PQSL event - Leasing Strategy for a New Shopping Centre

14-04-2005

Reported by Jean Cheng, JO Deputy Secretary

Further to the success of the site visit to the new shopping centres in Shenzhen organized by the JO on 26 February, it revealed that many members were interested in shopping centre leasing, especially the future development trend as well as the impact of comparable shopping centres in China.

It was our pleasure to have a PQSL event delivered by Mr Martin Leung on 14 April on Leasing Strategy of a New Shopping Centre. Martin is a corporate member of the Institute and is currently Hon Secretary of the JO Committee. He is a General Practice Surveyor with comprehensive experience in the planning and leasing stages of new shopping centres in China.

Over 150 members joined the event. Martin firstly gave a brief introduction on different types of shopping centres: metropolitan, regional, district, local and specialty. He used an interesting analogy from inception to child birth when the developer and the tenants worked together to create a new shopping centre. Development comes in three main stages, viz. market research, planning and leasing.

According to Martin, when the site was still bare land, a thorough market research should to be carried out. The research material included a SWOT analysis which would compare with competing centres, transport network, catchment area, profile of the targeted customers and determine a unique market positioning for the shopping centre.

Martin explained that after collecting and analyzing results from the research, next came the planning stage. As a project manager, one should exhibit his professional knowledge by understanding the market, the customers’ needs and use his experience to coordinate with consultants and professional bodies such as the architect, interior consultant, advertising companies, etc to achieve the objective. Martin also covered special technical requirements for specialty tenants such as cinemas and supermarkets. The design of a shopping centre was unique as he pointed out such as the positioning of the escalators, lifts and size of different trades of shops.

The final part came the leasing stage where Martin emphasized that anchor tenants such as department store, supermarket, food court and cinema were crucial to a new shopping centre as they draw major pedestrian flow; early negotiation and confirmation from them would be fundamental to success. As some special technical requirements for them might be required, it was important to complete the leasing documentation before building completion. Project managers should be familiar with the current market trend because popular trade tenants would help to publicize a shopping centre. During negotiation, Martin said that sound valuation skills to find the market rent would be necessary since currently, turnover rent was quite popular in the market.

Tenancy administration including the various terms and conditions in the tenancy agreement were also highlighted by Martin who shared his practical skills and tactics in negotiating with the tenants in speeding up the leasing deal. He suggested that the 3 “R”s, renew, relocate and remove were good solutions for the tenant mix review in a shopping centre. Shopping centre development as explained by Martin was quite different from residential and office development. It was unique and its core business was to coordinate between developer and tenants. Most members found this seminar very interesting, enjoyable and fruitful because Martin had presented a lot of creative ideas by way of photos and pictures from both local and foreign shopping centres.