail mall, tenant mix analysis is still the most important part of property performance. When you get the tenant profiles and the mix well balanced, you can drive more sales to the property and strengthen the rent for the owner. It is an ‘equation’ of property performance and must be adhered to.
In these times when retail stores and mall performance are under pressure, it is essential that you develop a property business plan once a year and include key planning and activity elements in that plan. The parts of that plan should include:
- Tenant Mix Analysis
- Holding mix strategy
- Standard lease
- Anchor tenants
- Vacancy management plan
- Vacancy Marketing
- Income and Expense Analysis and Benchmarks
- Customer Profiles
- Sales records for tenant segments
- Marketing strategies for the property
- Owner life cycle plans
- Implementation of retention programs
- Investment and rehabilitation initiatives
- Maintenance planning
- Competitor analysis
So let’s get back to the point of analyzing tenant mix. Here are some ideas to get you started.
- What anchor tenants do you have on the property and how long do they have left in occupancy? If your anchor tenant is important to the property and combination (likely to be the case), you will need a renovation or replacement program in place to resolve any vacancy threats.
- Specialized tenants must be well suited to the property and the buyer. The placement of specialized tenants should occur in ‘groups’ that encourage sales and attention from buyers. If a buyer purchases products from one store, the adjacent stores must be complementary to potentially extend the sales potential of each buyer’s purchase.
- Some of your tenants will be of the “destination” type. That means you will see people visit that store regardless of their location. A post office is a good example. In a shopping center, it is good to have some of these target tenants and distribute them in locations where they benefit the overall tenant mix.
- Look at the ‘permitted use’ as detailed in each of the tenant leases. For example, and when it comes to food courts, it is important to ensure that the ‘permitted uses’ and the ‘exclusivities’ outlined in each lease are respected. One of the most common problems in a food court is the sale and supply of ‘coffee’. If you have a major coffee shop retailer in the mall, you could be destroying your business by allowing all other retailers to sell coffee. That’s where an “allowed use” strategy comes in handy.
Taking all these issues, you can plan the tenant mix and tenant profile in the property. Successful commercial property is all about strategy and planning. If you run or rent a mall, it’s your job to recognize that fact and implement the plan.