How Retail Property Owners Can Maximize Occupancy Rates Now
What moves and strategies can help retail property owners keep their investments full of paying tenants?
No matter how great a commercial investment property appears in advance, real returns are going to rely on daily property management. This is especially true to maximizing the extremely important occupancy rate.
High occupancy rates are vital to achieve and maintain for overall attractiveness of a shopping plaza to consumers. Other factors include tenant performance, the negotiation of new leases and securing the most profitable tenants. This will strengthen your NOI and ultimately the value of the property for refinancing or resale.
How can high occupancy rates be maintained, even in highly volatile times in retail?
Pre-empting vacancies by negotiating renewals early, or marketing for new tenants early if a tenant is set on leaving or hasn’t been performing well is a great start. This will minimize any vacant days and reduce turn times. Building relationships and waiting lists of tenants, especially franchise tenant who wants to open multiple locations possibly at each of your retail properties is what really differentiates the high performing retail assets as well.
Improve forward performance by securing tenants who are better suited to survive and thrive with emerging trends. Right now, that may include cannabis and tech-savvy retailers versus overpriced and non-tech savvy boutiques.
Maintain a well-rounded tenant mix that can keep performance and occupancy rates up through different economic phases. A good example of this type of tenant includes drug stores, banks, gyms, coworking spaces, coffee shops, gas stations, wine distributors and discount stores.
Be creative with empty units when you can’t avoid them. Pop up stores, seasonal stores and short-term retailers all can help generate premium rents without having to take big bets on unproven tenants. This can include test locations for startups, temporary event spaces, distribution centers for online orders. You may even wish to divide up spaces for smaller tenants so that less square footage is vacant at any one time.
Further, try taking a holistic approach to your shopping plaza. Hosting events, building community, harnessing consumer loyalty and even adding in mixed use elements for a greater variety of tenants can all be helpful. These are all ways to maximize occupancy rates now.
Occupancy rates are a vital factor in retail property performance. There have been some shake ups in tenants and the types of tenants who are expected to perform. Yet, with an experienced and well-connected asset management team, retail property investors can find this is a spectacular time to acquire underperforming assets and add a lot of value and cash flow potential to them.