In the right location, great tenants are easy to come by.
Time was that Byron bay was filled with hippy shops and organic lentil burger shops. I love that stuff, that’s one of the reasons I moved here… Not the hippy shops… the health food.
That and the perfect surf climate.
As Byron’s become more and more popular though all those little shops have become forced out of the main drag and either out of business or out of town into the back streets.
The main St is all full now of big retail chain stores. Witchery and Susan is all you find these days.
That’s bad for many people who come to shop the hippy stuff… but it’s great if you own commercial property.
Think about it. Would you rather a major group chain store as a tenant or a Mum and Dad operation running on the smell of an oily rag?
Chains are excellent tenants. They often stay for many years, pay on time – every time, keep the place in good order and can afford to pay a healthy rent.
But it’s not just clothing retailers that fit the bill.
Tyre fitters, mechanics, coffee shops & cafes, bakers, video shops, bottle-o’s, homewares retail and many other categories … Just look around, there are heaps of them.
So when you go into an area start looking around at what is not there. Ask yourself: what could there be demand for? What dos this community need?
Finding chains to lease your stores is not as difficult as you might expect.
You need to start with what you’ve got (if you already own a commercial property) and detail the following:
-demographics of the centre’s typical customer
-stores with the highest sales volumes
-store locations in relation to traffic patterns and site lines
-parking ratio and lot configuration
-spaces that are vacant
-spaces that could potentially be divided or combined with other spaces
-lease expiration dates
-the local market’s primary and secondary trade areas
-successful and not-so-successful retail properties in the market
-typical common area maintenance charges and real estate taxes for area centres
Then put together a SWOT analysis relating to your property and the SWOT for how it relates to the local area. Consider the types of relationships between existing stores and the kind of purchases that customers make. Is there a theme to the area or a real gap in the market?
Then you are in a good position to create a proposal and will have a better idea of which chains it might be good to approach. It’s also worth considering the following depending on the size of your property:
Try to be creative in determining how to best attract potential tenants by asking these questions.
-Can certain spaces be combined to accommodate a larger tenant?
-Can a big-box user perform better in a smaller space?
-Can I relocate some merchants within the property to free up a particularly valuable location for another use?
-Are the ‘out parcels’ being fully used?
-Can the parking ratio or zoning be changed to allow the building to be expanded?
-What is the highest and best use of a specific space in relation to the current and planned merchandise mix of the centre?
Also there is usually a dedicated person in larger chains who seeks out new locations for expansion. From these people you will be able to find the kind of requirements they have, what kinds of properties and locations they are looking for.
They will know exactly the demographic they are looking for. There will be a minimum town population size and other location requirements like main St access etc.
If you get this list from as many chains as you can you will perhaps find a tenant that will suit your property, or if you are looking to buy a property then you can keep these requirements in mind when looking.
Additionally, if you are developer you could purpose build something to suit a client by talking to them and even getting an agreement in place before you go ahead and buy. This will guarantee you a tenant as soon as your development is complete and allows them to place advertising to generate interest in the new store before it’s even open.
There is a much more detailed section on this strategy in the members area. To find out more about becoming a member of James Dawson’s Commercial Property Cashflow Blueprint go here