Managing Retail Property PDF

12 Managing Retail Property Learning Objectives After completing this lesson, students should be able to… Compare the different types of retail shopping centers Identify the different types of retail tenants...

12 Managing Retail Property Learning Objectives After completing this lesson, students should be able to… Compare the different types of retail shopping centers Identify the different types of retail tenants Discuss the importance of tenant mix in management planning List the different roles of each member of a leasing team Explain how to evaluate prospective retail tenants using the rent-to-sales ratio Discuss common retail lease provisions Explain percentage rent and breakpoints Contrast the leasable area formula with the leased space formula for determining pass- through charges Discuss the importance of the sales analysis report Suggested Lesson Plan 1. Give students Exercise 12.1 to review the previous chapter, “Managing Office Property.” 2. Provide a brief overview of Chapter 12, “Managing Retail Property,” and review the learning objectives for the chapter. © 2021 Rockwell Publishing  Property Management Instructor Materials 3. Present lesson content: Types of Retail Property and Tenants – Types of shopping centers – Types of retail tenants EXERCISE 12.2 Types of shopping centers Management Planning for Retail Property – Regional analysis – Neighborhood analysis – Property analysis – Market analysis – Analysis of alternatives Marketing Retail Space to Tenants – Leasing team – Finding and marketing to potential tenants Leasing Retail Space – Evaluating and selecting tenants – Lease provisions – Leasing to anchor tenants – Lease summary EXERCISE 12.3 Evaluating retail tenants Operations and Reporting – Operations – Marketing shopping centers to consumers – Reports to the owner EXERCISE 12.4 Sales analysis reports 4. End lesson with Chapter 12 Quiz. Chapter 12 Outline: Managing Retail Property I. Types of Retail Property and Tenants A. Definitions: 1. Gross leasable area (GLA): the GLA is a measure of square footage that includes all of the tenant spaces but not the common areas 2  Chapter 12: Managing Retail Property 2. Anchor tenant: a large retail tenant that occupies a prominent space in a shopping center and is expected to draw the majority of customers to the property B. The industry generally recognizes five main shopping center categories based on the size of their market area 1. A strip mall (convenience shopping center) is usually located on a major thor- oughfare, on the boundary of an urban area or further out in the suburbs; contains up to 30,000 square feet of GLA; serves the smallest market area; may have a small anchor tenant 2. A neighborhood shopping center consists of 30,000 to 125,000 square feet of GLA; supports a market of at least 1,000 families within about three miles; usual- ly has a supermarket or a drugstore as an anchor tenant; may include one or more outparcels a. Outparcel: a retail space that is separate from the main shopping area but still within the boundaries of the parking lot 3. A community shopping center is similar to, but larger than, a neighborhood shopping center; contains 125,000 to 400,000 square feet of GLA; serves 5,000 families within a 5-mile radius; has 15 to 40 tenants; may include a supermarket, large drugstores, and/or large specialty stores as anchor tenants 4. A regional shopping center is a larger center that attracts customers from sur- rounding areas in search of products that they can’t find closer to home; contains 400,000 to 800,000 square feet of GLA and up to 80 tenants; serves 50,000 to 150,000 families within a 5- to 15-mile radius; may include large movie theatres and two or more major department stores as anchor tenants 5. A superregional shopping center is a larger version of the regional center; con- tains at least three anchor tenants; has over 800,000 square feet of GLA 6. In addition, there are several types of specialized shopping centers a. Outlet and discount shopping centers do not have anchor tenants; attract cus- tomers from up to 50 miles away; tend to be located far from urban areas and suburbs to help keep prices low b. Power shopping centers consist of a number of market-dominant chain stores (“category killers”) clustered together in one center c. Lifestyle shopping centers became popular in the 1990s; they are open-air centers that cater to affluent customers, combining a boutique shopping expe- rience with the easy access and parking of a neighborhood shopping center C. Tenants in the retail category include not only stores but also businesses that provide services, such as banks, optometrists, and portrait studios 1. Anchor tenants occupy the largest and most prominent spaces in a center and generate traffic for the center’s smaller retail tenants a. Banks will generally not finance the development of a new shopping center until the developer has signed lease agreements with the anchor tenants 3  Property Management Instructor Materials b. Because of their importance, anchor tenants enjoy a privileged position when it comes to lease negotiations 2. Small shops and specialty stores carry a better-than-average selection of a certain type of item, such as cookware or shoes, and have a knowledgeable sales staff 3. Restaurants tend to occupy outparcels, as they open earlier and/or close later than other retail tenants in the center 4. Carefully-selected service retailers broaden the appeal of a shopping center EXERCISE 12.2 Types of shopping centers II. Management Planning for Retail Property A. The regional analysis will include transportation issues, the health of local industries, tourism, recreational opportunities, and climate 1. Climate affects the success of open-air and pedestrian-friendly centers, as well as helping to determine the types of stores that will do well in the area 2. The manager must also research demographic information to understand local buying power and purchasing preferences a. Consumer profile: a collection of demographic and lifestyle information on consumers in a retail property’s market area, including age, employment, education and income levels, family configuration, and buying habits b. Sources of data include the U.S. Census, the American Housing Survey, the Consumer Expenditures Survey, current business reports, and local trade and business journals B. The neighborhood analysis should consider local transportation and access to the shopping center, as well as the economic condition of the neighborhood (an upscale center is likely to do better if located close to its customer base) C. The property analysis assesses the property’s physical attributes and general condi- tion, as well as the property’s marketing and leasing operations, management quality, and financial condition 1. During the property analysis, a retail property manager will spend a great deal of time studying the tenant mix: the proportion of different types of retail tenants and their physical arrangement on the property a. Because customer traffic in a shopping center is so interdependent, the tenant mix has a sizeable impact on sales performance b. The manager must constantly monitor tenant mix, as shoppers’ tastes change with time 2. Tenant mix in a new development is determined well in advance, based on the developer’s own market analysis and the initial signing of anchor tenants before construction begins D. The market analysis for retail properties typically addresses two issues: the property’s ability to attract customers and the property’s ability to attract tenants 4  Chapter 12: Managing Retail Property 1. The market analysis should first define what kind of customers the shopping center wants to attract; rather than trying to appeal to everyone, most shopping centers target a certain range of customers 2. The second part of the market analysis is a study of competing properties a. A shopping center or store is considered competition based on its proximity to the subject property b. The type of merchandise sold in a center also helps determine whether it is competition E. The analysis of alternatives often focuses on the center’s appearance and cosmetic upgrades, parking, and highest and best use III. Marketing Retail Space to Tenants A. Leasing team: a team of leasing professionals that optimizes leasing efforts for a re- tail property 1. Depending on the property’s size and percentage of vacant space, the team can include a combination of leasing agents, brokerage agents, marketing director, property manager, and owner B. Finding and marketing to potential tenants begins with the leasing team reviewing the management and marketing plans, and creating a leasing package 1. A leasing package is especially helpful for new properties 2. The leasing package includes a layout drawing showing the location of tenants in the center, a brochure with pictures, a regional map showing transportation routes, a demographic and lifestyle profile of the relevant market and customer base, traffic counts, general sales numbers from current tenants, and planned mar- keting 3. To find prospects, the leasing agent should compile a list of sources of potential tenants and advertise via the shopping center’s own website, as well as display ads, billboards, on-site signage, and online classified ads IV. Leasing Retail Space A. Once the manager has identified the ideal tenant mix, he needs to evaluate individual prospects and select tenants 1. The manager should consider whether the prospective tenant has a healthy sales history, adequate inventory, a sales volume that will increase the center’s prof- itability, and if the space under consideration would be a good choice for the prospect 2. The manager also needs to consider if there is an adequate projected rent-to-sales ratio: a ratio calculated by dividing the minimum rent by projected sales a. A store with a ratio above 15% is generally not producing enough profit and poses a high risk of default on the lease b. Example: $25 minimum rent per sq. ft. ÷ $180 monthly sales per sq. ft. = 13.8% rent-to-sales ratio 5  Property Management Instructor Materials B. The retail lease usually contains provisions concerning percentage rent, a recapture clause, late charges, pass-through charges, and tenant operations provisions C. Retail rent usually consists of minimum rent (base rent) and percentage rent 1. Minimum rent: the set amount of rent due each month, regardless of the retailer’s sales 2. Percentage lease: a common retail lease arrangement in which the tenant must pay a stated percentage of gross sales in addition to minimum rent 3. Breakpoint: the dollar amount of gross sales that must be achieved before the ef- fective percentage rate exceeds minimum rent, triggering percentage rent due for the period a. A natural breakpoint is calculated using the minimum rent; base rent ÷ per- centage rate = breakpoint b. An artificial breakpoint is based on an amount that is higher or lower than the natural breakpoint; with a lower breakpoint, the percentage rent kicks in sooner, resulting in higher total rent payments 4. The property manager usually uses the tenant’s gross sales to compute percentage rent a. The lease may allow tenants to deduct certain items from gross sales, such as sales tax and customer refunds b. Tenants report gross sales using a monthly tenant sales report; the manager uses a tenant sales report to determine percentage rent due for next month 5. A percentage rent provision may include a maximum dollar amount and/or a tiered scale, with the percentage rate falling as each successively higher sales amount it reached D. Recapture clause: a lease clause that sets a certain level of gross sales for a new retail tenant to achieve within a certain time; if the tenant fails to meet this sales goal, the landlord may terminate the lease and rent to a new tenant E. Late charges are usually imposed if a rent payment or monthly sales report is late F. Pass-through charges distribute the property owner’s operating expenses among the tenants, based on the amount of space each tenant occupies 1. Leasable area formula: divides total GLA occupied by the subject tenant by the total GLA of the entire property (whether vacant or occupied) 2. Leased space formula: divides the GLA occupied by the subject tenant by the total leased GLA; when there are vacancies, this formula results in a higher per- centage, and thus higher pass-through charges, for each existing tenant 3. Common area maintenance (CAM) charges: the costs charged to tenants for maintaining the common areas, such as parking lots, mall walkways and escala- tors, and landscaping; most retail tenants pay a prorated share of CAM costs based on the square footage of their premises 6  Chapter 12: Managing Retail Property a. Many outparcel tenants only pay exterior CAM charges; managers usually maintain two separate accounts for interior and exterior CAM charges, as- sessing different percentages for each G. Tenant operations provisions address tenant use, store hours, insurance, signage and advertising, and security deposits 1. Use clause: a provision that limits the tenant’s use of the leased premises to what is specifically listed in the clause a. Noncompete clause: a use clause in a lease that prevents the landlord from entering into new leases with retailers who sell competing merchandise or services; also called an exclusivity clause 2. Retail leases usually require the tenant to remain open during normal business hours, and maintain adequate inventory and staff 3. Both landlord and tenants need adequate insurance; policies should name both the landlord and the tenant as co-insureds 4. Retail tenants usually design and install their own signs, but managers should retain control over the size, color, materials, and placement of the signs; the lease may also require tenants to do a certain amount of advertising 5. Retail property managers collect security deposits to protect the property owner should the tenant default; the tenant may be able to negotiate an early refund of part or all of the deposit after meeting predetermined sales goals for a specified number of months H. Some lease provisions for an anchor tenant may be different than for ordinary retail leases 1. The lease term for an anchor tenant may be much longer (as long as 20 or 30 years) than other retail tenants 2. Anchor tenants often pay a very low base rent, at least for the first few years; leases also usually contain escalation clauses because the lease term is so long 3. Anchor tenants can often negotiate their way out of CAM charges, although they usually help pay for the parking area 4. An anchor tenant’s lease may contain a continuous operations provision to limit the rights of the anchor to “go dark” during tough economic times I. Lease summary: a summary of the lease terms (such as minimum rent, CAM charges, and lease termination date) for each tenant 7  Property Management Instructor Materials Exercises EXERCISE 12.1 Review exercise To review Chapter 11, “Managing Office Property,” have your students fill in the blanks in the paragraph about new office space below using the following terms: Shell Improvement allowance Build-out Addendum Building standards Discussion prompt: Indo-Designs has an unusual operation and wants to rent an un- improved open floor and design it from the floor up. The company is looking for _____________ space. To make the space ready, the landlord under direction of the tenant will have to complete _____________ of the space. The property manager will provide some funds for this project in the form of a/an _____________. The property manager must make sure the work meets _____________. The construc- tion details are complicated enough that they are not included in the main body of the lease agreement; instead the work is described in a lease attachment called a/an _____________. Answers: Indo-Designs has an unusual operation and wants to rent an unimproved open floor and design it from the floor up. The company is looking for shell space. To make the space ready, the landlord under direction of the tenant will have to complete build-out of the space. The property manager will provide some funds for this project in the form of a/an improvement allowance. The property manager must make sure the work meets building standards. The construction details are complicated enough that they are not included in the main body of the lease agree- ment; instead the work is described in a lease attachment called a/an addendum. EXERCISE 12.2 Types of shopping centers Select the category of shopping center that each of the centers described below would fall into, using the following categories: Lifestyle Regional Neighborhood Outlet Community Strip mall Power 8  Chapter 12: Managing Retail Property 1. Tri-city Complex. Boasts over half a million square feet of GLA. Its nearest com- petitor is over half an hour’s drive away. It has three department stores and a multiplex cinema. 2. Windmill Center. Not a very large mall, but it boasts some big-name stores. It has four large chain stores—an electronics and appliances seller, an Old Navy, a Home Depot, and a sporting goods store. There’s also a Wendy’s on an outparcel. 3. Vista Heights Center. This center has 100,000 square feet of GLA, drawing shop- pers fairly locally, within a couple of miles. Its only anchor tenant is a large grocery store. There is a KFC on an outparcel. 4. North Eldridge Town Centre. This center has double the square footage of the Vista Heights Center. It has a Lowe’s Home Improvement Center as its anchor. The mall is an open-air center, not covered. 5. 140th Center. This center has four stores in a row along a busy arterial. The stores are a donut shop, nail salon, dollar store, and payday loan outlet. 6. The Village. An open-air center with a Beverly Hills feel. Mostly upscale retailers such as Gucci, Neiman Marcus, and Apple. Parking is easy and the lots are graciously planted and pedestrian-friendly. Restaurants are similarly upscale, and include a Ruth’s Chris Steakhouse. 7. Big Deal Plaza. The plaza, located in a small suburb of a large metropolitan area, includes Eddie Bauer and other national name-brand stores, especially clothing stores. The stores mainly sell their discount lines, returns, and seconds. Answers: 1. REGIONAL. Only a superregional shopping center is larger. 2. POWER. Power centers draw crowds, but the tenant mix usually doesn’t matter much as most customers are seeking out a particular store. 3. NEIGHBORHOOD. As the name implies, these centers serve a neighborhood, perhaps 1,000 or so families. Anchor tenants are most often supermarkets, but may also be large drugstores or home improvement stores. 4. COMMUNITY SHOPPING CENTER. These centers usually require a customer base of at least 5,000 families within a five-mile radius. 5. STRIP MALL. Some strip malls may have a modest anchor tenant such as a drug- store; this one doesn’t, however. 6. LIFESTYLE. The stores in a lifestyle center cater to affluent shoppers. The grounds 9  Property Management Instructor Materials of lifestyle centers are nicely planted and well-groomed. 7. OUTLET. Although not necessarily large, outlet malls offer unique deals and so can draw customers from as far away as 50 miles. EXERCISE 12.3 Evaluating retail tenants Discussion prompt: A shoe seller wants to expand to a fourth store by leasing space in Caneville Mall. Which of the following questions would the property manager need to answer? 1. Does the retailer stock enough inventory and turn the inventory over as seasons and styles change? 2. Would the retailer provide discounts for mall management? 3. What’s the retailer’s sales history? 4. Does the retailer have the kind of personal style that the property manager likes? 5. Does the retailer sell enough that, with percentage rent, the lease would be at least of average profitability for the center? 6. Would there be challenges that the retailer might face in a new shopping center that might drive down its sales volume? 7. Does this retailer duplicate products or services that are already available nearby in the mall? 8. Will the retailer actively participate in decision-making by the merchants associa- tion? Answers: 1. Asked: Does the retailer stock enough inventory and turn it over as seasons and styles change? The manager has to look at the long-term prospects of a retailer, not just their immediate sales record. Merchandise has to change over time to maintain sales. 2. Not asked: Would the retailer provide discounts for mall management? Gener- ally speaking, seeking concessions that provide personal benefit to the manager violate the manager’s fiduciary duty to the owner. 3. Asked: What’s the retailer’s sales history? This query is central. 4. Not asked: Does the retailer have the kind of personal style that the property man- ager likes? While the property manager may want to avoid retailers he doesn’t like, the decision to approve a tenant must be based on what the owner would want, not the whims of the manager. 5. Asked: Does the retailer sell enough that, with percentage rent, the lease would 10  Chapter 12: Managing Retail Property be at least of average profitability for the center? An adequate rent-to-sales ratio is essential. 6. Asked: Would there be challenges that the retailer might face in a new shopping center that might drive down its sales volume? It’s important to understand that sometimes a retailer who does well in one location cannot carry that performance over to a new location. 7. Asked: Does this retailer duplicate products or services that are already available nearby in the mall? Some competition is healthy, but there’s a limit. For example, two candy stores within a couple of doors of each other and selling similar candy isn’t likely to work. 8. Not asked: Will the retailer actively participate in decision-making by the merchants association? The manager isn’t likely to care about this. Of course, the manager does want to be sure that the retailer makes enough in sales to contribute to the marketing fund, as required by the lease. EXERCISE 12.4 Sales analysis reports Have your students answer the following true/false statements about sales analysis reports: 1. A sales analysis report focuses mainly on the shopping center’s overall sales rather than an individual retailer’s sales. 2. Sales analysis reports matter because they help determine base rent. 3. Most shopping centers limit sales analysis reports to anchor tenants and other large tenants. 4. The sales analysis report doesn’t break down sales by square foot because square foot usage varies so greatly from one retailer to another. 5. Data in trade publications aren’t of much relevance when it comes to completing a sales analysis report. 6. The sales analysis reports can help determine if changing the tenant mix is a good idea. 7. Mall-wide marketing efforts might change in response to a sales analysis report. Answers: 1. FALSE. A sales analysis report focuses mainly on the shopping center’s overall sales. Sales analysis reports focus mainly on individual retailers and categories of retailers. 11  Property Management Instructor Materials 2. FALSE. Sales analysis reports matter because they help determine base rent. Sales analysis reports help determine percentage rent. 3. FALSE. Most shopping centers limit sales analysis reports to anchor tenants and other large tenants. The manager prepares sales analysis reports for all tenants. 4. FALSE. The sales analysis report doesn’t break down sales by square foot because square foot usage varies so greatly from one retailer to another. Sales analyses always break down sales by square foot; this enables comparison with industry averages. 5. FALSE: Data in trade publications aren’t of much relevance when it comes to completing a sales analysis report. Trade publications can provide useful data for comparing the performance of a particular retailer against retailers of that type in the area. 6. TRUE: The sales analysis reports can help determine if changing the tenant mix is a good idea. If a store is struggling, it may be because the fit with the tenant mix is wrong (rather than poor merchandising by the retailer). 7. TRUE: Mall-wide marketing efforts might change in response to a sales analysis report. If a sales analysis report indicates that stores in a certain category aren’t doing as well as usual for the area, these merchants might be featured in adver- tisements paid for by the marketing fund; this may help bring the performance of these stores up to par. 12  Chapter 12: Managing Retail Property Chapter 12 Quiz 1. Shopping centers are typically categorized ac- 6. Research into how area consumers spend their cording to: money in various merchandise sectors is an a) the architectural style of the building important consideration in determining the: b) the income level of the surrounding neigh- a) anchor tenant borhood b) architectural style of a shopping center c) the number of stores c) number of stores d) the size of the market area d) tenant mix 2. Which type of shopping center typically has 7. The manager of a regional shopping center is over 100,000 square feet of gross leasable area, updating his management plan; he examines the serves an area with a five-mile radius, and is rents, amenities, and tenant mix at the several anchored by a supermarket or small department other regional shopping centers around the store? metropolitan area, rather than those at the strip a) Community shopping center mall that is down the street. He is performing b) Regional shopping center a/an: c) Strip mall a) analysis of alternatives d) Superregional shopping center b) market analysis c) neighborhood analysis 3. A newly-constructed shopping center contains d) regional analysis about 50,000 square feet of gross leasable area. It targets affluent customers, with a number 8. A member of a shopping center’s leasing team of upscale chain stores and restaurants built is paid by commission, and works for a real around an outdoor plaza. This is a: estate brokerage firm rather than for the build- a) lifestyle shopping center ing’s owner. This would be the: b) outlet shopping center a) leasing agent c) power center b) marketing director d) regional shopping center c) maintenance supervisor d) shopping center manager 4. An example of an anchor tenant would be: a) a casual restaurant on a separate pad in a 9. A leasing package would include all of the mall’s parking lot following, except: b) a large department store a) a map of freeway access and public transit c) a name-brand store selling factory seconds in the area d) a specialty store that is the only one of its b) demographic information about the local type in a large mall market c) rents at competing shopping centers 5. Unlike office and industrial properties, a major d) sales figures for categories of current ten- consideration in the design of a shopping center ants would be: a) climate b) health of local industries c) local buying power d) transportation networks 13  Property Management Instructor Materials 10. Walden’s Widgets projects monthly sales of 13. The leased space formula for determining pass- $200 per square foot. Fabulous Contraptions through charges involves: projects monthly sales of $150 per square foot. a) dividing the tenant’s gross leased area by The space they are considering renting rents for the building’s total currently leased GLA $30 per square foot. As far as the building’s b) dividing the tenant’s gross leased area by manager is concerned, the more desirable ten- the building’s total gross leased area includ- ant would be: ing vacancies a) Fabulous Contraptions, with a rent-to-sales c) dividing the building’s total currently leased ratio of.20 GLA by the tenant’s gross leased area b) Fabulous Contraptions, with a rent-to-sales d) dividing the building’s total gross leased ratio of 5 area including vacancies by the tenant’s c) Walden’s Widgets, with a rent-to-sales ratio gross leased area of.15 d) Walden’s Widgets, with a rent-to-sales ratio 14. A use clause protects: of 6.66 a) neighbors of a shopping center from incom- patible uses 11. A retail tenant is on a percentage lease. The b) tenants from big hikes in CAM charges minimum rent is $1,000 per month. The tenant c) tenants from excess competition from other will also pay 5% of all gross sales above a figure tenants of $20,000 per month. In this case, $20,000 d) the building’s owner from an unsustainable would be the: tenant mix a) base point b) breakpoint 15. A clause in a shopping center lease prohibits a c) recapture point tenant from opening a branch location within d) trigger point a ten-mile radius. This is a/an: a) estoppel clause 12. Acme Buggy Whips is under a percentage lease b) exclusivity clause but has failed to meet its desired level of sales c) non-compete clause for a number of months in a row. Brookline d) use clause Mall exercises a clause in the lease to end the lease before the term expires, in order to find a more profitable tenant. This clause is the: 16. All of the following statements about leasing to anchor tenants are true, except: a) drop-dead clause b) early termination clause a) they may use a ground lease and build their c) recapture clause own store d) release clause b) they receive longer-than-average lease terms, perhaps 20 or 30 years c) they will pay a low base rent at the outset, but subject to percentage rent and escala- tion clauses d) they will typically pay a full prorated share of the shopping center’s CAM charges 14  Chapter 12: Managing Retail Property 17. Costington’s Department Store is an anchor tenant at the Blue Bell Mall, but would like to “go dark” there, continuing to pay rent but not operating a store, after opening a more impressive store at the new, nearby Fashion Centre Deluxe. However, Blue Bell Mall is able to terminate Costington’s lease if they do this, thanks to a/an: a) continuous operation provision b) early release clause c) exclusivity clause d) go-dark allowance 18. Janitorial maintenance is of particular concern in a shopping center that has a/an _____, as pest control is likely to be a problem. a) food court b) harsh winter climate c) ice rink d) parking garage 19. All of the tenants in a shopping center must join the merchants association and pay monthly dues. The association’s board of directors hires a marketing specialist, who implements a mar- keting plan for the shopping center. This model of funding a marketing plan is: a) a marketing fund b) cooperative marketing c) merchant association funding d) owner-financed funding 20. The sales analysis report, given by a property manager to a shopping center owner, includes all of the following, except: a) annual breakpoint and rent percentage for each tenant b) common area maintenance charges passed through to each tenant c) each tenant’s current sales performance compared with past performance d) each retailer’s sales per square foot 15  Property Management Instructor Materials Answer Key 1. d) The size of the market area will deter- 8. a) A leasing agent is an integral mem- mine whether a shopping center falls ber of a leasing team, but may work into the strip, neighborhood, com- for a brokerage firm rather than the munity, regional, or super-regional building’s owner. The leasing agent is categories. compensated by commissions. 2. a) A community shopping center is 9. c) A leasing package would not include typically an open-air complex with information about competing shopping 125,000 to 400,000 square feet of centers, but it would include maps, GLA, serving at least 5,000 families in demographic information, and general a five-mile radius. sales numbers. 3. a) A lifestyle shopping center is a com- 10. c) The more desirable tenant would be plex of stores oriented toward affluent Walden’s Widgets, which projects a consumers, that attempts to replicate higher rent per square foot. The rent- the walkability and ambience of a to-sales ratio would be $30 divided by small downtown. $200, or.15 (or 15%). 4. b) An anchor tenant occupies the largest, 11. b) A breakpoint is an amount of gross most prominent space in a shopping sales at which point percentage rent center. In a large mall, that would be a kicks in. It is determined by dividing department store. the base rent by the percentage rate of a percentage lease. 5. a) Climate is an important factor in shop- ping center planning; it affects whether 12. c) A recapture clause in a percentage a mall should be enclosed or open-air, lease allows a landlord to terminate as well as its overall architectural style a lease early if a tenant isn’t making and range of stores. minimum sales figures. 6. d) Tenant mix should reflect the demand 13. a) The tenant’s gross leasable area, divid- for different types of merchandise in ed by the building’s currently leased the local market. A manager of a shop- GLA, equals the tenant’s prorated ping center will need to research local share of the pass-through charges. consumers’ purchasing patterns to make decisions on the tenant mix. 14. c) A use clause is a lease clause that pre- vents tenants from selling particular 7. b) Market analysis for retail properties items or otherwise using the property should look at the shopping center’s in a way that competes with other ten- most direct competition, even if locat- ants. ed in a different part of a metropolitan area. A regional shopping center does not compete with a strip mall. 16  Chapter 12: Managing Retail Property 15. c) A non-compete clause in a shopping center lease prevents a tenant from opening up a branch store within a specified distance. This prevents the tenant from drawing away customers from the shopping center. 16. d) An anchor tenant will usually have the clout to negotiate away part or all of their CAM charges, although in some cases they will pay CAM charges on parking areas. 17. a) A lease’s continuous operation pro- vision may limit an anchor tenant’s ability to “go dark,” or allow the land- lord to terminate the lease ahead of schedule if the tenant stops operating. 18. a) Food courts require particular attention from shopping center management, as the presence of food waste can lead to pest problems. 19. c) The tenants of a shopping center may form a merchants association that will, among duties, coordinate the market- ing of the shopping center as a whole. This was the industry standard method for many years, although a marketing fund controlled by the property owner is more common today. 20. b) A sales analysis report focuses only on sales performance for each tenant in a shopping center. While management would certainly keep track of data on CAM charges, it would not be part of the sales analysis report. 17  Property Management Instructor Materials PowerPoint Thumbnails Use the following thumbnails of our PowerPoint presentation to make your lecture notes. Property Management Lesson 12: Managing Retail Property © 2021 Rockwell Publishing 1 Managing Retail Property This lesson covers retail property: ⚫ types of properties and tenants ⚫ management planning ⚫ marketing ⚫ leasing ⚫ operations and reporting © 2021 Rockwell Publishing 2 Types of Retail Property/Tenants Types of shopping centers Main categories of shopping centers: ⚫ strip mall ⚫ neighborhood ⚫ community ⚫ regional ⚫ superregional ⚫ specialized (outlet and discount, power, lifestyle) © 2021 Rockwell Publishing 3 18  Chapter 12: Managing Retail Property Types of Shopping Centers Terminology Gross leasable area (GLA): A measure of square footage that includes all of the tenant spaces but not the common areas. Anchor tenant: A large retail tenant that occupies a prominent space in a shopping center; expected to draw majority of customers to the property. © 2021 Rockwell Publishing 4 Types of Shopping Centers Strip mall Strip mall: ⚫ also called convenience center ⚫ up to 30,000 sq. ft. of GLA ⚫ serves smallest market area ⚫ may or may not have anchor tenant ⚫ configuration L-shape or U-shape or row of buildings © 2021 Rockwell Publishing 5 Types of Shopping Centers Neighborhood Neighborhood shopping center: ⚫ 30,000–125,000 sq. ft. of GLA ⚫ 5–20 tenants, at least one anchor ⚫ anchor tenants usually supermarkets, drugstores, home improvements stores ⚫ configuration similar to strip mall, but larger and may have outparcels Outparcel: Retail space separate from main shopping area but still within parking lot. © 2021 Rockwell Publishing 6 19  Property Management Instructor Materials Types of Shopping Centers Community Community shopping center: ⚫ 125,000–400,000 sq. ft. of GLA ⚫ 15–40 tenants, two or more anchors ⚫ anchor tenants usually supermarkets, but may be specialty stores, home improvement centers ⚫ configuration is large strip, L, or U shape ⚫ usually open air complex surrounded by parking areas © 2021 Rockwell Publishing 7 Types of Shopping Centers Regional Regional shopping center: ⚫ 400,000–800,000 sq. ft. of GLA ⚫ up to 80 tenants ⚫ 2 or more anchor tenants including major department stores and large movie theatres ⚫ configuration varies from single-story open-air to multi-story enclosed © 2021 Rockwell Publishing 8 Types of Shopping Centers Superregional Superregional shopping center: ⚫ more than 800,000 sq. ft. of GLA ⚫ serves very large market area ⚫ at least 3 anchors (major department stores, movie theaters) © 2021 Rockwell Publishing 9 20  Chapter 12: Managing Retail Property Types of Shopping Centers Specialized Specialized shopping centers are usually regional shopping centers. Outlet and discount shopping centers: ⚫ draw customers with discount pricing ⚫ 50,000–400,000 sq. ft. of GLA ⚫ usually no anchor tenants ⚫ usually located in suburban areas to keep rent/prices low © 2021 Rockwell Publishing 10 Types of Shopping Centers Specialized Power shopping centers: ⚫ collect “category killers” (market dominant chain stores) in one center ⚫ 250,000–over 600,000 sq. ft. of GLA ⚫ retailers don’t benefit from customer draw of other stores ⚫ usually built for access only by cars, located in suburbs © 2021 Rockwell Publishing 11 Types of Shopping Centers Specialized Lifestyle shopping centers: ⚫ cater to affluent customers ⚫ over 150,000 sq. ft. of GLA ⚫ may or may not have anchor stores ⚫ open-air centers combine boutique-like shopping with easy access and parking © 2021 Rockwell Publishing 12 21  Property Management Instructor Materials Types of Retail Tenants Anchor tenants Anchor tenants are most important tenants: ⚫ occupy largest, most prominent spaces ⚫ generate traffic for smaller retail tenants ⚫ financing for new center often contingent on signed anchor tenants ⚫ often department stores, big box retailers, supermarkets, movie theaters ⚫ enjoy privileged position in lease negotiations © 2021 Rockwell Publishing 13 Types of Retail Tenants Small shops/specialty stores Small shops and specialty stores: ⚫ carry a better-than-average selection of certain types of items (cookware, athletic shoes, jewelry) ⚫ have knowledgeable sales staff to go with specialized products Customers often come to center specifically to visit a particular specialty store. © 2021 Rockwell Publishing 14 Types of Retail Tenants Grocery stores and restaurants Grocery stores and restaurants: ⚫ usually occupy outparcels ⚫ usually open earlier and/or close later than other retail stores in the center © 2021 Rockwell Publishing 15 22  Chapter 12: Managing Retail Property Types of Retail Tenants Services Retailers who offer services rather than products broaden appeal of shopping center. Examples: ⚫ banks ⚫ portrait studios ⚫ optometrists ⚫ dry cleaners ⚫ beauty salons ⚫ fitness centers © 2021 Rockwell Publishing 16 Summary Types of Retail Property/Tenants – Types of shopping centers – GLA – Outparcel – Anchor tenants – Small shops/specialty stores – Services © 2021 Rockwell Publishing 17 Management Planning Management planning involves analysis of: ⚫ region ⚫ neighborhood ⚫ property ⚫ market ⚫ alternatives Some aspects of management planning are unique to retail properties. © 2021 Rockwell Publishing 18 23  Property Management Instructor Materials Management Planning Regional analysis Regional factors to analyze: ⚫ transportation ⚫ health of local industries ⚫ tourism ⚫ recreational opportunities ⚫ climate ⚫ affects open-air shopping centers © 2021 Rockwell Publishing 19 Management Planning Regional analysis Manager also researches demographics to understand local buying power and preferences. Consumer profile: Collection of demographic and lifestyle information on consumers in market area. ⚫ Includes age, employment, education, income, family size, buying habits. © 2021 Rockwell Publishing 20 Management Planning Regional analysis Sources of data for consumer profile: ⚫ U.S. Census ⚫ American Housing Survey ⚫ Consumer Expenditures Survey ⚫ current business reports ⚫ local trade and business journals © 2021 Rockwell Publishing 21 24  Chapter 12: Managing Retail Property Management Planning Neighborhood analysis Most important to retail neighborhood analysis: ⚫ transportation/access to shopping center ⚫ economic condition of neighborhood ⚫ upscale shopping centers will do better closer to their customers © 2021 Rockwell Publishing 22 Management Planning Property analysis Most important to retail property analysis: ⚫ general condition ⚫ marketing leasing operations ⚫ management quality, financial condition ⚫ physical components prone to wear ⚫ parking, landscaping ⚫ interior visual elements ⚫ tenant mix © 2021 Rockwell Publishing 23 Management Planning Property analysis Tenant mix: Proportion of different types of retail tenants and their physical arrangement on the property. ⚫ Customer traffic is interdependent, mix has big impact on sales performance. © 2021 Rockwell Publishing 24 25  Property Management Instructor Materials Management Planning Market analysis Market analysis for retail property looks at: ⚫ property’s ability to attract customers ⚫ who are the target customers? ⚫ where they shop, what they buy, how much they spend ⚫ property’s ability to attract tenants ⚫ competing properties © 2021 Rockwell Publishing 25 Management Planning Analysis of alternatives Unique to retail analysis of alternatives: ⚫ many alternatives involve appearance ⚫ simple cosmetic upgrades can have a big impact, low expense ⚫ landscaping, new trash receptacles, signage ⚫ consider turning excess parking into additional store space © 2021 Rockwell Publishing 26 Summary Management Planning – Regional analysis – Consumer profile – Neighborhood analysis – Property analysis – Tenant mix – Market analysis – Analysis of alternatives © 2021 Rockwell Publishing 27 26  Chapter 12: Managing Retail Property Marketing Space to Tenants This section looks at: ⚫ the leasing team ⚫ finding and marketing to potential tenants © 2021 Rockwell Publishing 28 Marketing Space to Tenants Leasing team Leasing team: Team of experienced leasing salespeople who handle leasing efforts for property. May include: ⚫ leasing agents ⚫ brokerage agents ⚫ marketing director ⚫ property manager ⚫ owner © 2021 Rockwell Publishing 29 Marketing Space to Tenants Leasing team Shopping center manager: ⚫ leads leasing team, selects members, directs activities Leasing agent(s): ⚫ prospects for tenants, sells space Marketing director: ⚫ advisory role (knows local retail market) Property owner: ⚫ ultimate authority to approve tenants © 2021 Rockwell Publishing 30 27  Property Management Instructor Materials Marketing Space to Tenants Leasing package Team needs to create a leasing package. ⚫ Especially if property is newly built. ⚫ Package content depends on: ⚫ team’s marketing strategy ⚫ particulars of property © 2021 Rockwell Publishing 31 Marketing Space to Tenants Leasing package Package usually includes: ⚫ layout drawing ⚫ brochure ⚫ regional map ⚫ demographic/lifestyle profile ⚫ traffic counts ⚫ current tenants’ sales numbers ⚫ marketing and promotions © 2021 Rockwell Publishing 32 Marketing Space to Tenants Finding prospects Generate interest among retailers with: ⚫ ads in business journals ⚫ direct mail campaigns ⚫ billboards ⚫ onsite signage © 2021 Rockwell Publishing 33 28  Chapter 12: Managing Retail Property Marketing Space to Tenants Finding prospects Most cost-effective method to share leasing information is via shopping center’s own website: ⚫ interactive maps ⚫ virtual tours Commercial property websites: ⚫ similar to classified ads online, but with specialized search parameters © 2021 Rockwell Publishing 34 Summary Marketing Retail Space to Tenants – Leasing team – Leasing package – Finding prospects © 2021 Rockwell Publishing 35 Leasing Retail Space Process of leasing retail space includes: ⚫ evaluating and selecting tenants ⚫ negotiating lease provisions © 2021 Rockwell Publishing 36 29  Property Management Instructor Materials Leasing Retail Space Evaluating and selecting tenants Manager already has tenant mix in mind; now focuses on picking individual tenants. Looks for: ⚫ healthy sales history ⚫ adequate inventory ⚫ sales volume ⚫ suitability of space under consideration © 2021 Rockwell Publishing 37 Leasing Retail Space Evaluating and selecting tenants Manager also needs to judge if projected rent-to-sales ratio is acceptable. To calculate ratio, divide minimum rent by projected sales. Example: Shopping center generates $25 minimum rent per square foot. Tenant projects monthly sales of $180 sq. ft. $25 ÷ $180 = 13.8% rent-to-sales ratio © 2021 Rockwell Publishing 38 Leasing Retail Space Lease provisions Important retail lease provisions include: ⚫ rent ⚫ pass-through charges ⚫ tenant operations © 2021 Rockwell Publishing 39 30  Chapter 12: Managing Retail Property Lease Provisions Percentage rent Retail rent consists of two parts. Minimum rent: Also called base rent. ⚫ Paid regardless of tenant’s monthly sales. Percentage rent: Percentage of gross sales that retail tenant pays as rent. ⚫ Paid in addition to minimum rent. © 2021 Rockwell Publishing 40 Percentage Rent Breakpoints Percentage lease provisions usually specify one or more breakpoints. Breakpoint: Gross sales amount above which percentage rent kicks in. Can either be: ⚫ natural breakpoint ⚫ artificial breakpoint © 2021 Rockwell Publishing 41 Percentage Rent Breakpoints Natural breakpoint calculated using minimum rent amount. Example: percentage rent is 5% of all gross sales above natural breakpoint; minimum rent is $5,500. Base rent ÷ % rate = Breakpoint $5,500 ÷ 5% = $110,000 Natural breakpoint: $110,000. © 2021 Rockwell Publishing 42 31  Property Management Instructor Materials Percentage Rent Breakpoints Artificial breakpoint happens when parties negotiate breakpoint that’s higher or lower than natural breakpoint. Previous example, if breakpoint lowered to $95,000, percentage rent kicks in sooner, meaning higher total rent. $110,000 – $95,000 = $15,000 15,000 x 5% = $750 in additional rent © 2021 Rockwell Publishing 43 Percentage Rent Gross sales Tenant’s gross sales figures used to calculate percentage rent. ⚫ Lease may allow tenant to deduct certain items (sales tax, refunds) from gross sales. ⚫ Tenants must report gross sales monthly. ⚫ Manager uses report to determine percentage rent for next month. ⚫ Manager usually has right to audit tenant’s financial records. © 2021 Rockwell Publishing 44 Percentage Rent Limits Percentage rent provision may include maximum rent amount. Alternatively, provision may use tier arrangement (variable scale). ⚫ Percentage rent rate falling as each higher sales amount is reached. ⚫ Keeps total rent from becoming too large. © 2021 Rockwell Publishing 45 32  Chapter 12: Managing Retail Property Percentage Rent Recapture clause Lease with percentage rent provision may contain recapture clause. Recapture clause: Sets a certain level of gross sales for new retail tenant to achieve within a certain time. ⚫ If tenant fails to meet goal, landlord may terminate lease and rent to new tenant. © 2021 Rockwell Publishing 46 Percentage Rent Late charges Late charge may be levied when: ⚫ tenant’s rent is late ⚫ tenant’s monthly gross sales report is late ⚫ manager must give tenant written notice and certain number of days before assessing charge © 2021 Rockwell Publishing 47 Lease Provisions Pass-through charges Like other commercial leases, pass-through charges cover landlord’s expenses (taxes, insurance, CAM charges). Two ways to determine tenant’s prorata percentage for pass-through charges: ⚫ leasable area formula ⚫ leased space formula © 2021 Rockwell Publishing 48 33  Property Management Instructor Materials Lease Provisions Pass-through charges Leasable area formula: Divides total GLA of the entire property (whether vacant or occupied) into tenant’s GLA. Tenant’s GLA ÷ Total GLA = Tenant’s % 15,000 ÷ 800,000 = 1.875% Expenses $325,000 × 1.875% = $6,093.75 © 2021 Rockwell Publishing 49 Lease Provisions Pass-through charges Leased space formula: Divides total leased GLA into tenant’s GLA. ⚫ Results in higher percentage when there are vacancies; existing tenants pay more. Tenant’s GLA ÷ leased GLA = tenant’s % 15,000 ÷ 400,000 = 3.75% Expenses $325,000 × 3.75% = $12,187.50 © 2021 Rockwell Publishing 50 Lease Provisions CAM charges CAM charges: Common area maintenance expenses. For retail properties, common areas include: ⚫ parking lots ⚫ loading docks ⚫ interior service areas ⚫ mall pedestrian areas © 2021 Rockwell Publishing 51 34  Chapter 12: Managing Retail Property Lease Provisions CAM charges Many outparcel and anchor tenants pay only exterior CAM charges. Manager should keep separate records for: ⚫ interior CAM charges ⚫ exterior CAM charges Tenants have right to inspect landlord’s invoicing and bookkeeping for accuracy. © 2021 Rockwell Publishing 52 Lease Provisions Tenant operations provisions Retail lease provisions that govern tenant operations include: ⚫ tenant use ⚫ store hours ⚫ insurance ⚫ signage and advertising © 2021 Rockwell Publishing 53 Tenant Operations Provisions Use Use clause: Provision limiting tenant’s use of leased premises. ⚫ Prevents excessive competition. ⚫ Helps manager preserve tenant mix. © 2021 Rockwell Publishing 54 35  Property Management Instructor Materials Tenant Operations Provisions Use A use-related clause that protects tenants is noncompete clause. Noncompete clause: Provision that prevents landlord from entering into new leases with retailers who sell competing merchandise or services. ⚫ Sometimes called exclusivity clause. © 2021 Rockwell Publishing 55 Tenant Operations Provisions Hours Lease usually requires tenant to remain open during normal shopping hours. ⚫ Hurts center’s image if customers find stores closed during normal hours. ⚫ Hurts landlord’s percentage rent if store is closed during normal hours. Tenant must usually close after normal hours. ⚫ Avoids additional security, utilities. ⚫ Exception: restaurants, groceries. © 2021 Rockwell Publishing 56 Tenant Operations Provisions Insurance Given extensive liability, lease usually requires both landlord and tenant to maintain adequate insurance. ⚫ Policy should name both landlord and tenant as co-insureds. ⚫ Manager usually treats policies as CAM expense and bills tenants prorated share. © 2021 Rockwell Publishing 57 36  Chapter 12: Managing Retail Property Tenant Operations Provisions Signage and advertising Tenants usually design, install own signs. ⚫ Managers should retain control over size, colors, materials, and placement. Lease usually requires tenant to spend minimum amount on advertising. ⚫ Tenant may also have to contribute to marketing fund. © 2021 Rockwell Publishing 58 Tenant Operations Provisions Security deposits Security deposit helps protect property owner from tenant default. ⚫ Some tenants can negotiate early refund of part/all of deposit after meeting predetermined sales goals. ⚫ Anchor tenants, large national chains usually not required to pay security deposit. © 2021 Rockwell Publishing 59 Leasing Retail Space Anchor tenants Anchor tenants enjoy clout in lease negotiations. Terms of anchor tenant lease may differ from regular retail lease in various ways including: ⚫ lease term ⚫ rent ⚫ continuous operation © 2021 Rockwell Publishing 60 37  Property Management Instructor Materials Anchor Tenants Lease term Anchor invested significant money and planning into location; landlord knows success of center depends on anchor. ⚫ Longer lease terms: usually 20–30 years. ⚫ In new centers, anchor tenants may lease land only and pay for construction. ⚫ Especially outparcel spaces. ⚫ If so, may want even longer lease terms. © 2021 Rockwell Publishing 61 Anchor Tenants Rent Anchor tenants usually pay low base rent for first few years. ⚫ Usually only enough to cover landlord’s costs. ⚫ Idea is to make up for it with percentage rent. Lease may also contain escalation clause. ⚫ Lease term is so long that percentage rent may not keep up with changes. © 2021 Rockwell Publishing 62 Anchor Tenants CAM charges Anchor usually pays only portion of normal CAM charges for parking lot. ⚫ May dictate standards for interior common area use and upkeep. ⚫ CAM provisions may be in lease or separate document called CAM agreement. © 2021 Rockwell Publishing 63 38  Chapter 12: Managing Retail Property Anchor Tenants Continuous operation During economic downturns, anchor tenants may decide it makes financial sense to “go dark.” ⚫ Continue to pay base rent but cease retail operations on premises. ⚫ Most anchors are part of large chains and can afford to do so. Landlord may seek continuous operation provision, limiting right of anchor to go dark or allowing landlord to terminate lease. © 2021 Rockwell Publishing 64 Leasing Retail Space Lease summary Retail leases fairly complex, so manager should have quick access to key lease terms. Lease summary: Summary of lease terms (such as minimum rent, CAM charges, lease termination date) for each tenant. ⚫ Typically one page per tenant. © 2021 Rockwell Publishing 65 Summary Leasing Retail Space – Rent-to-sales ratio – Minimum rent – Percentage rent – Breakpoints – Recapture clause – Use clause – Exclusivity clause – Lease summary © 2021 Rockwell Publishing 66 39  Property Management Instructor Materials Operations/Reports to Owner This section will discuss: ⚫ operations ⚫ security ⚫ maintenance ⚫ marketing shopping centers to consumers ⚫ reports to owner © 2021 Rockwell Publishing 67 Operations/Reports to Owner Operations Unsafe, unclean shopping center will drive away customers. Two important aspects of operations: ⚫ security ⚫ maintenance © 2021 Rockwell Publishing 68 Operations Security Needs depend on individual property: ⚫ size and location of shopping center ⚫ hours ⚫ crime in area © 2021 Rockwell Publishing 69 40  Chapter 12: Managing Retail Property Operations Security Other considerations unique to retail: ⚫ detaining suspected shoplifters ⚫ handling unruly customers ⚫ helping customers (flat tires, injuries) To prevent problems: ⚫ security procedures should be spelled out ⚫ staff should be trained © 2021 Rockwell Publishing 70 Operations Maintenance As with security, needs depend on size of shopping center, hours, traffic levels. Maintenance program should address: ⚫ frequency of restroom cleaning ⚫ snow and ice removal ⚫ pest control and disposal of food waste (if there is food court) © 2021 Rockwell Publishing 71 Operations/Reports to Owner Marketing centers to consumers Imperative for shopping center to have its own marketing strategy. ⚫ Handled by center’s marketing director. ⚫ Needs dependable funding, detailed plan. © 2021 Rockwell Publishing 72 41  Property Management Instructor Materials Marketing Centers to Consumers Funding the marketing Marketing typically financed by: ⚫ property owner ⚫ merchants association ⚫ marketing fund © 2021 Rockwell Publishing 73 Funding the Marketing Owner Owner-financed marketing: ⚫ owner funds all marketing that benefits entire shopping center ⚫ individual retailers don’t contribute or have any say in marketing for center © 2021 Rockwell Publishing 74 Funding the Marketing Merchants association Merchants association most common method until marketing funds in early 1980s. All stores in shopping center have lease provision requiring membership in and contributions to merchants association. ⚫ Owner contributes certain amount. ⚫ Board of directors makes decisions and implements marketing plan. © 2021 Rockwell Publishing 75 42  Chapter 12: Managing Retail Property Funding the Marketing Marketing fund Marketing fund: ⚫ property owner has complete control of marketing efforts paid for by fund ⚫ lease requires each tenant to contribute ⚫ advisory board represents retailers and gives input, but has no actual control ⚫ contributions are based on square footage leased by each tenant ⚫ anchor tenants may pay less per sq. ft. © 2021 Rockwell Publishing 76 Marketing Centers to Consumers Marketing campaign Marketing director prepares annual marketing plan with input from: ⚫ landlord ⚫ manager ⚫ representatives of retailers © 2021 Rockwell Publishing 77 Marketing Campaign Media selection Plan should include all means of gaining exposure to customers: ⚫ newspapers ⚫ direct mail ⚫ billboards ⚫ television ⚫ radio ⚫ internet © 2021 Rockwell Publishing 78 43  Property Management Instructor Materials Marketing Campaign Events Manager and marketing director should plan one or two events per year. ⚫ Events generate energy, community involvement. ⚫ Examples: ⚫ fundraisers ⚫ seasonal sales/clearances ⚫ health and fitness promotions ⚫ special interest events © 2021 Rockwell Publishing 79 Marketing Campaign Grand openings Grand openings can be very effective. Marketing director should: ⚫ plan a year in advance ⚫ keep tenants apprised of plan ⚫ use mix of internet and traditional media to promote event ⚫ make sure events complement grand openings of individual retailers © 2021 Rockwell Publishing 80 Operations/Reports to Owner Reports to owner One report that’s unique to retail property is sales analysis report. Sales analysis report: Periodic report prepared for owner of retail property that compares each tenant’s sales, and shopping center’s as a whole, to industry averages. © 2021 Rockwell Publishing 81 44  Chapter 12: Managing Retail Property Operations/Reports to Owner Reports to owner Sales analysis report should include: ⚫ sales figures for each retailer broken down by month and year ⚫ number of sq. ft. and sales per sq. ft. for each retailer ⚫ annual breakpoint and percentage rent owed © 2021 Rockwell Publishing 82 Operations/Reports to Owner Reports to owner Analysis should compare: ⚫ each tenant’s current sales to past performance and industry averages ⚫ shopping center’s sales in each retail category to local and regional averages © 2021 Rockwell Publishing 83 Summary Operations and Reports to Owner – Security – Maintenance – Marketing to consumers – Merchants association – Marketing fund – Sales analysis report © 2021 Rockwell Publishing 84 45