The Best Tips for Handling a Tenant Mix Analysis

In a commercial or retail property, the tenant mix analysis process has distinct advantages for the leasing agent and the property owner of any investment property. The analysis helps you with formulating the right decisions and negotiations relating to tenant placement and property use. This then makes the business plan for the property quite real…

In a commercial or retail property, the tenant mix analysis process has distinct advantages for the leasing agent and the property owner of any investment property.

The analysis helps you with formulating the right decisions and negotiations relating to tenant placement and property use. This then makes the business plan for the property quite real and relevant.

Here are some things that you can achieve as part of analyzing your tenant mix:

  • Identifying the problem tenants before they impact your rental and income from the property
  • Working on vacant areas early as part of a definite plan of attack on re-leasing.
  • Setting benchmarks for rental and lease terms for the coming year ahead
  • Understanding your good and bad tenants and formulating a strategy for each
  • Working with anchor contracts effectively for the long term of the property growth
  • Keeping the landlord briefed on upcoming negotiations on all critical lease matters.
  • Targeting your property to the plans of the landlord and the trends of the leasing market
  • Allowed for expansion and relocation of your good tenants to keep them in the property.

If you have a moderate size commercial or retail investment property with multiple tenants in occupation, undertake a regular assessment of your tenant mix so that the potential pressures within the property can be dealt with and removed.

Here are some ideas to help you set up the analysis of your tenant mix:

  1. Review the current shopper and business demographic in the local area. Look for issues of growth or contraction. Understand what these groups are looking for when it comes to goods and services. How does your property match and complement that requirement?
  2. Assess the potential of vacancy in the property. You will have to deal with the vacancies first so you are not exposing the property to an excess loss of rent. That being said you should not fill a vacancy with any tenant that comes along; it should be the right tenant for the property and the location.
  3. Understand the differences between your anchor tenants and the specialty contracts. Are there any synergies that can spin across the groups?
  4. Look at the lease expiry profiles in the property as well as the rent reviews coming up. Any critical dates in these categories should be deal with early so you do not have a vacancy to address. Excessive or protracted vacancies send the wrong message about the property to the market and the shoppers.
  5. Understand the clusters of tenants that work well together in the property. A larger retail property will have multiple clusters and locations for you to consider and optimize.
  6. What are the ideal lease terms and conditions that suit the landlord when it comes to lease negotiation and acceptance?
  7. What levels of market rental apply locally?
  8. What are your competing properties doing with incomes, vacancies, tenants, and marketing?

Simple questions like these will help you with formulating your tenant mix. That will then give some direction to the property for the landlord in both income and occupancy.