You’re a pretty bright person, so don’t worry, I won’t waste your time explaining how to mix tenants together to get that perfect mix of attraction and collection retail stores. Unless you twist my arm JUST right, then I may have to let go of the goods.
Okay fine. Bottom line here is that I’ll basically be talking out loud to you – and I want you to know the whole time that you shouldn’t have to worry about this. This is the job of the leasing agents for your center, and there is much more to successful leasing agents than market knowledge… but, in case you’re curious what goes on in their minds:
1. Start with Your Anchor Tenant(s)
Anchor means that the tenant is preferred, typically national meaning they have stores in multiple states – it also means they likely sign a longer lease and occupy more space within the center than other tenants. Here in Florida, most of the time we see this being Publix, Whole Foods, and Walmart anchored centers for the Grocery side of things. It also may means that, when people give directions to your center, they say “next to the Publix” or “across from the Whole Foods on the corner of A and B street”.
While Grocery tenants are great, they’re not the only option. Leasing agents also consider Entertainment (Game Time, Movie Theatres, Bowling Alleys), Fitness Centers (LA Fitness, Snap, Crunch, CrossFit gyms), Dining (Italian, Pizza, American, Steak, Fish, Bar & Grill), Financial options (Bank of America, Lake Michigan Credit Union, Chase) and Specialty tenants. The fun comes in laying out the mall just so, making it easy for customers to get to and from places while simultaneously pulling them in to make additional purchases.
2. Create a Cluster
And that’s when you get into clusters. It’s when leasing agents make a seating chart of stores based on their relevance to one another (for example, their target demographic). The idea is creating ‘zones’ of customer activity to increase sales. All this happens because once customers start buying in one place, they’re likely to make another purchase soon – seriously, like the store next door. By making these clusters, it facilitates this behavior and tenants can complement each other.
Example Cluster 1:
Buffalo Wild Wings
Ross Dress for Less
Regal Movie Theater
*This example provides sports-centered dining for the family, retail shopping, discount shopping, and family entertainment.
Example Cluster 2:
*Slightly different than example 1, this variation offers multiple specialty tenants paired with one mass retail/grocery store and one franchise restaurant.
3. Specialty Tenants
Once a cluster is established, introducing specialty tenants encourages customers to stick around and spend more money. Sometimes, you might get a franchise tenant who has already convinced a customer base to get loyal, stick around, and spend more money. This is helpful because your mall can ride the coat tails of the successful. However, it’s important to recognize the obvious strengths (Dunkin Donuts, CVS, Dental Office) and less obvious weaknesses of adding certain tenants (Massage Parlors, Vape Stores, and Pawn Shops).
In the end, your shopping center is going to achieve the best results by curating the perfect collection of tenants and credit. The best way to achieve this is to employ a seasoned retail leasing team with a strong track record for success in the local area. They will have the market knowledge, tenant relationships, experience, strategy and skills required to execute the plan and maximize the return on your investment(ROI). You may have thought this article would solve all your problems, and while for some it may, it won’t implement the solutions for you.