There are different types of shopping center owners. Some just pay attention to the profit and loss statement and some are also concerned with the overall health of the shopping center. Regardless of a shopping center investors ownership style, and if there is an in house management or a third party management company, it is important to know the tenants.
Shopping center owners should have a finger on the pulse of how every tenant is performing. This can be done in a number of ways but the best way is for the shopping center owner to have a dialogue with each tenant. This can be accomplished directly or indirectly through the management company.
Why is this so important? Knowledge!
Shopping Center owners and tenants are in this together. Regardless if the tenant is a mom and pop or a national chain, a dialogue will help a shopping center owner to know if the tenant is doing well or struggling. A good dialogue with the tenant will help to ensure that a landlord is not caught off guard by a tenant default. Often times by having the open dialogue, a tenant feels more comfortable in asking for a month or two of rent abatement to get themselves through a difficult economic time. And as a shopping center owner it makes more sense to fore go a couple of months of rent as opposed to having to shell out 30-40k in tenant improvement dollars for a new tenant.
Tenants speak with other tenants. If tenants are happy or unhappy about their landlord they will let other tenants know. This works both ways. If a landlord is slow to respond to maintenance requests or if the tenants don't have the ability to reach the landlord they will let everyone know how dissatisfied they are. They will speak with other tenants in the shopping center as well as tenants they know in other shopping centers to see if the grass is greener at another shopping center. But if a tenant is able to pick up the phone and reach the landlord or the landlords management company and the requests are handled in a timely manner then those tenants can become the best advertisements to potential future tenants.
What about national tenants? National tenants can be a bit harder to deal with than a small independent retailer. But ultimately there is a person who is responsible for the store within each shopping center. Typically national tenants have real estate managers who are knowledgeable about the performance of the store within their territory. Get to know these real estate managers. The benefits can be much more than just keeping up with a single stores performance. If you own more than one shopping center, having a relationship with the real estate manager may also help to get them into a space in a different shopping center.
"I own a ton of shopping centers, I don't have time to contact every tenant." This may be the case, but there is someone in the organization who is responsible for the accounting, maintenance, and tenant relations that should be able to perform these duties. Whether it this person is in house or a third party manager, a shopping center owner should receive a quarterly update on how each tenant is doing, potential red flags, and possible solutions to these problems.
This is a very simple concept. Shopping center owners or managers should speak with the tenants once a quarter and ask questions, a lot of questions. How is business? How is the foot traffic in the center? Are the tenants happy with the visibility/signage or is there something the shopping center owner can do to improve it? How are the other tenants in the shopping center performing? Are there outside factors in the community that are adversely effecting the shopping center?
All of this sounds basic, but all to often I speak with the tenants of shopping centers that I am selling, and they are happy to be done with absentee ownership whom they have never met and are unreachable or unresponsive. Also understand that there are those tenants who look to take advantage of situations or tend to have unreasonable expectations. But communication is always key in every relationship and it is no different in the relationship between a shopping center owner and the tenants.
Shopping center owners should have a finger on the pulse of how every tenant is performing. This can be done in a number of ways but the best way is for the shopping center owner to have a dialogue with each tenant. This can be accomplished directly or indirectly through the management company.
Why is this so important? Knowledge!
Shopping Center owners and tenants are in this together. Regardless if the tenant is a mom and pop or a national chain, a dialogue will help a shopping center owner to know if the tenant is doing well or struggling. A good dialogue with the tenant will help to ensure that a landlord is not caught off guard by a tenant default. Often times by having the open dialogue, a tenant feels more comfortable in asking for a month or two of rent abatement to get themselves through a difficult economic time. And as a shopping center owner it makes more sense to fore go a couple of months of rent as opposed to having to shell out 30-40k in tenant improvement dollars for a new tenant.
Tenants speak with other tenants. If tenants are happy or unhappy about their landlord they will let other tenants know. This works both ways. If a landlord is slow to respond to maintenance requests or if the tenants don't have the ability to reach the landlord they will let everyone know how dissatisfied they are. They will speak with other tenants in the shopping center as well as tenants they know in other shopping centers to see if the grass is greener at another shopping center. But if a tenant is able to pick up the phone and reach the landlord or the landlords management company and the requests are handled in a timely manner then those tenants can become the best advertisements to potential future tenants.
What about national tenants? National tenants can be a bit harder to deal with than a small independent retailer. But ultimately there is a person who is responsible for the store within each shopping center. Typically national tenants have real estate managers who are knowledgeable about the performance of the store within their territory. Get to know these real estate managers. The benefits can be much more than just keeping up with a single stores performance. If you own more than one shopping center, having a relationship with the real estate manager may also help to get them into a space in a different shopping center.
"I own a ton of shopping centers, I don't have time to contact every tenant." This may be the case, but there is someone in the organization who is responsible for the accounting, maintenance, and tenant relations that should be able to perform these duties. Whether it this person is in house or a third party manager, a shopping center owner should receive a quarterly update on how each tenant is doing, potential red flags, and possible solutions to these problems.
This is a very simple concept. Shopping center owners or managers should speak with the tenants once a quarter and ask questions, a lot of questions. How is business? How is the foot traffic in the center? Are the tenants happy with the visibility/signage or is there something the shopping center owner can do to improve it? How are the other tenants in the shopping center performing? Are there outside factors in the community that are adversely effecting the shopping center?
All of this sounds basic, but all to often I speak with the tenants of shopping centers that I am selling, and they are happy to be done with absentee ownership whom they have never met and are unreachable or unresponsive. Also understand that there are those tenants who look to take advantage of situations or tend to have unreasonable expectations. But communication is always key in every relationship and it is no different in the relationship between a shopping center owner and the tenants.
Absolutely so true. Great blog article and critical aspect for any building owner or manager. I wrote a similar article at one of my blogs and I will edit that blog to link to this article to lend credibility to both of our theories!! Nice to meet you too!
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