Build Your Shopping Centre Tenant Mix the Right Way

If you are the leasing or property manager in a retail shopping centre, one of the key facts of property performance will be the tenant mix. If the tenant mix is not correct then it will frustrate the future of the property through:

Poor tenant salesHigh vacancy factorsVolatile lease termsUnpredictable outgoings recoveryUnstable mark rentPoor customer numbers or visitations to the property

So the best way forward is to get a tenant mix plan or strategy in place as soon as possible. To do this you can use the following base plan for implementation of the tenant mix plan with the landlord:

Seek details from the landlord as to how long they want to hold the property as an investment. There is a different approach to short and long term holdings when it comes to lease negotiation and tenant mix.
Survey the local shoppers to understand what they want in their regular shopping patterns and needs. What opinion do they have of the property and how can you match or improve on it?
Are there any intentions to redevelop or demolish the property and for what reason? This will have impact on your lease terms and conditions.
How do shoppers move to the property and through the property? The flow of people will create high points and locations for your good retailers to be located.
Who are the anchor tenants now in the property? Are the anchor tenants nearing lease expiry (inside 2 years), and if so how will you address this matter? Do you want the anchor tenant or tenants to renew and on what basis? You should fix any matters of the anchor tenant lease before you look at the specialty smaller tenants.
Are there any relocation plans to move tenants around the property? This will impact your tenant mix strategy and the duration of leases that you negotiate.
Split your tenants into two or three groups. Tenant Group 1 would be the tenants that you want for the future to remain in the property, and on that basis you would negotiate any lease on reasonable terms. Tenant Group 2 are those that you may like to stay in the property but it is subject to some changes in occupancy such as relocations, renovations, change of permitted use, or change of lease terms and conditions. Tenant Group 3 will contain those that should not remain in the property at lease expiry; they are of no benefit to the customers or the levels of sales in the greater property. All these tenant groups should be reviewed every 3 months because there will be changes.
Taking each of the Tenant Groups 1,2, and 3 above, split them into sub-groups of retailers categories such as Fashion, Food, Electrical, Jewellery, Sports Goods, Entertainment, etc. From these sub groups you can work out what groups work well with each other and can therefore be used in clusters around the shopping centre. The clustering of tenants near each other is ultimately what tenant mix strategy is all about.
Identify what tenants you need and do not exist in the property now. They will become Tenant Group 4. Start to look around other competing properties for retailers that fill this requirement. They should be contacted and networked for property relocation to your property when they get to the end of lease term.
Given the plans of the landlord and the existing tenant profiles and mix, create the standards that should apply in any new lease to be negotiated. Add to this some independent valuation and projection of market rentals that apply in your location to a property of your type.

These factors will help you get the tenant analysis and plan under way.

If you want more tips and ideas to help your tenant mix or retail property strategy you can get a free ebook right here at http://www.commercial-realestate-training.com/

John Highman is an expert real estate author, conference speaker, and coach. He helps Real Estate Agents to improve their market share, negotiation skills, listings, and commissions.

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Vacation Rental - Making the Right Deal

Buying your Vacation Rental

Like any other rental property purchase, you have to do your homework before you buy. That homework comes in a few different categories:

Financial: Before you start looking, do a financial feasibility study, comparing expenses to income. This way you will have some idea as to what to look for in terms of price, amount of repairs you are either willing to do or to pay for. The financial perspective will also have some bearing on what location you can afford. We all know that a vacation rental on Malibu Beach would rent well and bring in lots of cash... but not many of us can afford that property!

Vacation Market Research: Meet with owners of other vacation rentals or property managers who mange vacation rentals, they can be a wealth of information. The main information you want to get from them is:

• How many days per year can I expect to rent the property?

• What is the rental rate for various sized properties (studio, 1 bedroom, 2 bedroom etc.)?

• What type of property rents the best and most often?

• What is the best type of property to own; single family detached, condo, townhouse, duplex?

• For each size of property, how many guests should it be able to sleep.

When Kris and I are teaching our classes and seminars, we often hear our students lamenting "I've done everything wrong! If only I had this information before!" Since we all get plugged into new information all the time, it is never too late to incorporate that information or process into what we already have in motion. Perfect world for doing you due diligence on vacation rentals is before you buy a property. In fact, let me just spell out the "perfect world" process and then you can figure out where you can best slip into it with your own situation.

Decide on 2 or 3 geographic locations where you think would be best for you to buy a vacation rental.

Working with a Realtor or on Craigslist, find out what the prices are for properties in those areas. Note: This may cause you to have to decide against one or more of the locations you selected. That's OK. If available, look at new areas to replace those or just move forward with the ones you have left.

Working with a Realtor or a Property Manager of vacation rentals. Find out

• How many days per year can I expect to rent the property?
• What is the rental rate for various sized properties (studio, 1 bedroom, 2 bedroom etc.)?
• What type of property rents the best and most often?
• What is the best type of property to own; single family detached, condo, townhouse, duplex?
• For each size of property, how many guests should it be able to sleep.

Put together a financial proforma. This is where the rubber meets the road. Your financial proforma will tell you things like how large of a loan you can afford to carry on the property, how many days per year you will need to rent it. What size and price of property works best in your scenario. Match these up with the demands of your market and it will start be very apparent if this deal makes sense or not.

Pat Larkin has over 30 years in the property management, home-building and land development industries. Until 2009 they owned and operated one of the largest residential property management firms in Southern California. They have since established "Manage To Make Money" which is a resource for property owners, property managers and investors. A great place for them to "share their stuff" (help others to learn from their expensive and painful life lessons) in their tenure.

Original article