Canvassing for Retail Tenants
How to Find the Right Fit
Today's retail environment requires leasing agents to return to good old-fashioned hard work to find merchants and close transactions. Hard work means focus, discipline, and cooperation. It also means being proactive in canvassing for potential tenants in area retail centers. Taking the time to develop and implement a canvassing plan greatly increases your chances of success in leasing retail space.
The first step is to know your market and your property so that you can discuss leasing opportunities with potential prospects. At a minimum, I try to know the following information about my property and the surrounding market.
- demographics of the center's typical customer
- stores with the highest sales volumes
- store locations in relation to traffic patterns and site lines
- parking ratio and lot configuration
- spaces that are vacant
- spaces that could potentially be divided or combined with other spaces
- lease expiration dates
- the local market's primary and secondary trade areas
- successful and not-so-successful retail properties in the market
- typical common area maintenance (CAM) charges and real estate taxes for area centers
I find much of this information by studying the leases in my center, talking with property managers, visiting various properties, visiting the local library, or networking with other real estate professionals. Also, a number of companies sell extensive demographic information for most areas of the country. I keep a file on my property and its trade area, including information on traffic counts, demographics, and press clippings about the property and the market.
Perform a "SWOT" Analysis
Based on the information you know about your property and the market, your next step is to perform what I call a "SWOT" analysis of the property. I generally ask everyone associated with the property--leasing, operations, accounting, and management personnel--to provide input for the analysis.
An initial SWOT analysis might look something like this:
- Located on a main traffic artery with high traffic count.
- Most tenants are performing well.
- One side of the center has poor access and poor parking.
- Road construction that will widen the main artery is scheduled to begin on the center's side of the street in three months.
- A new housing development is scheduled to be built within the target market within the next year.
- A big-box retailer is considering renting space about a mile away.
Build a Depth Chart
Next, you need to build a merchandising depth chart.
HAVES AND NEEDs--Begin by listing the types of uses--such as snack shop, toys, or department store--found in your center and identifying those that are lacking in the property but could complement it. You may find that you have several of one type of store on the "have" list, so you should consider that use maximized and not put it on the need" list. But there may be other categories of stores that are missing from the center; if you feel these are appropriate for your center, put them on the "need" list.
LEASE PLAN--Once you determine a list of use needs, take a look at the lease plan--the architectural layout of the property, the space sizes and dimensions, and the current merchants and vacant spaces.
Keeping in mind your SWOT analysis, consider the relationships between existing stores, the types of purchases customers make in each store, and the store locations in your center. Assign an appropriate merchandise category to each vacant or potentially vacant space in the shopping center. Then name the specific stores that you believe would best fill the need or use.
STRATEGY--I try to develop a strategy that will create the most synergy between existing merchants and potential merchants and help to pull traffic through the property. Some stores, such as jewelry stores, yogurt shops, or ready- to-wear stores, are impulse-purchase oriented; others, such as restaurants, theaters, and department stores are destination oriented. Impulse-oriented tenants will feed off the traffic generated by these destination-oriented uses and will pay more rent to maximize the amount of traffic flowing past their door.
I try to be creative in determining how to best attract potential tenants. I ask myself these questions:
- Can certain spaces be combined to accommodate a larger tenant?
- Can a big-box user perform better in a smaller space?
- Can I relocate some merchants within the property to free up a particularly valuable location for another use?
- Are the outparcels being fully used?
- Can the parking ratio or zoning be changed to allow the building to be expanded?
- What is the highest and best use of a specific space in relation to the current and planned merchandise mix of the center?
TARGET LIST--I decide which spaces and specific categories need to be filled first, based on the SWOT analysis and the general needs of the center. Then I determine which merchants are my first and second choices for each space. This becomes my target list.
A word about the target list: I don't limit myself to only those retailers that are currently in the market area. I try to find out if any national merchants are expanding into new markets. I stay on top of who is expanding by reading industry publications such as Shopping Centers Today, Deal Makers Weekly, Chain Store Age, Monitor, and Dollars and Sense of Shopping Centers and attending conventions and meetings sponsored by organizations such as the International Council of Shopping Centers (ICSC).
Take It to the Streets
The best depth chart in the business will do you no good if you don't actually get out to the retail centers and see what's there. So, once you've established your depth chart, the old-fashioned hard work re-enters the picture. A leasing agent must work through the depth chart by going out and canvassing area retail properties, trying to secure leases with the merchants who are the top priorities and discovering new prospects through the canvassing process.
When you identify a prospect that seems to make sense for your property, visit one of that merchant's stores. Observe the displays, merchandise type (brands vs. generic), quality, price, customer preferences, the price points, the number of sales clerks, the displays, the fixtures, and the store design. This will tell you if the store makes sense in the space you've planned for it to fill.
When I canvass, I generally dress like a typical customer, without the appointment book, suit, or briefcase. Store employees respond better to me if I come across as a customer rather than a high-powered salesperson.
I explain that I am evaluating the store to see if it might make sense in my client's retail center. I find out as much information as possible from store employees--including how many other stores the company has, where the other stores are located, what their typical customer and average sale is, who their competitors are, what their standard and ideal store size is, and what their sales volume is. Sometimes a clerk will share information with me that a store manager or owner would not.
Most importantly, I get the name, address, and phone number of whom to contact regarding new stores. I leave a business card and leasing brochure behind and ask the store employee to forward the information to the store's owner. I also take a picture of the storefront and take notes about the store while it is fresh in my mind. I compile all the information in my database, including the following:
- the name, address, and phone number of the merchant and principal decision maker
- the type of merchandise sold
- the size of the space
- general comments such as price points, store appearance, and expansion plans
- follow-up information, such as a reminder to send the store manager a traffic study and a lease plan or to call the manager in six months when the store will be considering expansion again.
I follow this procedure for each space on the merchandising depth chart. Once I have visited all the stores on the original list and organized the information in the database, I rework the depth chart. Some stores turn out to be better prospects than others. And sometimes I discover stores I had not originally listed and revise my chart accordingly. The revised depth chart is a moving target that helps me set priorities and target stores for leasing your property.
The Big Meeting
The next step is to meet with the decision makers of the stores that interest you. The goal is to get the decision maker--who might be a manager, owner, or corporate real estate representative--to visit the property.
Prior to any face-to-face or phone meeting, find out as much sales information about the company's stores as possible. Try to find out what kinds of lease terms they received in other locations. The more homework and preparatory work you do, the better.
I try to schedule appointments with the decision makers of the stores at my property during lunch or Saturday afternoon. This allows the prospective merchant to see the property at a high-traffic, high-sales time, which may impress them more.
If a potential prospect is reluctant to visit the property, I listen carefully to the prospect's objections. If the merchant really makes sense for the property, I keep trying. While I am persistent, I don't make a pest of myself.
Don't Drop the Ball
The final--and crucial--step is to follow up with all potential tenants. Find a way to make yourself and your property stand out from the rest of the offers the prospect may be receiving. Focus on the fact that you are offering them a chance to evaluate a potentially lucrative opportunity. I have found that most good business people are willing to look at potential opportunities.
Even if the decision maker says no, I keep the store in my database. I then try to develop a relationship with the decision maker by scheduling periodic follow-up visits every three to six months. By sending a note with a copy of a news clipping about the store or some new information that will help the store, I keep my name and the property in the decision maker's mind. Eventually, because I've taken the time to develop a relationship, the person may end up considering what my property has to offer.
The Common-Sense Approach
Approach leasing any property with common sense. Evaluate your property's strengths, weaknesses, opportunities, and threats and use this evaluation to develop a plan to target the merchants you want to locate in your center. With careful planning and the right approach, canvassing can be some of the most profitable time a company invests.