The 5 Questions Shopping Center Landlords Need To Ask Before Leasing To Retail Tenants

A recent report from Credit Suisse signaled tough times ahead for America’s malls: 20% to 25% are predicted to close by 2022. As the number of shopping centers shrinks nationally, landlords have had to scrutinize the retail tenants that fill their properties. No longer subscribed to the “shop until you drop” mentality, consumers are traveling farther and less frequently to high-end shopping centers that combine attractive stores with entertainment experiences.

“Landlords have to be more selective and more proactive,” Franklin Street Senior Vice President of Retail Agency Leasing Cary Beale said. “If landlords are not being proactive, the center is going to fail.”

Beale, who has more than 20 years of experience representing both shopping center landlords and retail tenants, has laid out five essential questions landlords need to consider when looking at a retailer for a shopping center.

1. What is the center’s and the retailer’s target market?

At the Baldwin Park Village Center in Orlando, Florida, Franklin Street’s leasing team has brought in 13 new retailers and restaurants since taking over leasing in May 2016. Most are new-to-market concepts and boutique stores that offer family-friendly options for residents and serve as a destination for those living outside the upscale Baldwin Park community.

Open-air shopping center landlords have increasingly tapped into the large and affluent demographic living in Baldwin Park, a population that enjoys one of the highest average household incomes of any neighborhood in Orange County. The stores include Tactical Brewing Co., a new microbrewery, and Manny’s Original Chophouse, a steakhouse chain known for its road trip-themed décor.  

As shopping centers struggle to attract shoppers, particularly millennials who have abandoned the former watering holes of their parents for online shopping, landlords must carefully compare the demographics around their property with the target market of the prospective retailer.

2. What is the center’s main competition?

Understanding the other options shoppers have in the area can help landlords bring in retailers that make their center stand out. Malls close to each other will compete for customers, and having identical stores lowers the probability that either will be chosen.

Nearby big-box giants could sway the competition in their favor. Filling a shopping center several miles from a Target with department stores would set up the landlord for failure.

“Make sure you are best in the market,” Beale said. “You need to know who you are competing against.”

3. What are the retailer’s build-out costs?

Shopping centers have become a riskier investment, making it a less welcoming environment for retail startups. Asking prospective tenants for their estimated build-out costs offers one way to assess their experience in the market.

“Many of these new startup businesses don’t know what the startup cost is, and they evaluate it to be much less than their actual cost,” Beale said. “If they are opening a restaurant and they say it is $100K, and you have built 30 of these and they are actually $300K to $500K, the tenant doesn’t really have its heads wrapped around what it’s doing.”  

Prospective tenants willing to spend more, and who have the financing to do so, could prove that they are willing to invest in the success of the center. “It shows the landlord that they are going to fight to succeed,” Beale said. 

4. Does the retailer have multiple locations?

Another bellwether for potential retailer success is whether the concept already has multiple locations.

“For a landlord, bringing in a tenant with multiple locations is exciting and we know they have a good record in the past, they are already a proven concept,” Beale said.

Landlords can also use a shopping center to debut an internationally successful brand. At the Santa Anita mall in California, Taiwanese menswear brand Simple, Style, Trend & Casual Life, or SST&C, opened its first U.S. store. The store caters to the large demographic of Asian families living in the area.  

5. What is the game plan for the center?

Shopping centers do not become successful from individual deals with tenants. Now more than ever, a holistic experience across all the stores affects the return on investment.

“The biggest mistake landlords make is they don’t look at how the tenants impact the shopping center,” Beale said.

Balance is important. Overutilizing high-use tenants in shopping centers is a common mistake. A landlord might build too many restaurants that have too few parking spaces, leading to frustrated customers and a loss in revenue.

The ideal shopping center leverages a healthy mix of entertainment and exciting new restaurant concepts. Amenities like a movie theater or arcades have become essential, while dining has shifted from franchise-heavy offering to more unique, chef-driven experiences. Celebrity chefs and local farm-to-table options have also been making waves in the market.

As e-commerce and shifting consumer trends continue to pressure malls and shopping centers to adapt, it is more important than ever to find retail tenants that fit the complete vision for the shopping center.

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News in Brief – June 28, 2017

Franklin Street arranged the $4.15 million sale and financing of a 19,493-square-foot retail plaza at 6450 W. Commercial Blvd. to a Chinese investor.


Publix buys out Ovation Town Center in Orlando for $23.3m

Publix Super Markets has purchased the Ovation Town Center, where it is an anchor tenant, in a $23.35 million sale. The 96,750 square foot shopping center is located in the Davenport submarket of Orlando at 7800 Lake Wilson Road. Approximately 10 minutes from Disney World, the center also boasts national tenants like McDonalds, Wells Fargo, Tropical Smoothie, Anytime Fitness. The center was 93 percent leased at the time of the transaction. Bryan Belk and John Tennant of Franklin Street’s Atlanta office represented the seller, Armstrong Development, in the transaction.

“Ovation Town Center was built to attract shoppers to the east of Interstate 4 and the thousands of annual visitors to the nearby Reunion Resort, a 2,300-acre gated community,” Belk said. “It is the closest anchored shopping center to the resort, where visitors oftentimes stay a week to a month at a time. We saw substantial investor interest in this property and received a variety of buyer profiles that submitted bids from institutional, REIT, and private investors across the country.”


Is CRE Entering a New World Order?

Excerpted from December 2017 Real Estate Forum article:

RETAIL: 2017 will bring “another strong year for retail investment sales as investors continue to chase higher yields in the real estate sector,” says John Tennant, senior director with Franklin Street of Atlanta. A majority of retail REIT activity will continue to focus on core/core plus markets “and you will continue to see these companies prune certain underperforming assets from their portfolios. REITs will continue to look for deals in the urban core with strong demo-graphics and incomes, and you will see a continued increase in the amount of street-front and mixed-used retail they will be carrying in their portfolios.”

For their part, says Tennant, retailers will continue to position stores “in the center of the strongest submarkets where their core customers are. Developers will be able to secure higher rents for the A+ locations that meet these retailer requirements. The complexity of these unique mixed-use deals will require developers to stay disciplined to keep their deals on budget as commodity prices for steel and concrete continue to rise, coupled with a tightening labor pool.”


Reinsurance rates drop makes commercial policies bargains

Excerpted from a Miami Today story.

For a variety of reasons, 2017 is a great year for businesses to be in the market for insurance.

“There is substantial competition in the market now,” said Gaston Blanch, a director with Franklin Street Insurance Services who deals mainly with real estate insurance. “It’s chaotic, because there is surplus capacity that needs to be deployed.” 

New companies have entered the fray and established insurance companies “aren’t chasing rates down, because they expect to lose business,” Mr. Blanch said. Some are walking away from renewals, he said. “It defies logic.”

He cites a client whose policy renewed in April. The client had filed $400,000 in fire, electrical and water claims over five years and still saw its premium reduced from $200,000 per year to $180,000, a 10% decrease.

“For business owners, it’s good,” he said. “In fact, I would tell anyone who’s getting a flat renewal that they are leaving money on the table.”


Franklin Street Arranges $23.4M Sale of Shopping Center in Central Florida

DAVENPORT, FLA. — Franklin Street has closed on the $23.4 million sale of Ovation Town Center, a 96,750-square-foot, Publix-anchored shopping center located at 7800 Lake Wilson Road in Davenport, roughly 35 miles south of Orlando. Bryan Belk and John Tennant of Franklin Street’s Atlanta office represented the seller, Armstrong Development, in the transaction. Publix Super Markets purchased the property. McDonalds, Wells Fargo, Tropical Smoothie and Anytime Fitness are among the shopping center’s other tenants. 


Broker Connects to Chinese Buyer on Lauderhill Retail

Franklin Street’s Robert Granda linked up with a Chinese brokerage firm in Miami to market his client’s retail plaza beyond U.S. borders.

Granda, a director in Franklin Street’s Plantation office, represented New York-based investment group Balkani with senior vice president Greg Matus in the $4.15 million sale of a Lauderhill strip mall anchored by a Tire Kingdom.

See story at


People on the Move: Claire Bayles

Claire Bayles
Area Manager at Franklin Street

EDUCATION:  Virginia Polytechnic Institute and State University (Blacksburg, VA)

At Franklin Street, Bayles supports Franklin Street Management Services’ commercial division, servicing a diverse portfolio of properties throughout the Atlanta area. Bayles is responsible for managing all aspects of her portfolio including marketing, operations and financial activities.


Vickers Roswell aims to continue ‘small town feel’ even w/high rise bldg, density

Roswell residents have voiced concerns that the large scale redevelopment at Canton and Woodstock Street in Roswell may lessen the small town feel of historic Canton Street.

Rezoning for Vickers Roswell began at the tail end of 2014.

Since that time, the project has been reportedly described by residents as too big, too dense and taking away from the small town feel that is historic Roswell and Canton Street.

The developer stated they have worked closely with a local architect firm to develop a quaint boutique project.

Leigh Anne McGarry is one of the leasing associates at Franklin Street Real Estate Services that is working to fill this property.

McGarry expressed that “with our overall design and target tenants, we are still very much so keeping the small town feel at the top of our minds and priority, in order to cater to the local residents.”

Upon clarification, “target tenants” are small, local businesses, which is intended to continue the feel and operation of Canton Street.

“We would hope that local residents will see the benefit of extending the heart of Canton Street further north and connecting both ends of the street to create a strong walkability within the area,” said McGarry.

Originally proposed in 2014, this project has seen a reduction in scale and density after receiving split reviews from residents.

The mixed-use development project encompasses residential, retail and restaurants.

Initial proposal included more of all three, but with density zoning not being approved, a reduction resulted.

Vickers Roswell will accommodate first floor retail with apartment units on the second and third levels.

In total, there will be 79 residential units, mostly two bedrooms according to McGarry.

“Historic Roswell is booming. Local residents love the culture and southern small town feel the street has, full of chef-driven restaurants and family friendly experiences,” said McGarry.


People on the Move: Todd Mitchell

Todd Mitchell
Investment Associate at Franklin Street

EDUCATION:  Shippensburg University of Pennsylvania (Shippensburg, PA)

At Franklin Street, Mitchell specializes in the sale of multi-tenant retail properties throughout Georgia and Alabama. With nearly two decades of experience in sales, marketing and customer relations, Mitchell is an expert at creating long-term value opportunities for his clients and their assets.