Southern California Commercial Leasing + Investment Sales Brokerage
What Makes a Tenant an Ideal Fit for Your Shopping Center?

If you’re like many retail landlords, you have an “ideal tenant” in mind for the vacancy that just popped up in your shopping center.

With all due respect, however, your perspective a likely off the mark. That’s not to say you don’t know your property. Undoubtedly, you know it better than ANYONE.

But knowing your property isn’t the same thing as understanding…

== > How these tenants synergize with your existing tenants
== > Area residential / daytime population and average annual household income demographics
== > The tenant-types that succeed in this area
== > The tenant-types actively seeking space in this area
== > Typical monthly budget
== > And what deal incentives (TIs, free rent, options, annual increases, etc…) these tenants seeking

See what we mean? There are a fist full of crucial factors to consider in the tenant selection process.

And toward that end, here are the four key elements to keep in mind when you’re weighing potential retail tenants to fill a vacancy in your shopping center:

Does the Tenant Synergize with Existing Tenants?

When it comes to selecting a tenant, synergy is the FIRST + MOST IMPORTANT consideration. No matter how sexy a tenant may appear, if their use overlaps with or fails to support existing tenants, you’re headed for trouble.

For example…

A gadget or computer repair store and cell phone sales + service store synergize beautifully.

But two competing cell phone service providers are likely to negatively impact the sales for one outlet or the other. And never mind that both are likely to demand exclusives.

On the same coin, a gadget repair store is likely to cannibalize a computer repair stores business and vice versa. And exclusives may be an issue in this scenario, too.

Similarly, with restaurants, co-tenancy among like ethnic foods is destined to create issues…

Imagine a center with Persian, Lebanese, and Greek restaurants. Or a center with Chinese, Thai, and Vietnamese restaurants.

The strong similarities between these cuisines will inevitably impact sales among the group. One restaurant is bound to rise above the others, and ultimately squelch their ailing competitors’ business.

The point here being, tenants that dovetail with one another, rather infringe, create synergy. Thus, an ideal prospective tenant synergizes with your existing tenants

What Tenant-Types Succeed in The Area?

Average annual household income, ethnic + racial makeup, and relative geographical location all factor into the potential margin for success for any prospective retail tenant.

Income Demographics

About 18 months ago, a check cashing location opened on Santa Monica Boulevard, just West of the 405 Freeway. In other words, in the heart of West Los Angeles, an exceptionally affluent community.

Meanwhile, the nicely built-out location, for which the landlord likely forfeited free rent in lieu of tenant improvement dollars, closed up shop six months later.

Check cashers are not in-demand tenants in more affluent communities whose residents are unlikely to be living paycheck-to-paycheck, they’re paychecks are probably transmitted via direct deposit, and they’relikely to bank with a mainstream financial institution.

Ethic + Racial Demographics

Let’s say a Mexican restaurant opens in a predominately Asian community, or vice versa, a Chinses restaurant opens in a predominately Hispanic area.
Now, arguably Mexican + Chinese foods both hold some universal appeal. But that appeal generally only applies to diverse communities or communities that don’t foster definitive cultural identities.

Relative Geographical Location

Now, this may sound like a rather ham-fisted analogy, but you wouldn’t open a surf store in downtown Los Angeles. Whereas, in Santa Monica, just blocks from the beach, is a no-brainer for such a business.

Similarly, fast food restaurants and gas stations are ideally suited to surround freeway on/off ramps. But out in the middle of nowhere, down some back-country road, such establishments make no good sense.

In short, proximity to geographical landmarks, whether natural or man-made, are key considerations in qualifying an ideal tenant.

What Tenant-Types Are Actively Seeking Space in the Area?

Restaurants currently rank among the HOTTEST retail tenant segments. But how many restaurants can a given area support? Eventually, a community is bound to reach a saturation point.

In such circumstances, restaurant tenants are unlikely candidates for your vacancy.

Conversely, a given location may be underserved. In 2016, restaurant sales exceed grocery store sales, a key factor driving current restaurant expansion. And if your property is in an area with a dearth of restaurants, a restaurant tenant is exactly the prescription for your vacancy!

What’s the Typical Monthly Budget of Tenants Active in Your Area?

In the end, it boils down to dollars and cents. A given business only generates so much income. As such, tenants can only pay so much in rent + CAMs. Beyond a certain threshold, the business ceases to be profitable and won’t last.

Understanding how much income certain businesses generate is critical to meeting retail-rate expectations.

What Incentives Are Suitable Area Tenants Looking For?

Tenant improvement (TI) dollars? Free rent in lieu of TI funds? Additional incentives for longer-term leases?

Awareness of the incentive specific tenant types and tenants operating in your center’s areas are seeking is a crucial factor in attracting the right tenants.

Additionally, understanding how to leverage those incentives is a critical component of lease negotiations.

Need Help Sourcing the RIGHT Tenant for Your Vacancy?

As you can see, MANY elements factor into placing the “ideal tenant” in your latest vacancy.

The good news is, you don’t have to wrestle with these issues! Instead, you can hire a qualified professional to lease your space for you.

And that’s where CBM comes in! Our leasing team is on top of all the factors outlined above and spend their days pursuing tenants to fill vacancies, just like yours.

For additional information on CBM’s leasing services, visit: