Tenant Mix Strategy: Creating a Successful Retail Center

Author: Lindsey Halter CCIM

Have you found yourself shopping in your neighborhood shopping center and wondered how or why certain retailers are located there? Retail commercial real estate owners invest a significant amount of time and effort cultivating the optimal tenant mix to maximize the long-term viability and success of their shopping center.

What is a Tenant Mix?

A shopping center’s tenant mix is defined as the combination of different businesses who collectively make up the shopping center’s occupancy. Oftentimes this includes one or more anchor tenants that are recognizable brand names that help drive traffic to the shopping center, along with smaller tenants that have businesses that are complementary to the anchor tenant(s).

Why Does Tenant Mix Matter?

A properly executed tenant mix for a retail shopping center can create a dynamic and attractive destination for shoppers, driving both traffic and sales for the tenants. Shoppers are likely to spend more time at the shopping center if there are opportunities for cross-shopping to visit multiple stores in a single trip. This creates a positive experience for the shopper which leads to customer loyalty and repeat business for the tenants of the shopping center.

Factors to Consider When Developing a Tenant Mix Strategy:

• TARGET AUDIENCE: Understand the shopper profile and the demographic characteristics of the surrounding community so you can tailor the tenant mix to meet the needs of the target customer.
• ANCHOR TENANTS: Secure strong anchor tenants to generate traffic to the shopping center and serve as a draw for other tenants.
• DIVERSIFICATION: Include a mix of national, regional and local tenants to appeal to a broad customer base. Incorporating local tenant brands helps contribute to a sense of community.
• COMPLEMENTARY USES: Include tenants that complement each other to create a synergistic shopping experience that will keep the customer engaged at the shopping center.
• COMPETITION: Keep in mind that some tenants will have restrictions in their lease against competitive uses in an effort to protect their business.
• MARKET TRENDS AND ANALYSIS: Continuously monitor market trends, consumer behaviors and competitor strategies to adjust the tenant mix accordingly.

Achieving the perfect tenant mix is as much art as it is science. It requires strategic planning, foresight, and an in depth understanding of the market. Creating a successful tenant mix will not only attract customers but will keep them engaged, encouraging longer shopping visits, and fostering a sense of community, all contributing to the overall success of the retail shopping center.

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