Retail shopping centers tend to attract large numbers of customers, making them ideal locations for business owners. This is good news for a retail real estate owner. Higher the number of tenants will attract, the more money you get to pocket. Especially if the property is strategically located. However, the same tenants leasing space in your premises will impact the number of customers visiting the premises regardless of how strategic your location is. This raises the need for important factors to look for in tenants for retail properties. Obviously financial stability and experience in the business is critical, but there are other important items that should be evaluated as well.
Leasing Agreements
The primary stream of income for your property will be rental payments. Therefore, while arranging the terms of a leasing agreement, always consider the expiration dates and option dates that are agreed upon with the tenant. You do not want most of the leases to expire at the same time period. This would result in a threat of numerous vacancies, which could greatly impact your revenue and can put you in a bad position while renegotiating lease terms.
Tenant Relationships
Tenants will only lease space in your property if they are certain they will make profits. Therefore, to ensure that your shopping center attracts a large number of customers, apart from its strategic location, you should ensure that the majority of the tenants can attract customers who will be beneficial to them and other retailers within the premises. Take the instance of your leasing space to a salon business and a spa. The two will be dependent upon each other and consequently make themselves profitable. The investor in turn, will benefit from their lease payments making everyone happy. Also be sure to diversify your tenant mix. Service retailers, basic good retails and other varied tenants can help weather any potential economic volatility.
Major Tenants
Major tenants are those whose leasing agreements provide the most income. It is wise to have a large anchor tenant, like a grocery store or a major big box retailer. Always keep a keen eye on their operations and be sure to know well in advance if they are not planning to renew their leases. This can allow you to start making prior arrangements to replace them quickly. Doing this would ensure their absence does not significantly impact other tenants and your financial operations.
Property Maintenance and Appearance
As tempting as it may be to put off maintenance to keep more money for yourself, it is in your best interest to perform maintenance and upkeep as soon as possible. This would ensure the shopping center is always in top condition. This is because once the property deteriorates, customers may move to better maintained retail properties. Tenants would lose money and eventually move out and drastically impact your commercial real estate portfolio.
Conclusion
The commercial real estate industry is one of the most profitable businesses to be in. Other factors to look for in tenants for retail properties is to ensure that they are appropriately dealt with, so they maintain profitability for your business. Ensure that you build up a good relationship, sign leasing favorable agreements, and keep your property in a good state.
