3 Things that are Hurting your Shopping Mall's Revenue!
There was a time when a real estate builder's highest point was a 'Leased Out' sign outside his shopping mall/ retail centre. Don't blame him. Real Estate builders are ordinary folks just like us. Myopic to the core. However, if you are a real estate builder reading this, you will quickly agree that there is nothing such as 'Leased Out' in reality and leasing is now a perpetual activity if you want to stay in business.
Here are the 3 most important factors that could be hurting the total revenues that you rake in from your retail centre every month. Some of them may be relevant to your shopping mall too;
1. Anchor Tenants are Occupying more space than they should
Take a close look at your anchor tenants. How much space are they occupying? While you do that, its also a great idea to look back at the per square feet sales that they had projected while wooing you to open a store at your property. Are they doing that kind of business? And if they are, are you getting the expected returns from leasing out spaces to such anchor tenants?
In most cases, you may realize that your anchor tenants could be hogging too much space. And mind you, all of that is the most premium space in your retail centre. Could you squeeze out a few thousand Sq ft back from your anchor tenants? That could translate into a few more awesome Vanilla stores in your mall that could add a significant revenue figure to your monthly revenue sheet.
Its not easy. Anchors have massive egos and have even bigger economic and legal forces. Reason with them. Talk numbers and failed promises. Show them that you are not being to able to make the most of your space and that you need to make money too. (You have debts, don't forget). With some focus and lots of time (may take a year or two even), you should be able to right size your anchors and free up space for some awesome small format stores that make your cash register ring.
2. You have too many screens in that multiplex
If you are a large retail centre owner, there is a very serious possibility that the multiplex operator in your mall has consumed too much area and the number of screens you commissioned in a happy frenzy are slowly becoming dead space resulting in lesser revenues and possibly, losses.
If you are facing such a situation, there is no ready made solution. Multiplex spaces are designed differently and axing a couple of screens may not free up ready to set up retail spaces. This needs careful planning and a study in advance. However, if you are building a shopping mall and are looking for multiplex operators, please weigh your revenue and square footage use in great detail before signing that multiplex lease. It could save you a lot of money, effort and heartburn in the long run.
3. Your Vanilla stores are wrongly placed
Most mall developers start with a cool zoning plan. The ground floor shall have this and the first floor that. But when you walk out into that market with a firm COD (Commercial Operational Date) and your bankers are looking at you more than anyone else, you could find yourself signing leases that may not conform to your zoning wish list. This WILL happen. Including a 3 year performance review and a clause that allows relocation of stores due to performance reasons should be part of your lease agreement. Its your space and you have every right to get the most out of it.
You can take it ahead along those lines and make your retail centre more efficient and better performing. It is a constant and never ending process. Remember, nothing kills a shopping mall faster than complacency and misunderstanding from the developer.
Cheers!
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| Is the hypermarket at your shopping mall too big? If yes, you could be losing a lot of money every month! |
1. Anchor Tenants are Occupying more space than they should
Take a close look at your anchor tenants. How much space are they occupying? While you do that, its also a great idea to look back at the per square feet sales that they had projected while wooing you to open a store at your property. Are they doing that kind of business? And if they are, are you getting the expected returns from leasing out spaces to such anchor tenants?
In most cases, you may realize that your anchor tenants could be hogging too much space. And mind you, all of that is the most premium space in your retail centre. Could you squeeze out a few thousand Sq ft back from your anchor tenants? That could translate into a few more awesome Vanilla stores in your mall that could add a significant revenue figure to your monthly revenue sheet.
Its not easy. Anchors have massive egos and have even bigger economic and legal forces. Reason with them. Talk numbers and failed promises. Show them that you are not being to able to make the most of your space and that you need to make money too. (You have debts, don't forget). With some focus and lots of time (may take a year or two even), you should be able to right size your anchors and free up space for some awesome small format stores that make your cash register ring.
2. You have too many screens in that multiplex
If you are a large retail centre owner, there is a very serious possibility that the multiplex operator in your mall has consumed too much area and the number of screens you commissioned in a happy frenzy are slowly becoming dead space resulting in lesser revenues and possibly, losses.
If you are facing such a situation, there is no ready made solution. Multiplex spaces are designed differently and axing a couple of screens may not free up ready to set up retail spaces. This needs careful planning and a study in advance. However, if you are building a shopping mall and are looking for multiplex operators, please weigh your revenue and square footage use in great detail before signing that multiplex lease. It could save you a lot of money, effort and heartburn in the long run.
3. Your Vanilla stores are wrongly placed
Most mall developers start with a cool zoning plan. The ground floor shall have this and the first floor that. But when you walk out into that market with a firm COD (Commercial Operational Date) and your bankers are looking at you more than anyone else, you could find yourself signing leases that may not conform to your zoning wish list. This WILL happen. Including a 3 year performance review and a clause that allows relocation of stores due to performance reasons should be part of your lease agreement. Its your space and you have every right to get the most out of it.
You can take it ahead along those lines and make your retail centre more efficient and better performing. It is a constant and never ending process. Remember, nothing kills a shopping mall faster than complacency and misunderstanding from the developer.
Cheers!
About the author
Rahul Mishra is a real estate professional who started his life as a salesman, selling homes in the city of Kolkata since 2001. He worked pan India in real estate organisations like MMG Realty, Bengal Shrachi, The Phoenix Mills and The Space Group before helping co found Pillars with a single objective - To make real estate easy!Connect with Rahul Mishra on Linkedin.
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I think your 1st 2 points are totally wrong.
ReplyDeleteAnchor and multiplexes are crowd pullar. I can give 10 examples of shopping mall in mumbai where malls are fail because of not having hyper and anchor .
Vanilla store placing is very important but in today scenario not a single vanilla store is getting signed without anchor and theater .