Vacancy Control
Published: 01 September, 2010
Across the country shopping centre owners, managers and agents are turning to increasingly innovative strategies to plug gaps in their tenancy line-ups
A survey of centre managers carried out for Shopping Centre by Business Blueprints found that managing vacancies was the biggest single challenge facing centre managers today, and Colliers’ research shows that void rates are still on the increase – up from 10.7 per cent a year ago to 11.4 per cent.
However, the picture is very patchy across the UK. Capital Shopping Centres has just reported that its portfolio of prime shopping centres has just 2 per cent of its floorspace vacant. But anecdotal evidence has some secondary malls suffering void rates as high as 25 per cent.
So what strategies have proved successful in keeping voids to a minimum?
Peter Preddy, head of retail asset management at DTZ, says a wide range of techniques should be considered. “Landlords need to implement the right blend of initiatives, which can vary considerably between different centres, depending on a number of factors including their market sector, current tenant mix and lease length position.”
But rather than wait for voids to occur, and then go to the time and expense of filling them, Preddy advocates a proactive approach to prevent them occurring in the first place.
He says: “This not only means close monitoring of retailers’ performance and rent payment, identifying those at risk and where lease ends are imminent, but also determining retailers who are trading well and may have ‘out-grown’ their current unit. This enables landlords to instigate surrender and renewal to mitigate voids down the line, while encouraging the growth of occupiers with stronger trading offers.”
But if this approach fails, he advises landlords to take a long-term view on temporary occupations and identify new, often local, retailers, who are prepared to take short-term occupations.
This approach has proved very successful at Aviva’s Mell Square in Solihull, where canny asset management has led to a vacancy rate of less than 1 per cent. The leasing strategy to create a clear point of difference through targeting local and unique boutique operators has paid off with five new retailers joining the scheme.
Aviva’s asset manager, Shelagh Larard, says: “Like other shopping schemes, we were affected by the economic downturn. However, we saw this as an opportunity to provide a platform to change the tenant mix and strengthen the appeal to our very affluent catchment. With fierce and growing competition, it was essential for us to retain customer loyalty by mixing luxury and unique independents along with high street brands.”
One sector that has consistently maintained low void levels through the recession is outlet malls where the hands-on style of outlet managers has helped to keep occupancy high.
Adrian Nelson, director of UK leasing at McArthurGlen, says a customer-focused approach is the key. “We’ve been researching our customers to exactly what each centre’s catchment is,” he explains. “Then we’ve gone out to target the brands that will offer something to that catchment. And we always try to get the best in any category.”
One strategy to keep the offer fresh is bringing in new brands from overseas, many of which see outlets as a way of dipping a toe into the UK market without a massive financial commitment.
