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The Importance of Tenant Mix
The marketing and financial success of a shopping centre is dependent on many factors. Among the main success factors suggested in previous studies are tenant mix, the quality of location and accessibility, catchment size and quality, car-parking provision, internal layout and environment (see, for example[1]). The combination of all these factors will have a bearing on whether or not a developer/landlord will be successful in marketing the centre to both potential tenants and potential consumers. Among these success factors it is widely recognized that the "tenant mix" of a shopping centre is critical for all parties concerned -- consumers, retail tenants and the developer/landlord. The term tenant mix refers to a combination of factors, including the proportion of space or number of units occupied by different retail/service types, as well as the relative placement of tenants in the centre[2].
From a marketing point of view, securing an appropriate tenant line-up is critical to attract and retain customers as the image of a centre is largely determined by tenant mix[3-5]. Tenant mix has been noted as especially important for certain types of centre (speciality schemes for example) which are reliant on a differentiated image as a key element in their marketing strategy. Early lettings and strong tenants are particularly crucial for a new centre, to help entice customers away from their established shopping destinations, to build a successful image, to establish appropriate positioning in the marketplace, and to win market share. The initial line-up of tenants provides the first consumer experiences, and the quality of first impressions has been noted as a vital component in building a successful centre[6].
Strong tenants and early lettings are also critical to a centre's financial success. The developer/landlord is seeking an immediate return from early rentals to service the organization's mortgage debt, as well as long-term security of income from well-covenanted tenants who offer good prospects for turnover growth and therefore rental growth[7]. These requirements explain the traditional emphasis on recruiting multiples[2]. Pre-lettings to appropriate anchor tenants are particularly crucial[8,9] as they help developers attract funding, set the tone for a centre, and encourage leasing commitment from other traders[10]. Some developers/landlords also incorporate a proportion of smaller traders to add variety and help build a...