Market Demographics and Traffic Drivers Are Main ConsiderationsA Conversation with Jake Frantzman, Senior Leasing Representative
What’s the secret to creating the “right” tenant mix?
There’s no secret to it at all. It’s about analysis and understanding of two key factors: the demographics of the local market and the traffic drivers that deliver shoppers to the property. As a leading retail leasing company with more than sixty years of success, we consider these two as the foundation of our tenanting strategy.
We want to create shopping destinations. So we study the character of each market, including income levels, population, competition, and vehicular traffic patterns. There’s no template here. Each market is individual. What works in one, won’t necessarily work in another.
The right tenant mix in retail leasing is about variety. You want to combine big brand names in diverse categories with day-to-day-service providers. We look for an anchor store for each of our centers. This is the key driver. Typically, the anchor is a grocer.
Why are grocers such sought-after anchors?
The average American consumer makes two to three grocery buying trips per week. That frequency benefits every store in the center, as shoppers combine their errands or act on impulse to buy something at a neighboring store or grab a bite to eat. The pharmacy, the dry cleaner, the dollar store, the nail salon, the pizzeria, and others all get spillover from that anchor traffic. And obviously, grocers are selling goods that people need, so even in a negative economic cycle, they still draw shoppers. That’s why they’re such a cornerstone in a successful retail leasing strategy. Nothing matches them for pulling in a steady flow of shoppers.
What are some other must-have tenants?
Fast-casual restaurant chains, large brand name drug stores, discount fashion retailers like T.J.Maxx or Kohl’s – we’ve found these to be strong traffic drivers.
Any thoughts on the right mix of local vs. national retailers?
Our focus is always on the national brands. These are your mega traffic drivers. We go for these big names and then maybe backfill smaller spaces with regional franchises or local services like nail salons, dry cleaners, and banks. Specialty boutiques can work, too, as they often offer unique products and services and can bring a strong following locally. Again, when you’re leasing retail space, it’s all about area demographics and brand appeal.
First-to-market tenants…what’s their overall value?
A hot new brand that people have been waiting for in their particular locale has tremendous value. Its reputation boosts traffic and creates overflow to other tenants. And the presence of a hot brand can revitalize the entire tenant mix, by attracting other desirable tenants. They’ll often say: “If they come, I want in too.” But again, the new brand has to be a good fit for the market demographics. A good recent case is the Fairway Market lease in Post Road Plaza in Pelham Manor, N.Y. Being close to the city, area residents knew of and wanted ready access to this brand and the demographics were right.
Any other recent retail leasing cases you’d like to share?
Edgewater Harbor, a 100,000 square-foot mixed-use development on the Gold Coast of the Hudson River in Edgewater, N.J. comes to mind. Phase One is completed with 480 high-end condo units and a borough municipal office. Upcoming phases will include a hotel plus other businesses. A big grocer wasn’t quite right for this property, so we went with HomeGoods for our anchor. Another key tenant is CVS, which offers grocery items among its inventory. The rest of the tenants are higher-end retailers and service businesses – just right for the “captive audience” of residents and office employees in this property.
How do you plan ahead for vacancies?
We pay close attention to trends – demographic trends and trends in retail. And based on those, we project the kind of new tenants that will ensure the continued success of the properties under our management. We know, for example, that apparel retailers are challenged right now, while off-price merchandisers are solid. We’ll factor that knowledge into our tenanting strategy. As our tagline says we’re “positioning retail real estate for a new generation.” Understanding the trends are part of that positioning.