Prospecting for tenants in smaller centers

The neighborhood shopping center is the first level of retail investment property and is closely integrated into the community. The combination of tenants must be of a commercial convenience nature. That will be the key to your success.

When designing your tenant mix strategy for neighborhood property, think about the convenience and basic needs of the immediate community. Is the surrounding community growing and in what way? What do they spend their money on and how often? Are they younger families or older retired families? These questions dictate how they will spend their money.

Sometimes, to really answer these questions, it is necessary to conduct a survey of surrounding homes and families. They know the neighborhood better than you do and can usually tell you what the community thinks about the property and what is missing.

Once you have the answers to these basic questions, you can continue your search for the right tenants. While you’re at it, pay due attention to nearby competitor properties and new real estate developments, as they will have an impact on your property.

Once you know who you want for your combination of tenants and property, it’s time to look for them:

• Configure your target companies by type. Since your property is convenient in nature, you will likely need tenants in the categories of Fast Food, Fruit and Vegetable, Bakery, Newsstand, Pharmacy, Hair Salon, Liquor Store, Smaller Supermarket. Choose your tenants wisely with the established business history of other properties in mind.
• Cold call small, family-owned businesses in the area, and particularly competing properties, as they are likely to be interested in talking to you about your offer. They will also inform you about the performance of the other properties. This market intelligence is invaluable.
• Follow up with property managers and franchise managers or retail franchise chains. Breaking into a well-known retail chain may require several follow-up letters and phone calls. The seeds of interest you sow today may take weeks or months to germinate, but consistency and persistence will get you through the door.
• Follow-up with supermarket chains for relocation or opportunity for new stores. The supermarket industry is highly competitive and most chains would like to keep the opposition out of their ‘patch’. Supermarket anchor tenant rents are lower than specialty tenants and will be selective in paying their share of property expenses, but you will get a long-term anchor tenant to support your property. Choose well.
• Pay attention to local media in new ways, with your ears and eyes open to business prospects. Even in a slow economy, there are companies that are successful. Convenience shopping doesn’t go away; it simply changes the priority and offer to the buyer. Read the newspaper every day, listen to the radio, and watch your local TV stations not only for business news, but also for ads from retailers that seem successful. You will find out who is growing, who is moving, and who (by the absence of him) is almost dead in the water.
• Use local phone books, the Internet, industry groups, chamber of commerce directories, and publications from local economic planning offices to find out who’s who in the market and who might be interested in moving. Make the calls and ask the questions. It’s the secret to building a great tenant mix for your property.
• Visit other shopping centers at different times of the week to examine the operations of potential tenants. Learn to think like your target retailer, understanding the strengths and weaknesses of the operation. Learn what it’s like to turn the key at that store and what it takes to stay in business.
• Always return all phone calls from a lead or inquiry. A potential tenant with a dynamic operation may be prospecting you and your property. It doesn’t matter how outlandish or bizarre a person or idea sounds. You can find some occupation gems among the strange and different ideas.
• Know your business patterns for the property in question, i.e., peak business days, traffic patterns on the property, established popular tenants, how the community uses common areas, how parking allows for quick access to the property for the suitable buyer.
• What is the brand of the mall? Do you need to do any renovation of the common areas? Tenants will not move into something that is degraded, defaced, and poorly maintained. Poorly presented properties are a common problem in owner-managed facilities where the owner is inexperienced or on the smaller end of the investment scale. He must spend money introducing commercial property, otherwise the rent, client interest, and tenant base will decline.
• Existing tenants and potential new tenants of a property are likely to talk before making the decision to accept a new lease offer. Therefore, harmony and relationships with tenants are critical to future property occupancy and rental success. Happy tenants generally mean a well-performing property.

Understand how your real estate leasing brokerage can fit into the bigger picture of your local mall. The leasing broker or property manager can always open the door to valuable prospects, but it’s also up to you to sell the mall and your future in the community. When you know the community well, you have the keys to a great combination of tenure and property performance.