Navigating the waters of tenant vacancies can be daunting, even for seasoned commercial real estate professionals. From choosing the right leasing agent to the right tenant, it can at times feel similar to gambling. Not sure whether you’re betting on a winner or a loser.
Below are ten helpful strategies to ensure a successful tenant mix.
Learn from previous tenant failures
Just as you were taught in childhood to learn from your mistakes, this advice is applicable in the commercial real estate industry. Take the time to discover why certain tenants did not flourish, was it their location, their business plan or their ability to attract customers. Paying close attention to the details in the beginning will mitigate larger headaches later on.
Reposition the center
When your tenant mix is not fulfilling the needs of the surrounding community, consider repositioning the center. If your tenants offer higher-end commodities and the demographic does not warrant the price points, retain tenants who tout discount products and services. Understanding your center’s consumer profile will aid in your tenants’ long-term success.
Reinvent tenant locations
Today’s tenants are looking for smaller spaces with frontage and high visibility. Consider reconfiguring existing spaces to meet tenant demands. Many retailers are now fulfilling online orders directly from brick and mortar stores to keep up with online retailers such as Amazon and eBay – offer them the ability to have window frontage and the backhouse processing center they seek.
Focus on tenant synergy
Putting the right tenants together takes skill – be mindful of exclusive rights. Mixed business models may attract consumers via convenience but a café may object to a gym with a juice bar being located just a few doors down. Protecting the tenant’s business plan should be of concern to ensure occupancy stability.
Open lines of communication
Instilling solid lines of communication so tenants understand and are aware of the language in their lease, along with their ability to contact property management, is key. Ensuring good communication between landlord and management, and management and tenant, is just as important as instituting good rapport among fellow tenants.
Close eye on tenant performance
Paramount to a successful tenant is their ability to deliver on their business plan. The commercial property manager should evaluate the tenant’s performance in terms of their sales volume, resulting in their ability to pay their rent in full and on time. An underperforming tenant can reduce the value of the center and negatively affect other tenants.
Be proactive
By staying informed of the performance of the center, the tenants, and the commercial management company, an owner is able to proactively respond to situations before they warrant a retroactive reaction.
Stay informed of the market
Staying apprised of current market conditions such as lease rates, comps, occupancies, vacancy rates, and new construction allows for the ability to make better educated decisions and properly position the center for success.
Utilize revenue management software
To forecast trends to determine which months will experience higher or lower sales volumes, turnover, move-out / move-in dates, and manage lease expirations. The most important job of management and ownership is to create a long-term, stable environment in which the tenants can conduct their business while maximizing asset operating income.
Efficiently handle the move-in process
The objective is to have vacant space occupied as soon as possible, and this is possible by being actively involved in assisting the new tenant’s move into the premises. Management should assist in coordinating the construction of landlord required (if any) interior improvements and complete this work in the shortest time period possible, with set rent commencement dates.
Meissner Jacquét Commercial Real Estate Services understands that tenant satisfaction is directly related to tenant retention. And that is why it’s imperative to attend to every detail and service issue, from cleanliness of the restrooms and maintaining property curb appeal, to employing energy efficient operating strategies and maintaining the edge on the competition through accurately assessing and implementing capital improvements and the property specific business plan.
Sources:
Meissner Jacquet Commercial Real Estate Services
REBusinessOnline