So I suppose this is logical: Because major big-box tenants attract a lot of shopping traffic, landlords usually give them cheap rents and big build-out allowances.
And small tenants have their rent rates burdened by their prorata part of those discounts. After all, without the big box traffic and marketing, most of the smaller shops in the center could not survive.
However on the other side, if the small shops had a good representative negotiating their leases, they made sure that they could terminate their lease at anytime one of the big boxes closed up and left the center.
There are two very important considerations when setting up a tenanting plan. The first and primary one is picking the right tenant mix and the second is where each store is placed in the mall, i.e., who are its neighbors? This requires serious talent in order to make a good footprint.
And there is a third one, one that is often either overlooked or not enforced by the management company. All shops must have the same business hours and the same days for holidays. And that even applies to not closing or opening five minutes late.
I often use Dallas' North Park for examples. There are four high-end jewelry stores in the mall and they are grouped together. None of them respects the mall's posted business hours. In fact, one of them isn't even open one day each week. Others close helter-skelter...totally unpredictable. I guess if the manager's son has a socker game, that's reason enough to close early. I often wonder if the store's home office approves these closings.
Shoppers frequently stop and go back when they reach 1) a blank store space 2) a closed store. So this behavior by the tenants not only affects the business revenues of their neighbors, but it also affects the percentage of their sales that is a part of their rent.
To line of the stars for the best oppotrunity to revitalize an older mall or strip center, you'll surely want to keep these important concepts in mind.
*The spell check feature is not working as I post this. Please forgive errors.
Copyright 2008 - William S. Cherry
Bill,
It is obvious you do not work for CBRE. I have a hunch you may have owned a center or do own a center, because the majority of the typical CBRE, Daum, Sperry, etc. would put two Mexican resturants next to each other and think that was a good idea.
TED --
Thanks for your observations and comments.
ANd you're right. I don't work for CBRE, I work for Bill. My assignments over the years have been to figure out how to turn around the retail in vacant downtowns, under performing malls and strip centers, and so on. I've done it on a case by case consulting basis.
The way to do it seems to mostly involve three things: logic, a few simple math problems, and asthetic taste. So you wonder how anyone could screw it up.
Many times the project was put together without any display of talent at all, but by the numbers it attracts most of the retail is able to survive. Of course it escapes the owner, management comoany and even the tenants themselves that had it been properly conceived and maintained, the revenues would be far greater.