A tenant mix analysis should be performed regularly on any commercial property and on that basis at least every 6 months as part of the property’s business plan. This way, you can see the tracking of things for tenants, anchor tenants, and clients of the property. Identifying problems in the mix early can help you prevent major problems on the property down the road.
Since a commercial property is driven by sales and customer interest, the mix of tenants will be very important in your annual property business plan. When you set the right strategies for the mix, you can market the property to the client base and the local community, thereby strengthening sales results for everyone involved.
The success and performance of a commercial property is closely related to the success of the tenants. A successful commercial 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 take into account the plans and changes that allow the property to be improved. Both the owner and the tenants of the property get positive results with their vested interests.
These are the main reasons why you should focus on tenant mix and get it right.
- Low vacancy rates will be evident at the property. Tenants will not want to leave because they know they are participating in a property where the owner and property manager are truly shaping the property in a positive way.
- Higher market rents will be achieved as the property is performing better than nearby competitor properties. That will then extend to a higher property value for the owner.
- With existing tenants, your renewals will be less hassle and negotiations will be easier. Tenants really don’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 as you will have many other ‘market rent comparables’ to use on and from the same property. It will be more difficult for rent disputes or disagreements to be justified or discussed.
- A good mix of tenants will give you the ability to move tenants around and place them in better positions when the opportunity arises.
- Renovation strategies and relocation strategies can be incorporated into lease negotiations, making it easy for you to shape the property and mix at the right time in the future.
When you focus your efforts on the tenant mix for the property, you can create a better financial outcome for both tenants and owners. Use the factors above as part of a checklist to shape the tenants and negotiations you undertake.