leasing a strip center - Posted by Tom

Posted by john on March 11, 2006 at 08:22:50:


I’m in agreement with you about marketing yourself. No one is going to take better care of your business than you are. I think agents are a joke, because they can advertise 100 listing and just sit back and wait for a phone call without lifting a finger. That is a reactive approach and not a proactive one. You may as well send out a 100 flyers and get the phone call yourself. I’m curious to know though, who do you send those flyers to? Where do you get the potential leasee names and addresses.

leasing a strip center - Posted by Tom

Posted by Tom on February 21, 2006 at 09:16:35:

I’m creating some direst mail marketing pieces to try to attract retailers to my newly constructed strip mall.

I’m trying to get inside their heads to see what is important to them. Of course, demographics, population growth etc. Those are a given.

I’m talking more the emotional side of the retailer or their rep or their real estate manager. What scares them about picking the wrong site? What can they live with that’s not perfect? What is a mistake that if made would cause them to be fired?

I want to address my marketing to deal with the answers to those questions and help allay the fears of those decision makers. Any ideas!!

Re: leasing a strip center - Posted by ray@lcorn

Posted by ray@lcorn on February 22, 2006 at 15:17:42:


That’s not a common line of thought and I like the out-of-the-box approach. Not sure I’ll have the answer for how to construct the offer, but I can easily identify the major concern for national retailers. Locals are another case, but my guess is they have similar concerns.

Worst mistake for a retailer? Top of the list is a location that doesn’t meet the projection. That’s why most have such a heavy emphasis on demographics. The large ones have software that compares their average customer profile to the site demos, and from that they build their operating projection. They’ll have a minimum criteria for gross sales, and that will often be the deciding factor between locations.

The pacifier that most reps try to get is an escape clause in the lease. Unfortunately that’s the bane of center owners. Leases with escapes are seen as unstable income streams, and it hurts valuations worse than any other factor. We just turned down a national credit tenant launching a new concept and wanted a one-year out. Even though they were willing to do the upfit I wasn’t interested in saddling the center with uncertainty in the tenant mix.

Second on the list is the upfit cost. Most owners will do a deal that includes the upfit cost for the tenant in exchange for a longer term lease. The higher the cost, the longer the lease. We add the upfit cost (and a rate of return) to the lease amount and amortize over the term. At some point the rental rate will become prohibitive, so it’s always a balancing act, and always negotiable. We’re in a deal right now that started out with us doing all the upfit for a five year deal, but will wind up being split about 50/50 on a ten year deal.

Third on the list would be co-tenancy with a major tenant. If your center has a national retailer in place, a new tenant may ask for a clause that allows them to exit if the anchor leaves. Those are sharp swords, and I would only give that to a tenant with significant drawing power of it’s own.

Locals usually want short lease terms, easy outs, and everything done for them. They have less room for error, and the owner has to balance having the space the occupied against the risk of uncollectibility. In their case they don’t get fired, they go broke. We always get personal guaranteees, but will sometimes modify the default clause to eliminate the continuous operation requirement.

That’s my stating the concerns. Now let’s hear some solutions!


Re: leasing a strip center - Posted by Tom

Posted by Tom on February 23, 2006 at 14:45:56:


Thank you very much for your contribution. I am a big proponent of marketing and a big believer in a guy named Jay Abraham who talks among other things about the power of direct response marketing. I’m trying to lease up my strip mall by being proactive in my marketing.

I have a deal with my leasing agent that we both will try to fill the center.

However, I have a follow-up question. It seems most leasing agents are not proactive just like the residential ones. When they list a property they put it in MLS which is really what sells it.

I feel the same about the mindset of leasing agents - just throw up a sign and it will get leased.

Do most spaces really get leased because of signs or are there really proactive leasing agents who do all kinds of marketing? A lot of leasing agents solicited me but they all said about the same thing. Put up a sign and put it on Loop Net. I can save a lot of money and work harder myself.

Any thoughts?