Renovating a shopping centre is a frequent and planned event to keep the tenants happy, the customers coming back, and the property looking good. This underpins the rental so that the property can compete with other properties in the local area. Failure to renovate or refurbish puts you on the path to poor property performance and rents; this can happen all too quickly. Tenants and rent are a critical part of property strategy.
Renovation plans should incorporate your major tenants, specialty tenant mix, landlord investment plans, and the community needs. It is a fine balance. Give due regard to the terms of all leases in the property before you start, as some may have clauses that will impact the project planning or staging. Local property legislation relative to retail property could also have allowances and procedures for property renovation and or demolition.
Renovation therefore becomes part of retail property business plan and you must know what you are doing before you start; the lead time can be months if not years. Minor renovation is something that happens in one form or other each 5 years or so in a retail property, and with a larger renovations happening on average every 8 to 10 years.
Property renovation is a strategy that needs careful planning when it comes to shopping centres. The property should not be renovated at the peak shopping times of the year, and the renovation should be kept to a strict time schedule and outcomes. The builder or developer you use for the project is the first critical decision that you will make; they should give evidence of other renovation projects in similar high impact retail properties. They should be able to tell you exactly how they managed critical daily issues at the property such as noise, dust, storage, lighting, foot traffic, and tenant relationships; they should show how they completed other similar complex retail projects on time and within budget.
Make your property renovation a community event and build excitement around it. Make big statements about the renovation before and during the process so that the community knows what is going on and has an air of expectation with the outcome.
Get the community involved in the future of the property by undertaking surveys about needs and concerns. The survey outcomes can be built into the project if they are warranted and will build better community interaction with the final property release.
Informative signage should be placed on all the safety barriers and renovation hoardings around the property clearly telling the community what is going on. The more they know about what you are doing, the more likely they will come back when the works are finished. Shopper tolerance is what you need from the outset.
Always keep the tenants abreast of stages and progress in the renovation. It is their income and business that is affected. They want your renovation to be successful so that their business will be successful. The communication links in a shopping centre renovation are critical to the process and outcome.
When nearing the completion of the shopping centre renovation, a shopping centre should undertake a series of community events and special trading days staged over a period of 2 to 3 months. It can begin with a major coordinated, two-month grand-reopening campaign. It should be many fold and broad to attract as many shoppers as possible. The local area community needs to get involved and visit the property to see exactly what all the changes are and see what the property now offers. Build a degree of expectation in as many media outlets as possible as you lead up to the completion of the renovation.
Local service groups and sporting organisations will likely seize the opportunity to have space in the shopping centre mall to raise money and their profile. This can be integrated into the busiest shopping days of the week.
The promotional campaign at the end of a shopping centre renovation should have key objectives such as:
Creating a new identity for the shopping centre in the retail and business community as a viable centre offering fresh new shopping options suited to the community’s needs.
Giving the property a name that means something positive to the local shoppers. If in doubt create a competition for shoppers as part of the process.
Creating a program to increase awareness and use of the new tenants – cinemas, an anchor and a sandwich shop – through the participation of as many tenants as possible
Provide valuable community services to the children and families of the area in ways that strengthen community bonds an interaction.
Connect with the Chamber of Commerce, Rotary, Local Hospital, Jaycees, Police and Fire Departments, Rescue Organisations, and the media. Give them ways to interact with your shoppers on busy shopping days but ask for some benefit in return.
Improve customer perceptions of the property by introducing customers to new tenants and services that are new to the property.
Promote all the attractive and convenient new shopping at the centre. Show your customers how the property is easy to visit and use.
Upgrade all common areas and amenities so that the shopper feels and experiences the real benefit of the property upgrade.
Provide a mechanism that would stimulate cross tenant shopping, increasing customer awareness of new and existing tenants.
Build relationships with the media to generate free publicity where ever possible as the renovation proceeds.
Provide press clippings and collateral materials that would support leasing efforts as you seek to fill any remaining or upcoming vacant areas.
John Highman is an expert in investment real estate strategy, property performance, and tenant mix analysis and strategy. He is an author and coach that helps property investors, and real estate agents improve their retail, industrial, and commercial real estate opportunities and targets.
John has specialised in major commercial, industrial, and retail property for over 30 years. He knows what works and what doesn’t. He gives you the ‘good oil’ on getting active and achieving results.