When the Shopping Mall Dies, So Too Could Your Franchised Outlet

If you travel across America after this latest global recession, you will note that many shopping centers have anchor tenants which are no longer there. This is horrible to see so much square footage lost for the commercial property owners, leasing companies, and property managers, but it is also even worse for the mom and pop franchised outlets also in that center with no anchor tenant.

In essence, the shopping mall has died, and they are left holding the bag perhaps, with seven years left on their 10 year lease. They are obligated to make those lease payments even though the shopping center no longer has any traffic, and therefore, no customers are walking by, looking at their sign, and stopping in to buy something because they recognize the brand name.

At America’s largest indoor shopping malls you will note that there are companies that have gone out of business with “for lease” signs, and therefore, there are spaces between businesses that are still in business. This is especially upsetting for a franchise outlet which is paying “tripled net” and knowing that there are a specific number of tenants who were paying the overall cost to run the shopping center and their share of the cost automatically go up each time another business bolts.

It is often said that there is great synergy in the indoor malls due to the traffic, and the people who come to shop, look, and purchase retail items on their credit card. But when a shopping mall dies so too could your franchised outlet.

Therefore, you have to be very careful when and where you choose to put your location, and understand the reality of the US economy’s business cycles through thick and thin. It is not my intention to scare you, rather to warn you and hope that you will please consider this prior to purchasing a franchise or signing a 10 year lease.

Shopping Center Managers – Develop Your Tenant Mix and Strategy

When looking at a retail property it is important to look at the tenancy mix to see if any weaknesses exist in the current tenant placement. A poorly located tenant can drag down the performance of other tenants around them. That means a threat to rental and a potential vacancy exposure if the location becomes empty. Vacant tenancies are to be avoided at all cost if you want the property to perform well.

So here is a way of assessing the fundamentals of the property tenant placement.

So here is a way of assessing the fundamentals of the property tenant placement. It pays to use a checklist in the process so that all bases and issues are covered.

  1. Firstly you need to understand just who the anchor tenants within property are. They are the tenants around which the property functions. They will be the main reason customers visit the property. The anchor tenants will contribute largely to the property image, so choose your anchor tenants wisely. Anchor tenants give you a long lease (typically over 10 or 20 years) but they pay a lesser rent average based on unit area measurement. A retail shopping centre will only have a small number of anchor tenants (1 to 3) and they will be strategically placed across the property to create flow of customers through the common area. The options for lease renewal with anchor tenants are an important factor for both the tenant and the landlord. If there is any potential for the anchor tenant to leave the property at lease end, then it could destroy the property identity and cash flow. Landlords have to cover the issue early with lease renewal negotiations or finding a new anchor tenant well before the current anchor tenant leaves.
  2. Who are your major tenants? They are not always just your anchor tenants. Major tenants contribute to shopper interest and property visits. They supplement the anchor tenants but will not be as large as anchor tenants. They may be franchise tenants (although not necessarily). They are positioned between the anchor tenants on the traffic flows of customers. When you choose good major tenants you can create small clusters of tenants with complementary products or services. They become islands of interest for shoppers. Some major tenants will have sensitivity to being in proximity to certain other major tenants. The major tenants can trade off or through the trade of others, and experience in other locations influences their decisions and preferences in that regard.
  3. After you have placed anchor tenants, and major tenants, you get to the decisions on specialty smaller tenants. They will fill in the smaller shops and extend the customer interest in and around the traffic flows. Specialty tenants are of the greatest value when they are placed in areas near major tenants that they complement. Specialty tenants can be destination specific as shoppers will visit them if the offering is very good and unique. Select specialty tenants that are well proven from other locations.
  4. Convenience shopping is the next in the chain of tenant placement. Convenience shopping is centered on the daily needs of the community and will cover commodities such as food, bread, newsagent, butcher, fruit and veg. They will usually be placed in and around the supermarket anchor tenant.
  5. So do you have a food court? Any decent shopping centre should have a food court to extend the stay and interest of the customers to the property. The food tenants will have to be controlled in their food offerings so you get the quality and variation of food that customers want. Not all types of food work in a food court, and the choices will largely be dictated by the surrounding customer base.
  6. Do you have an entertainment type of tenant offering? In larger properties this will be cinemas or game type tenancies. They work the best when they are near the food tenants.
  7. Access in and out of the property from the car park has to be convenient and safe. If customers do not get a feeling of convenience from the property then they will stop coming to shop. Take a walk around your property and do so from the car park as a shopper. See what a shopper would see; feel what a shopper would feel. A good retail property has to be convenient and fresh. The customers visiting the property should feel good from the event. Any frustration they could experience has to be lessened or removed.
  8. Franchise tenants with a notable national identity are useful in a shopping centre as they will bring customers specifically wanting the offering or the brand. Space out the franchise tenants with local specialty tenants to achieve variation and interest for the shopper.
  9. Always keep the image of the shopping centre and all the tenants at the highest possible levels. To do this you may need a property lease that supports approvals and controls relating to tenancy presentation and any changes. The landlord and the property manager can then enforce critical presentation decisions.

All of the above points reflect decisions and tenants that the community needs and wants. This says that you must understand the type of community around the property and what they want in local shopping.

A retail property is a vibrant living property investment that cannot be left to its own daily function. The best retail properties are well planned and organised with constant attention from the landlord, property manager, and leasing manager. The bond between tenants, landlord, customers, and property manager is critical to the success of the property.

Selecting the Best Anchor

As your new boat projects draws closer to completion you will be starting to think about gear and equipment. It is a shame that you can’t build everything and some things you just have to buy. Equipping your new boat can be very expensive so shop around for the stuff you need. There are some things that you should not scrimp on as they are important for your safety. One of these is your boat’s anchor and so it is important that we get it right and choose the correct one to suit our boat.

You will need to use your anchor if you are going to sit and fish for a while. You may have found a perfect spot for fishing. You may be over a deep hole or reef where a lot of fish gather and always seem to be hungry and bite well. The difficult thing is to be able to mark the spot so you can find it again next weekend. Don’t be like the guy who did that by marking a big X on the side of the boat.

Make sure you use top quality nylon braided anchor line and a length of galvanized chain between the it and the line. Then choose the one that is right for your boat taking in your boats length. The Danforth anchor is a popular style and is characterized by it’s two long sharp pivoting flukes. This style is light and easy to store on your boat and will hold well in sand and mud making it ideal for small boats. To release your it just pull from a different direction. This sounds easy but how do you walk out on the water to pull from a different direction. You just have to pull on your rope till your boat glides up to it and as it glides past the direction on the anchor rope will change enabling you to easily pull it free. The Danforth anchor is one of the easiest for a quick release as it has pivoting flukes and can be pulled at a more vertical angle.

There is the Plow anchor that has a single fluke and this pivots on the end of the shank and also holds well on many bottoms. It is easy to release quickly too. There is the Bruce anchor which is used in very heavy conditions on large equipment but a reduced version is available for smaller boats. It will hold you fast and still release quite easily.

As you can see, there are options when you choose an anchor so check with the experts to make sure you have one that suits your boat perfectly. You don’t want to be anchored for the night somewhere and wake up the next morning in a different ocean or out in the middle of an ocean with no idea which way to go to get home. Get a few things right when you select your gear and you will enjoy years of happy boating.

Community Shopping Centers – Description and Financing

Community shopping centers generally have less than 200,000 square feet in gross leasable area. They may be designed as enclosed or open-air malls or as strip centers. The centers are organized around one or more of the major national or regional retailers, one or two “junior” department stores, or a store owned by a company specializing in smaller department store operations. A junior department store will generally have between 30,000 and 50,000 square feet and feature a full line of soft goods (clothing, books, and so on) and often some hard goods (appliances, furniture, and so on).

In the 1980s, major national and regional discount department stores emerged as new, significant anchors for community shopping centers. Retailers such as K-Mart (of the S.S. Kresge Corporation) and Wal-Mart became the dominant force in retail sales growth in the United States in the late 1980s. These stores, usually between 75,000 and 125,000 square feet, compete for discount shoppers with merchandise priced below that of the traditional department store. These super-discounters have become the most popular anchors in many new community strip centers because of their heavy advertising, low prices, and excellent locations, which generate shopping traffic.

Community shopping centers generally require trade areas with populations of 100,000 or more. However, these centers are often located in smaller towns that serve as a shopping area for a larger, multi-community area. Besides the anchor stores, the 10 tenants most likely to appear in these centers are:

  • women’s ready-to-wear shops
  • restaurants (with liquor service)
  • fast food/carryout restaurants
  • beauty salons
  • family shoe shops
  • jewelry shops
  • card and gift shops
  • restaurants (without liquor service)
  • women’s specialty clothing shops
  • banks
  • In strip centers, the anchor usually has a central location; if there are several anchors, they are separated. It is important to remember that because of the
    weather-exposed design of strip centers, shoppers generally walk for shorter distances between stores to shop than is the case in an enclosed mall area. Rents in strip centers will generally run 40 percent to 60 percent less than those found in similar retail areas in enclosed malls. As a rule, sales per square foot will be correspondingly lower than sales in enclosed malls.

    Like major department stores, food stores are destination stores. The other tenants depend to some extent on the occasional or impulse sales afforded by a good location in the pedestrian traffic pattern between the larger stores. Like the anchors in large super-regional malls, destination stores in community shopping centers often pay rents that cover only the costs to the center’s owner; the more specialized retailers pay rents that represent true profit potential.