Like most commercial real estate, value is created in retail properties through effective leasing. One important aspect to consider when leasing your retail real estate is your tenant mix. In other words, you need to consider how your tenants businesses relate to one another. Here are five questions to ask your self when evaluating a new tenant for your retail property in Reading, PA:
Does the new tenant compete with your existing tenants? For most types of retail properties, it is not a good idea to lease vacant spaces to tenants that directly compete with your existing tenants. This is pretty obvious, but it is not always the rule. There are some businesses that benefit by locating close to their competitors. These are usually companies that sell big ticket items that people want to shop and compare. This is why you often see several car dealerships located in clusters.
What's your prospective tenants target market? It's important to consider the type of customer that will be coming into your retail center. Do most of your stores cater to high end shoppers or bargain hunters. Does your center attract a specific demographic group? Will your center's existing customers shop at the new tenant's establishment?
What is the peak traffic time for your new tenant? Some stores will get more traffic in the morning or the middle of the day, and some will attract a night-time crowd. If parking is limited in your center, it's best to have a mix. That way the parking lot is never too crowded at any given time.
Does the prospective tenant attract it's own customers, or does it require traffic from an anchor tenant? Many smaller retailers will not attract enough customers on their own, and will only survive in a location that already has a strong customer base.
Will the new tenant encourage shoppers to stay in the center longer, or will they be in and out quickly? It's important to consider whether your center is geared towards creating a shopping experience or just a quick convenience stop. Some tenants will pay a premium to rent space where people stay and shop longer. Length of stay may also be an important consideration when parking is limited.
Creating the right mix of tenants is more of an art than a science. The more deliberate you are in planning your tenant mix, the better chance you have of turning your real estate investment into a thriving shopping center. What other things do you consider when evaluating how a prospective tenant fits into your property?