Although the retail real estate world has remained unremarkably stable over the past few years of trade and industry turmoil, building owners and developers haven’t slowed in their pursuit to entice new leaseholders while maintaining their list of current tenants.With most retail based on long-term lease agreements with public companies, tenant attraction and retention tactics in this marketplace can be – and often are – much different from those in corporate office or multi-family markets.What Retail Tenants WantTo successfully attract and retain retail tenants, you need to know what they desire for their stores and shops. Following is a glimpse of just a few of the things today’s retail tenants want:A traffic-generating location. This is a no-brainer: Retailers figure that if there are people constantly in and out of a shopping center or other retail area, some are bound to stop and shop in their store.Visibility and easy access. “What tenants want today is a viable shopping environment,” says Bob Michaels, president, Chicago, IL-based General Growth Properties Inc. A store that’s simple to locate and easy to navigate will surely attract consumers (and, in turn, make tenants happy).Entertainment components in close proximity. Movie theaters, restaurants, skating rinks, Santa’s Workshop – all of these venues draw crowds. And if there are crowds at a mall to see a movie, they’ll most likely see your tenants’ stores as well. It’s also nice for store employees to have a place close by where they can grab a quick meal, take a short break, etc.Managers that will keep them informed. No tenant wants to hear news regarding the shopping center from a customer, a newspaper article, or another merchant. They’re part of the mall; they want and deserve to know details regarding new construction/modernization plans, retailers moving into or leaving the center, etc. Other stores nearby offering merchandise related to their own. Michaels indicates: “Retailers ... like to locate near or with people that are compatible with their business.”Meet Your Tenants’ NeedsNow that you know the basics about what your tenants desire when they’re looking for the ideal place to set up shop, following are some of the latest ways retail owners and developers are meeting their tenants’ needs:Turn shopping centers inside-out. In many of today’s malls and shopping centers, the trend is leaning toward more of a stop-and-shop experience. Here, consumers can approach store entrances from the outside of the building, making shopping faster. “In a lot of our shopping centers that are eight or 10 years old, we’re redeveloping them. We’re putting in streetscapes. In many cases, the consumer can drive right up to the center and go into the stores, as opposed to having to go through the mall entrance,” explains Michaels.Provide tenant kits. Shopping Center Tenant Relations: A Manager’s Guide to Tenant Retention, a manual published by the International Council of Shopping Centers (ICSC), New York City, recommends that retail property managers provide new tenants with “kits” detailing all sorts of information. Rules and regulations regarding signage; names and phone numbers of appropriate contacts; instructions describing how to operate the HVAC system; maintenance responsibilities (both those of the tenant and those of the owner); procedures for a natural or man-made disaster; a calendar of events; and steps for submitting proposed modifications are all things that may be included. Be a partner. “We constantly talk to our retailers; we work with them. We share information with the retailers. From a service aspect, we really try to stay in very close touch to make sure they’re not missing anything and we’re not missing anything,” says Michaels.
For example, when General Growth’s merchants are struggling or aren’t doing as well as the company would like, retailer productivity services are made available. These groups meet with the tenant free of charge and work to help the identify reasons why sales are weak. There may be some way the owner/developer can help (store location, etc.). Other times, store employees, merchandise availability, or advertising strategies are to blame. And with tenant satisfaction measured primarily on productivity and sales, both the owner and tenants will appreciate the added help in recognizing the source of a problem.
Another idea for a partnership opportunity? Many retail building owners conduct surveys with consumers, asking questions about current retailers in the shopping center (what they like and don’t like about current merchants, which retailers they’d like to see join the center, etc.). Then, the survey results are shared with the retailers so they can use them to their benefit.Keep tenants “in-the-know.” Newsletters, weekly/monthly gatherings, or short breakfast meetings are easy ways to make tenants aware of the latest shopping center plans or to remind them about certain lease provisions. Hearing about upcoming special events, new owner/developer staff members, tenant achievements, and new additions to the list of merchants from you, the building owner, makes tenants feel like they’re an important component to your building – more than just a source of income – and will most likely make situations much easier in the long run. After all, how do you respond when one of your occupants says, “I heard from a customer this morning that we’re beginning a remodel soon?” You shouldn’t ever reveal confidential information; but stick to the general facts about what’s happening, and tenants will appreciate your extra effort. According to Shopping Center Tenant Relations, introducing current tenants to those that are just joining also helps keep the lines of communication open. Hosting a social event or an educational workshop (regarding advertising approaches, visual display strategies, etc.) can be a great way to build connections between merchants and owner/development staff. They’ll feel more comfortable coming to you with problems and interacting with their peers on a daily basis.Make security noticeable. Tenants will feel more secure in a place that is actively working to protect their merchandise. Security systems, security guards, and other visible safety measures make it obvious to your merchants that you care about them and the success of their business.Offer shopping center directories. According to the ICSC, this idea is an easy way for an owner/developer to help merchants thrive. Directories give tenants assurance that a consumer in one part of the mall will still have a chance to see what is offered throughout the rest of the mall. Some shopping centers provide smaller, take-away versions of the directory that tenants can offer to their customers to carry with them.What initially attracts a new tenant to a shopping center is ultimately what will persuade them to stay and renew their lease in the future. “It’s kind of like a herd mentality, if you will,” Michaels says. “If you’ve got the right tenants, then getting new tenants or additional tenants is pretty easy.” Summing up how most retail owners and developers feel, Michaels explains: “We try to be all things to all people within one retail environment.”Leah B. Garris ([email protected]) is associate editor at Buildings magazine.
For example, when General Growth’s merchants are struggling or aren’t doing as well as the company would like, retailer productivity services are made available. These groups meet with the tenant free of charge and work to help the identify reasons why sales are weak. There may be some way the owner/developer can help (store location, etc.). Other times, store employees, merchandise availability, or advertising strategies are to blame. And with tenant satisfaction measured primarily on productivity and sales, both the owner and tenants will appreciate the added help in recognizing the source of a problem.
Another idea for a partnership opportunity? Many retail building owners conduct surveys with consumers, asking questions about current retailers in the shopping center (what they like and don’t like about current merchants, which retailers they’d like to see join the center, etc.). Then, the survey results are shared with the retailers so they can use them to their benefit.Keep tenants “in-the-know.” Newsletters, weekly/monthly gatherings, or short breakfast meetings are easy ways to make tenants aware of the latest shopping center plans or to remind them about certain lease provisions. Hearing about upcoming special events, new owner/developer staff members, tenant achievements, and new additions to the list of merchants from you, the building owner, makes tenants feel like they’re an important component to your building – more than just a source of income – and will most likely make situations much easier in the long run. After all, how do you respond when one of your occupants says, “I heard from a customer this morning that we’re beginning a remodel soon?” You shouldn’t ever reveal confidential information; but stick to the general facts about what’s happening, and tenants will appreciate your extra effort. According to Shopping Center Tenant Relations, introducing current tenants to those that are just joining also helps keep the lines of communication open. Hosting a social event or an educational workshop (regarding advertising approaches, visual display strategies, etc.) can be a great way to build connections between merchants and owner/development staff. They’ll feel more comfortable coming to you with problems and interacting with their peers on a daily basis.Make security noticeable. Tenants will feel more secure in a place that is actively working to protect their merchandise. Security systems, security guards, and other visible safety measures make it obvious to your merchants that you care about them and the success of their business.Offer shopping center directories. According to the ICSC, this idea is an easy way for an owner/developer to help merchants thrive. Directories give tenants assurance that a consumer in one part of the mall will still have a chance to see what is offered throughout the rest of the mall. Some shopping centers provide smaller, take-away versions of the directory that tenants can offer to their customers to carry with them.What initially attracts a new tenant to a shopping center is ultimately what will persuade them to stay and renew their lease in the future. “It’s kind of like a herd mentality, if you will,” Michaels says. “If you’ve got the right tenants, then getting new tenants or additional tenants is pretty easy.” Summing up how most retail owners and developers feel, Michaels explains: “We try to be all things to all people within one retail environment.”Leah B. Garris ([email protected]) is associate editor at Buildings magazine.
