Shopping Centre Management - How to Handle Vacancy Factors and Events

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Like it or not you will get vacancies in your shopping centre. As a shopping centre or leasing manager in the property, it is essential that you minimise the impact of any vacancy and the frequency of vacancies within the property. Careful planning of lease expiries and lease renewals is part of the process.

Higher vacancy factors are sometimes the product of a number of variables such as the following:

• A shift in customer spending patterns and frequency
• A change in the regional and customer demographic
• Poorly matched tenant mix initiatives within the property to optimise retail sales opportunities
• A downturn in the local or regional economy that changes the business sentiment
• The development of a larger property in the same location that attracts tenants away from your property

Facing the facts of a property vacancy and dealing with them professionally in a timely way, will usually minimise the vacancy downtime. You can then keep the income and outgoings following for the landlord at reasonable levels.

Vacancy Control Programme
For this very reason it pays to have a Vacancy Control Programme (VCP) in your retail property. The vacancy control program should be a forward looking program that focuses on the next period of 24 months in the shopping centre. Each month the programme is extended out for the further 24thmonth and strategies are set for the newly identified issues.

The vacancy control programme (VCP) should include these components of control:

1. Identification of the upcoming lease expiries (use a chart for this purpose)
2. Identification of the upcoming rent reviews of all types (use a chart for this purpose)
3. Identification of the lease renewal options with all tenancies
4. Refurbishment programmes required to be undertaken by the tenant under the terms of lease occupancy
5. Refurbishment programmes expected to be undertaken by the landlord
6. Issues of expansion noted with any particular tenancies
7. Issues of contraction required by any tenancies
8. Strategies relating to the clustering of tenants within the tenancy mix
9. Shopping zone optimisation within the tenant mix
10. Make good provisions expected of the tenants and the landlord at time of lease expiry
11. Services and amenities impacted by tenant vacancy
12. Customer shopping patterns and traffic corridors adjacent to vacant tenancies
13. Common area usage patterns adjacent to vacant tenancies
14. Allowances for loss of rental and outgoings during the vacancy downtime
15. Allowances for new lease documentation when suitable tenants are identified
16. Allowances for incentives to be applied in any new lease to be created for the vacancy
17. Rental strategies to be applied with particular tenancies and with any vacancy as it occurs
18. Communication processes to be adopted between the landlord, tenant, and property manager in any new leasing process
19. Plan approval strategies for any new tenancy fit out
20. Decisions regard cosmetic and aesthetic barriers to be applied across a vacant tenancy when and if they occur.
21. Fitout implementation programs given the function of the property and customer visitation
22. Regular status reports to the landlord of issues relating to lease negotiations and vacancy minimisation
23. Strategies to adopt with regard to using other leasing agents in the marketing and leasing of vacant tenancies

These simple processes set the rules for a vacancy control and minimisation. Every retail shopping centre should have a vacancy control programme incorporating these and other factors of decision. In this way the property can be allowed to perform effectively whilst under the pressure of a vacant area.

Ahmed A. Assaf

Excel Commercial Inc, Mortgage Broker

The Realty Company, REALTOR®

Direct (780) 940-5707

Fax 1-866-858-8664

11810 Kingsway Ave, Edmonton, AB T5G 0X5

ahmed@excelcommercial.ca
www.excelcommercial.ca 
www.apartmentadviser.com 
Twitter @ExcelCommercial