A tenant mix analysis should be conducted regularly on any retail property and on that basis at least every 6 months as part of the property’s business plan. This way, you can see how things are for tenants, anchor tenants, and property clients. Identifying problems in the mix early can help you prevent major property problems over time.
Since a retail property is geared towards sales and customer interest, the tenant mix will be very important in your annual property business plan. When you establish the right strategies for the mix, you can market the property to the customer base and the local community, thereby strengthening sales results for all stakeholders.
The success and performance of a retail property are closely related 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 real estate markets.
A professional and experienced retail center manager will have their ‘finger on the pulse’ when it comes to tenant mix. They will have in mind the plans and changes that allow to improve the property. The owner and tenants of the property get positive results with their vested interests.
These are the main reasons why you should focus on the tenant mix and get it right.
- Low vacancy rates will be evident on the property. Renters won’t want to leave because they know they are participating in a property where the owner and property manager are really shaping the property in a positive way.
- Higher market rents will be achieved as the property is outperforming nearby competing properties. That will then extend to a higher property value for the owner.
- With existing tenants, your renovations will be less complicated and negotiations will be easier. Tenants really won’t want to move out of the property and lose their income or business stability.
- Rental reviews on the property will be easier to negotiate since you will have many other ‘market rental comparables’ to use on and from the same property. It will be more difficult to justify or dispute any dispute or disagreement about the rents.
- 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 lease negotiations, making it easier for you to set up the property and merge at the right time in the future.
When you focus your efforts on the tenant mix of the property, you can lead to a better financial outcome for both tenants and landlords. Use the above factors as part of a checklist to shape the tenants and the negotiations you undertake.