Anchor Tenant Choices in Shopping Centre Investments Today

retail shopping mall

Have you ever thought about what makes a shopping centre so successful as an investment in Brisbane when other similar properties nearby are struggling?  There are usually a few things in the answer, including the landlord’s commitment to the property function and appearance, the tenant mix, the marketing program for the property and tenants, elements of community involvement, ongoing customer attraction, and the anchor tenant. 

You could say that it is a special ‘retail formula’.   It is a unique blueprint to balance and maintain; shopping centre managers and leasing specialists in Brisbane know all too well the importance of the equation and the balance of it.  Neglect one part of it and weaknesses can develop.  The retail property can degrade very quickly.

Expect retail sales to be important to your investments

Fundamentals of Retail Property Performance

So, let’s look at the anchor tenant part of the equation.  When it comes to the performance of the retail property, the anchor tenant selection and success will be fundamental to the performance of the property.  On that basis, you should choose your anchor tenant to the future of not just the property but also the community of customers.

Key factors to bring into the leasing decision in selecting an anchor tenant will be:

  • Required lease term (generally long)
  • Option term (also generally long)
  • Base rental or turnover rent provisions
  • The anchor tenant match to the customer demographic
  • Rent review alternatives over the lease duration
  • Marketing initiatives of the anchor tenant into the local area
  • Fit out designs and refurbishment covenants in the lease
  • Branding match to the property and signage for the anchor tenant
  • The integration of the anchor tenant into the property tenant mix
  • The lead time to exercise the lease option for the anchor tenant
  • Levels of trade expected and required for the success of the tenant

Anchor tenants can bring stability to your market rent levels and create lower vacancy factors.  A retail property with a good anchor tenant will support the specialty stores and underpin the opportunity of retail trade for everyone.    So, a landlord should work closely with any anchor tenant in occupancy to ensure support and involvement in multiple ways.

Shopping carts
Attract more customers to your retail property.

Things to Review in Shopping Centre Purchase

If you are looking to purchase an existing shopping centre with an established anchor tenant, ask these things as part of the due diligence process and lease document review:

  1. The duration of the lease and the options
  2. Critical lease dates relating to lease occupancy and enforcement
  3. The levels of sales for the anchor tenant over the last three years
  4. The marketing plans and campaigns underway at the property and for the anchor tenant
  5. The dynamics of the anchor tenant and the specialty stores
  6. The customer facts and figures relating to retail trading days of the week, the patterns to the visitor numbers to the property, and the seasonal sales throughout the year.

Information like this can help you understand the complete ‘dynamics’ of the retail property and its successes as an investment.  Look for the strengths and weaknesses in every situation with retail trade, the tenant mix, and the property performance.

How to Optimize Shopping Centre Performance in Brisbane

retail shopping mall

There is a change evolving through the retail shopping centre ownership and investment market in Brisbane.  Around Australia and in Queensland you can see retail indicators growing and shifting. 

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

The competitive nature of retail says that a shopping centre should be optimized in all ways possible, so the customers keep coming back.

woman with shopping bag
Know your shoppers and their requirements

Improving a Retail Property for Customers

How can you strengthen your retail property and its category or customer attraction?  Positioning is so important to attract customers to the retail offering, and in supporting the tenants with potential sales.  Don’t let your retail property become ‘mediocre’.  Failing tenants or poor sales will produce higher vacancy factors.

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 today 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 and be ‘entertained’ 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 for its 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 carts
Attract more customers to your retail property.

The Base Plan for Property Improvement

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 some 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. 

Choose the right tenants for your shopping centre that can form the basis of customer attraction over time.  Protect your asset and its investment performance over time.