Essential renovation strategies for retail shopping centers
A mall renovation is a frequent event planned to keep tenants happy, customers come back, and the property looks good. This supports the rent so that the property can compete with other properties in the local area. Not renovating or renovating puts you on the path to poor property performance and rents; this can happen too fast. Tenants and rent are a fundamental part of the real estate strategy.
Renovation plans should incorporate your primary tenants, the specialty tenant mix, the owner’s investment plans, and the needs of the community. It’s a good balance. Please give due consideration to the terms of all property leases before you begin as some may have clauses that will affect the planning or staging of the project. Local property law related to commercial property may also have concessions and procedures for renovation or demolition of the property.
Therefore, renovation becomes part of the commercial property business plan and you need to know what you are doing before you begin; the lead time can be months, if not years. Minor renovation is something that happens in one form or another every 5 years or so on a commercial property, with larger renovations occurring on average every 8 to 10 years.
Property renovation is a strategy that needs careful planning when it comes to shopping centers. The property should not be renovated during peak shopping hours of the year, and the renovation must be kept within a strict schedule and results. The builder or developer you use for the project is the first critical decision you will make; must provide evidence of other renovation projects on similar high impact commercial properties. They should be able to tell you exactly how they handled critical day-to-day issues on the property, such as noise, dust, storage, lighting, foot traffic, and tenant relations; They must show how they completed other similar complex retail projects on time and on budget.
Make your property renovation a community event and build excitement around you. Make great statements about the renovation before and during the process so that the community knows what is happening and has an air of expectation with the result.
Get the community involved in the future of the property by conducting needs and concerns surveys. Survey results can be incorporated into the project if warranted and will build better community interaction with the final release of the property.
Informational signs should be posted on all security barriers and renovation fences around the property that clearly indicate to the community what is happening. The more they know about what you are doing, the more likely they are to come back when the works are done. Buyer tolerance is what you need right from the start.
Always keep tenants aware of the renovation stages and progress. It is your income and business that are affected. They want their renovation to be a success in order for their business to be successful. The communication links in the renovation of a shopping center are essential for the process and the result.
As the mall renovation nears completion, a mall should host a series of community events and special business days organized over a 2-3 month period. You can start with a large coordinated two-month reopening campaign. It should be very wide and wide to attract as many buyers as possible. The local area community should get involved and visit the property to see exactly what all the changes are and see what the property offers now. Build buzz in as many media as possible as you move towards completion of the renovation.
Local service groups and sports organizations will likely have the opportunity to have a space in the mall to raise money and your profile. This can be integrated into the busiest shopping days of the week.
The promotional campaign at the end of the renovation of a shopping center should have key objectives such as:
- Create a new identity for the shopping center in the commercial and retail community as a viable center that offers new shopping options that are adapted to the needs of the community.
- Give the property a name that means something positive to local buyers. When in doubt, create competition for buyers as part of the process.
- Creating a program to increase awareness and use of new tenants (movie theaters, an anchor, and a sandwich shop) by engaging as many tenants as possible
- Provide valuable community services to area children and families in ways that strengthen community ties and interaction.
- Connect with the Chamber of Commerce, Rotary, the local hospital, Jaycees, police and fire departments, rescue organizations, and the media. Give them ways to interact with your shoppers on busy shopping days, but ask them for some benefit in return.
- Improve customer perception of the property by introducing customers to new tenants and services that are new to the property.
- Promote all the new and attractive downtown stores. Show your clients how easy the property is to visit and use.
- Update all common areas and amenities for the buyer to feel and experience the real benefit of property improvement.
- Provide a mechanism that encourages purchases between tenants, increasing customer awareness of new and existing tenants.
- Build relationships with the media to generate free publicity whenever possible as the renovation progresses.
- Provide press clippings and collateral materials to support leasing efforts as you seek to fill remaining or upcoming vacant areas.