How to Boost Landlord and Tenant Relations in Commercial and Retail Property

foyer of retail shopping centre

The shopping centre and retail property markets are changing today, and that will reflect on how tenants create sales, attract customers, and grow their business over time.   The internet and the ‘online’ side of things are changing how property occupation works, and just what businesses need to lease premises successfully for the long term. 

Many businesses today don’t need to lease as much space as previously.  Many business people are completely mobile and attending an office daily is just not required for many reasons.  Customers and manufacturing are perhaps the only reasons a business or company would need a physical property ‘base’ to operate from.  On that basis, the landlord and tenant relationships of today are more important than ever before.

Relationship Rules in Investment Property

How can a landlord encourage positive tenant relations?  Try some of these for starters:

  1. Regular meetings – this sounds logical, but it is surprising just how ‘random’ many landlords are with tenant contact.  They let the contact go until something starts to pressure the tenant relationship or the occupancy.  When the ‘pressure’ is on, lease negotiations are always harder, and the alternatives to solving a lease problem will be less for both parties.
  2. Create comprehensive leases that work for both parties – the lease document supports occupancy and income stability.  When you look at it from that perspective, how a lease is created should be carefully considered.
  3. Clarify and control critical dates for all leases – this is a planning process of an advanced and positive nature.  Critical dates coming up with any leases should be watched and tracked at least 18 months out from the ultimate date.   That is how you can stabilize an investment property.
  4. Be flexible in tenant mix alternatives – if a tenant is under pressure, then look at the variables of expansion, contraction, or relocation.  There are ways to solve a tenant lease problem related to local business pressure.
  5. Understanding property use – for the investment property to thrive over time financially, the use of the property must be optimized.  There will be a balance between common areas, leased areas, car parking, and services.  The owners of competing properties of the location will always be seeking to attract tenants.  All the more reason to stay close to your tenant mix and property occupancy.
  6. Occupancy is not just about rent – collect a fair and reasonable rent for the property and the location.  Aggressive and high rents force people away from a property.  Look at the bigger picture of property occupancy costs including rent and outgoings.  How do they compare to other properties in the location?  Preserve your tenant mix by keeping occupancy costs in the ‘fair and reasonable’ zone.
  7. Negotiating leases early – if a lease matter is coming up (option or expiry), it is timely and sensible to negotiate any lease matter early.  Don’t wait for the lease date to arise before you start discussing things with the tenant. 

So these are valuable ways to work with tenants and preserve lease occupation in commercial or retail property.  Improve your investment property by negotiating with and consulting your tenants in a positive way.  Their business success will be the foundation of your real estate investment and its performance.

Things to Do in Shopping Centre Investment in Australia

shopping mall foyer

As we move from 2018 to 2019, there is a change evolving through the retail shopping centre ownership and investment market.  Around Australia and in Queensland you can see retail indicators growing.  The stronger retail properties stand out as the ‘performers’, and the weaker ones can lose their retail customer base all too easily.  The successful retail properties today are notably in categories of either:

  • Regional
  • Neighbourhood
  • Destination
  • Tourism integrated

These retail focus categories work well, and some shopping centres are a mix of a few.  How can you strengthen your retail property and its category?  Positioning is now important to attract customers to the retail offering, and in supporting the tenants with potential sales.  Don’t let your retail property become ‘mediocre’. 

Neighbourhood shopping centres will of course always exist, but the shaping of the tenant mix is critical to capture the local shoppers before they engage with regional retail offerings.  The retail customer base is more ‘mobile’ and will easily travel to the retail property where they can get the products or services, but more importantly the entertainment.  Shoppers like to feel good as they conveniently shop locally or regionally.

If you own a shopping centre or are considering the purchase of one, consider the positioning of the property now and how it could be ‘strengthened’ in its category and location.  Get positively involved in the future attraction of your retail property.

Where can you start with that? Choose the category of retail that should apply with your property and its demographic, and then boost the tenant mix, the customer attraction, and then the market rent.  All factors are linked.  It is a retail equation for landlords.

Shopping Centre Optimization Planning

As an extension of that idea, here is a ‘base plan’ for retail shopping centre optimization:

  1. Support tenant retention with quality tenants
  2. Reduce vacancies before they appear
  3. Balance the tenant mix for quality
  4. Market the Shopping Centre comprehensively
  5. Know the local property market and customer base
  6. Apply local area marketing online and offline to the customer base
  7. Engage with your tenants frequently
  8. Watch your outgoings costs and comparisons for the area and property size

As a final note, the entire sector is shifting with the pressures on retailers from the internet; customers like to purchase goods and services ‘conveniently’ online.  This directly says that the landlords of shopping centres should consider all the strategies behind their tenant mix, shopping centre operations, lease management, marketing, and their income base.