The tenant mix within any shopping centre is a vital element to its success and sustainability. Often the critical importance of the tenant mix can be overlooked by inexperience, which leads to failure of community shopping projects.

Mark Souris, Managing Director of Periscopic Property Management (a commercial, retail and mixed use property management company) says, “Market research and on the job retail experience is key to understanding what kind of tenant mix will work for a shopping centre. “Sometimes the most exciting tenants will not actually suit the surrounding community that will be shopping at the centre, tenants can also misread the market. It’s critical that developers and owners understand that their market will be the community in which the centre is built and if you don’t understand their needs and wants, they will shop somewhere else,”

Souris adds that credible market research into the surrounding community needs and affordability also determines the size of the centre and its tenant mix. The most successful centres are planned to the correct tenant category mix ratio. The placement of anchor tenants such as grocery outlets like Checkers, Spar or Pick ‘n Pay need to be in areas where physical expansion is an option for them. Remember, as a community grows so will the nature of their shopping needs.

Another key factor the tenant mix will affect is the actual planning and layout of the centre because this affects leasing and how rent will be charged. It’s vital that centre owners/ developers realise that different types of stores will be charged different rental rates per square metre. Stores that require less space but sell products with higher purchase values can be charged higher rental rates.
Souris says, “The true value of a centre is determined by the potential rental income. This is why centres need to have the right tenants in the right places. A centre owner does not want to be in the position where they have to lower rentals and bite into their earning potential, size is not essential, but rather the intelligent utilisation of your space.

“Often the use of tenant space within the centre and its design should be dictated by market research and hard earned experience. The best way to get the right information is to hire consultants and experienced property management companies who know how to interpret the market research and translate that into a productive tenant mix. Investment into any centre development is a massive capital outlay and getting your tenant mix right out the gate will limit the first year’s casualties and further benefit your investment.”