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5 Questions To Ask When Considering Your Retail Center's Tenant Mix

Real Estate Agent with BMC Capital

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?


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John Pusa
Glendale, CA

Joseph - Excellent information and tips on retail center tenant mix. Thanks for sharing it.

Feb 04, 2011 04:05 PM
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA

I AM a firm believer that a good ADVERTISING program for the ENTIRE retail center is important...whether it is LARGE enough to have their own employee or have a central ad department, this is KEY to keeping the TRAFFIC to tenants/shops

Feb 04, 2011 10:29 PM
Joseph Cacciapaglia
BMC Capital - Houston, TX

Thank you for your comments.

Wallace, I agree with you, and I think it's easier to create an effective advertising program when your tenants have similar target markets.

Feb 05, 2011 12:15 AM
Richard L. Sanderson
Richard L. Sanderson Consulting - Kalama, WA
helping improve local property tax systems


Great questions about retail center tenants.  Our retail centers in the Washington DC area are just starting to pick up a little after being stagnant for the last two years.  But the tenant mix is an important factor as some retail centers still have a vacancy problem and others are doing better than average.

Feb 05, 2011 02:30 AM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Joe , these are 5 really good questions to consider in commerical leasing ! Good explanation !

Feb 16, 2011 09:43 PM
Neal Swanson
Fairhaven Commercial, Inc. - Puget Sound CRE - Seattle, WA
CCIM - Dealmakerpreneur

Great article.  Have you looked into The Retail Planet to determine the potential best fit for these centers?  I met with them at ICSC last year and was really impressed.  They also offer a limited version through The Site To Do Business.  

Jan 06, 2012 05:53 AM