Tenant mix analysis should be performed regularly in any commercial building and on this basis at least every 6 months as part of the building’s business plan. This way you can see how things are going for tenants, anchor tenants, and guests of the property. Identifying problems in the mix early can help you prevent larger problems in the property over time.
Since a commercial building is all about sales and customer interest, tenant mix will be very important in your annual real estate business plan. When you set the right strategies for the mix, you can market the property to the clientele and local community, bolstering sales results for everyone involved.
The success and performance of a commercial building is closely linked to the success of the tenants. A successful commercial building will typically have consistently low vacancy rates and good market rents, even in tougher retail cycles and real estate markets.
A professional and experienced mall manager will have their finger on the pulse when it comes to tenant mix. They will have plans and changes in mind that will allow the property to improve. The owner and tenants of the property then have positive results with their vested interests.
Here are the top reasons why you should focus on tenant mix and get it right.
- Low vacancy rates will be apparent in the property. Renters won’t want to leave because they know they’re participating in a property where the owner and property manager really shape the property in a positive way.
- Higher market rents will be achieved as the property performs better than nearby competing properties. This will then extend into a higher property value for the owner.
- With existing tenants, their renewals will be less complicated and negotiations will be easier. Tenants won’t really want to walk away from the property and lose their income or the stability of their business.
- Rent reviews in the property will be easier to negotiate given that you will have plenty of other “market rent comps” to use in and from the same property. Any disputes or disagreements over rents will be more difficult to justify or contest.
- A good mix of tenants will give you the flexibility to move tenants around and put them in better positions when the opportunity arises.
- Renovation strategies and relocation strategies can be integrated into lease negotiations, making it easier for you to shape ownership and mix at the right time in the future.
When you focus your efforts on the tenant mix of the property, you can generate a better bottom line for both tenants and landlords. Use the factors above as part of a checklist to shape the tenants and negotiations you undertake.