In the management of a retail shopping centre or retail mall, the retention of tenants becomes a critical component of property performance. Loss of tenants creates the following pressures on the building or landlord:

• Loss of rental during the vacancy and any subsequent rent free period
• Loss of the recovery of building outgoings during the time of vacancy
• Expenditure in the creation of new leases and associated documentation
• Expenditure in the provision of a new incentive for a new tenancy
• Commission costs to the leasing agent when a new tenant has been located

Normally you would not want a vacancy to occur in your managed retail property unless one of the following situations could apply:

• The tenants are disruptive to the property and the tenant mix
• The tenants have not been cooperative under the terms of the lease
• Rental payments have been variable and unstable
• You require the premises for a better tenancy or a new tenant
• You are undertaking a property renovation or relocation plan
• You are about to embark on a new property development

So tenant retention becomes a critical factor in the normal performance and future of the retail shopping centre. The tenant retention plan can feature in the business plan for the property and should be reviewed six monthly as part of the overall leasing strategy. The leasing strategy will also include factors of tenant mix and tenant mix analysis.

Successful Tenant retention programs

The tenant retention plan should be formulated in keeping with the targets set by the landlord for the investment. Most landlords intend to keep the retail property that they purchase for a number of years and on that basis the tenant retention plans should be designed. A comprehensive tenant retention plan should include the following elements:

1. Regular ongoing contact should occur with each and every tenant in the property to identify any needs of contraction or expansion. If this is not done, you will soon see other leasing agents attracting your tenants to their properties.
2. Early negotiations of lease renewals or options (as the case may be) should occur in a timely way. This prevents the tenants considering a move to other locations for a better deal or lease. It should be said that relocation costs will always be a deterrent to the tenant in leaving your property.
3. Assessments of the existing tenant's business performance and its relevance to the overall tenancy mix should be undertaken. In a retail property this will include sales turnover figures in the overall tenancy mix and there comparison to the particular singular tenant. Any weaknesses in the singular tenant and their business levels should be addressed early before the impact carries through to adjacent tenancy premises.
4. The levels of market rental that are charged to the tenants should be fair and reasonable given the trends of other rentals in other properties. Aggressive levels of rental pushed at the time of market rent review, can destabilise the relationship between the tenant and the landlord as well as escalating the threat of future vacancy.
5. It is wise to break the tenancy mix into levels of desirable and less than desirable tenancies. On that basis you will know who you really want to keep in the property for the long term.
6. The strategies regards the anchor tenant occupancy will have an impact on the surrounding specialty tenancies. The expiration of the lease for the anchor tenancy should be carefully monitored to prevent any massive disruption to property occupancy and the other specialties.
7. All critical levels of discussion and communication with the tenant should be recorded in writing to prevent any later misunderstandings. All ongoing matters should be followed through with the tenant and or the landlord being updated as appropriate.

A successful tenant retention program is really the result of excellent communications and timely response to any matters of property occupancy, lease management, and maintenance. The property manager is at the centre of all of these matters.