Wednesday, March 13, 2013

The Ten-Commandments of Retail Leasing (for Commercial District Managers)

Starting a district-wide retail leasing program is not for the faint of heart. The industry is based on relationships, and relationship building takes time. So be sure you are in it for the long-haul before investing your organizations time and resources. For those willing to take the leap, here are some basic tips to make sure that your organization's investment yields the results you are looking for. 
  1. Enlist your property owners and their leasing agents FIRST. This is the biggest rookie mistake that commercial district manager make. Without your property owners, you do not have a retail attraction program. Don’t contact a retailer unless you have a property to show him, otherwise you waste everyone’s time, and your credibility in the industry takes a nose dive. This means getting your property owners engaged and formally enrolled in your effort BEFORE making the pitch. In some cases, this might mean a simple MOU or letter agreement with the property owner that outlines yours and their expectations about what involvement in your retail recruitment effort entails. It may mean that you hold the keys to spaces and they give you the right to show those spaces. If you are going to expend resources – and your time is a resource – on helping them lease their property – it’s better to be upfront about what you expect from them. This means a simple agreement that they will be responsive to when you call to set up meetings, that they will allow you to coordinate site visits and show the space. An MOU may not be necessary for this to happen, but it’s always helpful to outline expectations up front.    
  2. Get out of the office and visit other districts.  Retail leasing is not something that is done well by sitting behind a desk. You always need to be on the look-out for concepts and stores that are a good fit for your district. Get out and visit stores, feel the merchandise, talk to retailers and cultivate those relationships. Consider visiting competitive districts in your region at least once a month to build your prospect list. This is particularly effective if you are looking for unique retail concepts. Emails have their place, but they do not replace face-to-face contact.
  3. Build relationships with the broker community. Most commercial district managers are not leasing agents. If you don’t have brokers actively working with property owners, then maybe you have to learn this skill. But if not, work to build relationships with local brokers who you can enlist in your retail leasing effort. You don’t need to build relationships with retailer to the same degree if you have brokers doing this work on your behalf.  
  4. Smaller retailers may be more open to your pitch. Keep in mind, national and chain retailers these days have lots of options, and they receive site submittals all the time. Be prepared to share sales data for your street. Smaller retailers are not often wooed in the same way. This gives you an opportunity to gain traction with a smaller retailer who may be flattered by your attention and interest in their business.
  5. Trade shows have their place, but they are not the only game in town. Trade shows are where big deals get made. They are unique and effective opportunities to meet leasing representatives and retailers face to face (particularly national and regional chain retailers). But keep in mind that attendees are often interested in volume deals. Remember, this is also where mall owners go to sign multiple leases at a time. All it means is that standing out in the crowd with your single site opportunity may be more of a challenge. Don’t let this deter you, but keep it in mind.
  6. Evaluate a potential tenant before approaching them. We offer our clients scout cards that they can use to evaluate the quality of potential prospects. These are particularly helpful if a Retail Leasing Task Force is engaged. The cards prompt a person to ask a series of questions that will help determine whether the retailer is a good fit for your district, including basic site selection requirements (sq. ft, leasehold rates, location, etc), expansion plans, target customer profile, etc. This way the prospects that Task Force members bring to the table can be evaluated against other similar prospects before determining whether it is worth spending time and resources. I personally love using scout cards because they can then become part of a tickler file that can be revisited on a monthly basis to determine who needs follow up.
  7. Make sure you are prepared. Become an expert on the tenant your target. It’s better to have a good list of a dozen retailers to target properly, than a list of a hundred retailers who get your brochure and then toss it in the trash. What does that mean in practice? Be sure that the locations you offer are within the parameters of what a retailer expects. That means knowing where their other locations are and how they compare to your site. Know the company’s growth strategy, real estate priorities and be prepared to address those in your pitch. And finally, get to know the retailers target customer and be prepared to make a customized case that your community has enough customers to ensure a profitable location. If you are pitching to a business that serves families, cull data from your demographic and market analysis that speaks to the growth in household size. If you are pitching to a lunchtime food concept, share data on the number of local office workers. Think like the retailer you are approaching and customize your pitch. They will appreciate this.
  8. Listen. Listen. Listen. I’ve said it before and I’ll say it again, this is about building relationships. People appreciate being heard – in fact, it makes you stand out in a crowd. So come prepared with a set of questions that you’d like to know and ask. At the end of the day, the more you know about your retailers site selection requirements, the better prepared you will be now and in the future to deliver spaces that are a good fit.  
  9. Keep track of prospects and follow up. You may or may not have a site to show a prospect right now, but consider that the perfect site for a retailer you spoke to a few months ago might pop up in the near future. You will want to maintain a database of prospects and a call log to keep track of follow up over time.
  10. This is a marathon, not a race. Successful retail leasing requires tenacity. There will always be vacancies to fill, even in a healthy market. The good news is that the skills you develop and the relationships you form make you more and more effective at retail leasing over time. So the longer you are at this the easier it becomes to fill vacancies. And the more vacancies you fill, the more property owners come to see you as a valuable resource in their retail leasing efforts. Overtime you will find that curating tenant mix for your district becomes a manageable - even fun! - task. 

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