The concept of tenant mix is not one known to all. The idea behind a tenant mix is very simple and the term very self explanatory. Tenant mix is simply putting together a collection of tenants so as to help maximize sales traffic which would in turn increase the sales revenue of the tenants. It is tantamount to creating a synergy of different but complementary service providers so as to create an easy shopping experience for prospective customers (which benefits everybody in the long run).
What is obtainable in today’s market economy is the fact that most retail tenants form groups basically by what services they are offering and the location in question. What is also true is the fact that based on this tenant cluster; there is for the customer a fantastic mix of goods and services and for the tenants, a healthy and steady flow of income generated by each member of the group as one service largely works hand in hand with the others.
Based on the above, you can only imagine what benefits a proper tenant mix would bring both to the tenants and the customers alike as it has been often argued that the success of any commercial centre largely depends on how well the tenants are mixed. So instead of waiting for the market to determine how it would be shaped, commercial property owners could cultivate their own tenant mix starting with these steps:
- Observe the market trends peculiar to that location
- Identify the tenants that can synergize properly which would help create an image for the commercial property before securing the anchor tenant for your mix;
- Create your final collection of tenant that offer services that are closely related;
Understand the risks associated with the concept of tenant mix (you are likely to have shaky years to start with);
- Create the proper charges as applicable (rent, maintenance etc. you may want to settle for percentage rent because of the high profitability associated with the concept of tenant mix)
- Place effective measures to help maintain the appropriate tenant mix (for future tenants).
By creating a mix, you are actively taking a decision not to rely on market forces to dictate your tenants for your commercial property.
Advantages of a proper tenant mix
Having explained the concept of a tenant mix, the advantages remain quite obvious to the seeing eyes. In further explanation to the above outline, here are the advantages you stand to gain from having a proper tenant mix
- Helps to achieve a high and stable cash flow amongst practicing tenants because services largely co-exist.
- Increased profitability: By the fact that owners and tenants alike are coming together to set a market trend and are not relying on the market itself to determine what survives, tenants are creating an avenue for increased profits in their businesses.
- Encourage sales and reduce vacancies on the property
- Beneficial to tenants and property owners alike
- Few tips to help you create the best tenant mix
As is apparent, the concept of tenant mixing is relatively easy to grasp. Here are few tips to help you get started.
- Make sure you do understand the concept of tenant mix and how important an anchor tenant is to the mix.
- Borrow a leaf from like properties in your location: while it is easy to plan, putting your plans into action might be a tad difficult if you do not understand the trends in your location. As much as you want to be a pace setter, you do not want to appear clueless so before you start your tenant mix, look at like commercial properties in your location doing the same.
- After you have chosen a model/ sample, polish your own offers by including incentives that those other properties lack. For already existing tenant mix, you can review your existing rent options, prioritize the tenants and enjoy a smooth sailing tenant mix plan.
- Help to boost the trade of your tenants by developing an effective marketing plan which should involve all tenants. This would help to bring more customers and of course more sales.
Creating a perfect tenant mix is not an easy feat to achieve but with the proper understanding of the concept, the market trends in your location and willing tenants, it definitely isn’t hard to create the perfect mix.