Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
Issue link: https://sct.epubxp.com/i/390025
i n m y o p i n i o n A f t e r s e v e r A l p r e - r e c e s sion years of false starts, we're finally seeing retail-leas- ing velocity pick up steam. In some markets and submarkets throughout texas, we're even wit- nessing four or five concepts vying for a single well-located tenant spot. that, my friends, is a landlord's market. As leasing velocity increases, it is critical that our leasing agents utilize talents well beyond technical skills. they need intuition, knowl- edge of tenant mixes and insight into retail operations. to sign a lease is one thing; to create a successful shopping center is another thing entirely. to do that, a leasing agent needs to have a full range of technical skills and a full understanding of lease and co-tenancy clauses, restrictions, pro formas, demographics and more. And beyond that, the agent needs to understand retailing as well as the retailers themselves. And there's always more to learn, even for leasing agents who have proven successful in creating outstanding tenant mixes. take, for example, the hybridization of retail concepts that we're seeing to- day, in which dollar stores sell gro- ceries, grocery stores sell furniture, and liquor stores sell prepared food. for an agent dealing with exclusive clauses within a shopping center, these hybrid stores present a challenge. In a nutshell, there are three ba- sics required for successful leasing, the first of which is market knowl- edge. this covers retailers, shop- ping centers, demographics, eco- nomic trends, real estate trends, housing starts, traffic patterns and all the rest. professionalism is critical too, as professional agents should recognize that real estate is not at all a 9-to-5, five-days-a-week job. And similarly, leasing is not a transaction business; it is a rela- tionship business. the third basic requirement is customer service: Clients need regular communica- tion and direction from their leas- ing agents. A leasing agent needs to under- stand the pro forma, i.e., a budget or estimation of the revenue and expense anticipated in leasing to a certain store. the best pro formas prove that the developer's objec- tives are in line with the retailer's. Both, after all, are seeking the same outcome: high sales. percentage rent has long been used to bridge the gap between a landlord's expectations for rental income pursuant to a pro forma and a retailer's ability to minimize risk in opening a store until the risk is reduced by good sales figures. Under a percentage rent agree- ment, a retailer will typically pay a base level of rent until sales rise above a certain level. Once sales reach that agreed-upon level, a higher rent kicks in. this truly reflects the retailer-land- lord partnership, whereby the land- lord takes a risk until the store suc- ceeds, but both parties are rewarded with more income when it does. like any successful leasing strategy, it is truly a win-win proposition for both developer and retailer. S C T Bob Young is managing director of The Weitzman Group, a commercial real estate services company based in Texas. 74 S C T / O c t O b e r 2 0 1 4 As leasing velocity increases, it is critical that our agents utilize talents well beyond technical skills. They need intuition, knowledge and insight. Continuing education a must for leasing success By Bob Young