Shopping Centre Operations & Business Plan

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2 CONTENTS Overview 3 Introduction 4 The Retail Parties 8 The Retail Competition 11 The Retail Elements 16 Market Trends in Retail 25 Demographics Retail 28 Consumer and Tenant Demand 33 Site Considerations 36 Financial Matters 39 Lease Abstracts 49 Standard Retail Leases 52 Marketing Retail 56 Staff Administration 62 Crisis Management 71 Security 77 Checklist for Shops 86 Know Your Property 91 Business Plan 97 Leasing and Lease Management 105 Reporting 134 Contractors and Risk 140 Time & Energy Pty Ltd, Professional Training and Coaching. PO Box 1860, Sunnybank Hills, 4109, Queensland, Australia ALL RIGHTS RESERVED. No part of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of the author. 2

3 Overview This book has been written for many types of people, all of whom have an involvement with retail property and its success. This Shopping Centre Business Plan model has been used by many industry professionals as they seek to enter or improve their position in the market. The best Shopping Centres use a plan and then keep to its formulation. It is important to know that at the beginning or formulation of your business plan, you will only know what you want to achieve and what the market provides you at that time. For that reason you must be continually aware of market changes and the need to adjust your business plan as you proceed. A Shopping Centre business plan is thereby a fluid and changing document that gives you stability and direction in an ever changing business environment. It is wise to review your Shopping Centre business plan performance monthly and quarterly with this in mind. You should expect a Shopping Centre business plan to take you some many days to formulate and weeks to correctly finalize. The reason for this is that you must identify and then balance all the issues that are important to you and the property. This takes good research and investigation over time. Good luck with your project and recognize that the Shopping Centre industry is both very rewarding and satisfying. The Author John Highman 3

4 Introduction 4

5 INTRODUCTION Shopping Centres have principally evolved from conception to a major part of our economic community since the end of World War 2. Prior to that time, any shopping and retailing outside of city centres occurred in small suburban local precincts. The basic shopping commodity products were then provided for in local groups of shops, which included Butcher, Fruit and Veg, Grocer, Delicatessen. It was unlikely that the shopping needs of a family extended beyond that basic product more than a few times a year. The major world economic growth from the end of World War 2 and the evolution of the Baby Boomers created both the need and the cash flow for new retail products and services. Particularly from the 1960 s onwards we have seen a major evolution in the way in which retail products are created and supplied to satisfy the seemingly endless customer demand. Product diversity is now forever growing and creating new markets for the retail spend within shopping centres. The property market has moved with this trend and supported product growth with unique shopping outlets that came to be labeled Shopping Centres. Today Shopping Centres have almost completely taken over most retailing by offering multi faceted retail outlets for all customer and retailer requirements. Those new Shopping Centre types include:- Neighbourhood Centres Community Centres Sub-Regional Centres Regional Centres Super Regional Centres 5

6 Through this e-book we will look at many aspects of this dynamic retail property category and how Property Professionals can make their job and their property more professional and diverse. We cover relevant tools and issues such as: Know the dynamic effects of Retail Management Create your own Retail Marketing Plan Understand how to write a Retail Business Plan Know the Types of Retail properties Create your own demographic analysis Know how to Staff a Retail Management Office Create your own Lease Abstract file Understand how to create a Crisis Management Plan Understand Customer and Tenant demand Understand the Financial aspects of Retail Management Know the 10 site Considerations of Retail property Understand how to analyse the Retail Competition AND MORE 6

7 About The Author John Highman is a Professional Real Estate Author and Coach. People have engaged John's services to speak at Real Estate Conferences and Seminars over many years. Recognized as a specialist on all facets of property, his coaching sessions are informative, entertaining and inspirational. He has blended over 30 years of extensive hands-on experience in Real Estate with human performance and presentation skills, to create a series of Real Estate Seminars and Keynotes, that give focus and balance to both individuals and teams in their pursuit of excellence. He has also held senior positions in leading Real Estate businesses. With increases in the demands in today s Real Estate world for sales, service, and bottom-line performance, there is a constant pressure on professionals to do much more with less. A new definition for personal excellence is essential; his coaching and training sessions addresses this need. In this publication, John brings to you real and relative real estate insights to help focus and build your business. Important Note: The within document is a template and instructional guide only which must be adjusted to suit your needs, your market, and the country in which you are located. Take time to understand the legislation and laws which apply to the Real Estate profession and Retail property in your country and local location before finalizing your document and the functions of your property. 7

8 The Retail Parties 8

9 INTERESTED PARTIES - RETAILING By its very nature, any retail property hinges its success on the relationship with and between its several interested parties. The interaction and service of this group is fundamental to retailing success. The interested parties are: 1. Owners/Landlords - this includes the involvement of Property Managers working closely with the landlords. 2. Tenants - the occupants and rent payers for the property. 3. Consumers - the key stone of retail success. 4. Lenders - the financiers of the retail property. It is common for the priorities of each group to differ in the function of a Shopping Centre. The pressures of retail spend, economic conditions, demographics, occupancy costs, and product changes, all effect the performance and overall success of a retail property. Dynamic Balance A successful Retail property is thereby the result of a Dynamic Balance involving the following positions: The Landlord is ultimately seeking the best and highest sustainable rents together with growth and strong long term lease covenants. The Tenants seek low rents and occupancy costs which still give them a high quality retail presence that generates business through good customer visitation and spend. 9

10 Consumers are seeking good access, good service, and value for money, feel good shopping, modern premises, and good retail product range. Lenders are seeking assurance of overall retailing success whilst maintaining their desired return on funds invested. These four stakeholders of the Dynamic Balance drive the Retail property simultaneously in three separate ways: 1. As a Property 2. As an Investment 3. As a Business The skills of a Centre Manager or Property Manager must be diverse and focused to achieve positive results for all stakeholders. Be aware of the need for total balance between the stakeholders and the three elements of retail operations. A good retail property will dynamically balance all of these critical issues and make the property more successful in the interaction with the community that supports it. The most important factor in the function of the shopping centre is the acceptance and the service it provides to the local community. Without people spending money at the retail property, nothing else will work. It should also be said that ongoing adjustment to the property must always occur to position it at the top of the customers mind. Retail property is therefore never static and is growing and living in all respects. This includes, tenant placement, presentation, marketing, community involvement, and maintenance. In running a shopping centre your fullest attention to these and other daily aspects is essential for the success of the property. 10

11 The Retail Competition 11

12 RETAIL ~ THE COMPETITION As a property professional you will be exposed to many property types and retail is no different. Retail is however highly affected by customer demands and precinct and regional demographics. Being able to professionally compare and monitor retail premises or Shopping Centres in your precinct is a skill requiring a complete understanding of the product and the retail property discipline. Knowing your area and how the community accepts your property is part of good control and guidance which can steer your property forward. Factors to Consider To compare shopping centres or retail premises fully, the factors you need to consider for each site are 1. Location factors Exposure Access Visibility Traffic counts Consumer base Customer services (parking, toilets, common areas etc.) 2. Appearance Modern? Practical/ Functional Attractive Positive customer sentiment 12

13 3. Tenant fitout/ambience Balanced standard Clean Functional Well maintained 4. Tenancy Mix Anchor tenants Majors Specialty balance Satisfying customer needs National chains versus Local tenants 5. Price Pointing Does pricing suit consumer? Blue collar versus White collar customer needs Customer spending patterns Customer budget limitations 6. Rental information Gross versus Net Rents Rental incentives to attract tenants Leases versus Monthly tenants Lease terms/expiries/options/rent Reviews 7. Potential Upside for Shopping Centre Expansion potential Population shifts and growth Customer demand 13

14 8. Surrounding Areas Parkland Parking Transport Industrial/Residential/Commercial Nearby competition/type and effect 9. Trade figures Notice levels and type of customers Inspect at various times Identify strong trading tenants versus slow traders Access MAT figures Through all this analysis remember that successful retail trading is driven from a positive shopping experience for the customers. Look for any negatives that will deter or discourage shoppers. Conducting your own questioning of shoppers is a good way of understanding where the weaknesses are for a particular property. Determining Market Share Determining where your property sits in relation to its market will involve the following stages: 1. Identifying the trade capture area 2. Identifying the total GLAR (Gross Lettable Area Retail) of all the properties in the trade capture area 3. Proportioning the GLAR for your property against the total GLAR for the trade area (and the need to know your %) 4. Researching your customer spending patterns within age/time/commodity groups/amount 5. Reviewing all turnover figures for your centre and others nearby 14

15 The object of this analysis is to determine if your property is achieving is fair proportion of the retail spend for the relative trade capture area. Lack of access to accurate turnover figures will however restrict the analysis. Where and how you gather information from nearby properties is a function involving skill. If you collect the wrong or incorrect information then it can lead you astray. In dealing with medium to larger properties it is common to employ a Market Research Company to work with you in data analysis and gathering. This will usually involve the positioning of people to undertake customer Shopping Surveys at different hours over a typical training period (usually a number of weeks). An adjustment for Seasonal shopping (e.g. Xmas and Easter) also needs to be allowed. 15

16 END OF SAMPLE 16

17 Create the best Retail Property and Retail Business Plan possible, it will guide you to new opportunities Time & Energy Pty Ltd PO Box 1860 Sunnybank Hills Queensland, Australia. Ph Fax Time & Energy Pty Ltd, Professional Training and Coaching. ALL RIGHTS RESERVED. No part of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of the author. 17

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