leasing strategy of a shopping centre
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Leasing Strategy of a Shopping CentreTRANSCRIPT
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Leasing Strategy of a Shopping CentreDate: 29 Jun 2002
Speaker: Ivan Ng, Government Property AgencyJUNIOR ORGANISATION Pre-Qualification Structured LearningTHE HONG KONG INSTITUTE OFSURVEYORS
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ContentsPart 1Types of shopping centrePart 2Leasing strategy for a new shopping centrePart 3Tenancy administration Part 4Past examination exercisePart 5 Q & APQSL: Leasing Strategy of a Shopping Centre
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Part 1 Types of Shopping CentrePQSL: Leasing Strategy of a Shopping Centre
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1. Types of Shopping CentreTerritorial - Festival Walk, Times Square, Pacific PlaceDistrict -- Tuen Mun Plaza, Dragon CtrLocal/Neigbourhood -- Wong Tai Sin Estate Shopping Centre Thematic -- Golden Shopping Ctr
PQSL: Leasing Strategy of a Shopping Centre
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1.1 Determination of Types of Shopping Centre
By location (district/accessibility) By sizeBy quality and quantity of customers By quality and quantity of tenantsBy the Landlords intention
PQSL: Leasing Strategy of a Shopping Centre
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Part 2 Leasing strategy for a new shopping centrePQSL: Leasing Strategy of a Shopping Centre
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2. Leasing strategy for a new shopping centreWhat do we want? Location factors - transportation, competitors, complimentary facilities Demographic factors - population, income group, age. etc who would come and what do they want?Design - numbers of shops and sizes
PQSL: Leasing Strategy of a Shopping Centre
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Tenant mix (by categories)Anchor tenant - dont be dominated by Department storeChain stores/Unique storesEntertainment facilitiesLocation of tenants e.g. foodcourt etc.In US, large department stores at both ends with small shops along the passageway
2. Leasing strategy for a new shopping centrePQSL: Leasing Strategy of a Shopping Centre
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2. Leasing strategy for a new shopping centre
Terms and conditions - both risky at the beginning, therefore a lower base rent + higher t/o rent and longer rent-free period (to maintain a higher rent image)Fit-out coordinationManagement, cleaning and security - inhouse vs contract outMarketing and promotionPQSL: Leasing Strategy of a Shopping Centre
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2. Leasing strategy for a new shopping centre
Leasing processFinding tenant - by Landlord or thru AgentAgreed on location, term, use, area on rentSign the offer (binding) - payment of first months rent and depositFitting outSigned the Tenancy Agreement (usually later than possession date)Stamping
PQSL: Leasing Strategy of a Shopping Centre
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2. Leasing strategy for a new shopping centreTenant Mixby categoriesby locationby sizeby pricePQSL: Leasing Strategy of a Shopping Centre
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2. Leasing strategy for a new shopping centreHow to determine the tenant mix?Where you are (position) and what do shoppers want to find in your centre ?By survey, observation and analysisDesign of trade mixAnchor tenant : department storeCategory killersPQSL: Leasing Strategy of a Shopping Centre
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2. Leasing strategy for a new shopping centrePQSL: Leasing Strategy of a Shopping Centre
Class
Shoppers
High
Gucci
Swank
Middle
Crocodile
D & G
Low
Price
High
Low
Middle
Cityplaza
Pacific Place
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2. Leasing strategy for a new shopping centreChain store or theme storeFood and beverage - restaurant or food courtEntertainment - ice rink, cinema, bowling centreApparel/cosmetics, F & B???
PQSL: Leasing Strategy of a Shopping Centre
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2. Leasing strategy for a new shopping centreTurnover Rent (a profit sharing basis)Mechanism - base rent or a % of the Turnover (gross receipt), whichever is the higherOn annual basis but receive monthly (to reflect season fluctuation)Merits: from Landlords point of view: while there is a guarantee of minimum income, the Landlord can receive more if the business is better than expectedPQSL: Leasing Strategy of a Shopping Centre
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2. Leasing strategy for a new shopping centreFrom Tenants point of view: can pay a lower base rent while the Landlord will take initiative to do more marketing and promotion to increase the sales to achieve a higher real rental
Mechanism : receive the t/o figure every month and then at the end of the year receive the audited report to do the annual reconciliation
PQSL: Leasing Strategy of a Shopping Centre
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2. Leasing strategy for a new shopping centreTenancy AgreementTerms -usually 3 years certainWhy?Excluding from Part V of Landlord and Tenant Consolidation Ordinance -- 6 mths NTQExclusion: A tenancy agreement for a fixed term of three or more years which contains no provision for earlier termination other than for breachPQSL: Leasing Strategy of a Shopping Centre
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2. Leasing strategy for a new shopping centreExcluding from Land Registration Ordinance S.(3)(2)All such deeds, conveyances, and other instruments in writing, and judgments, as last aforesaid, which are not registered shall, as against any subsequent bona fide purchaser or mortgagee for valuable consideration of the same parcels of ground, tenements, or premises, be absolutely null and void to all intents and purposes: Provided that nothing herein contained shall extend to bona fide leases at rack rent for any term not exceeding 3 years.
PQSL: Leasing Strategy of a Shopping Centre
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2. Leasing strategy for a new shopping centreNo need to be by Deed -- Conveyancing and Property Ordinance S.4(2)(d): (exclusion): the grant, disposal or surrender of a lease taking effect in possession for a term not exceeding 3 years (whether or not the lessee is given power to extend the term) at the best rent which can be reasonably obtained without a premium;
PQSL: Leasing Strategy of a Shopping Centre
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2. Leasing strategy for a new shopping centreValuation of ShopComparison method - nearby shops of same categories, rateable value etc.Zoning methodVacant and to let? Should the shops next to each other will have same unit rent? But in reality not, as there is a tenant mix?PQSL: Leasing Strategy of a Shopping Centre
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Part 3 Tenancy AdministrationPQSL: Leasing Strategy of a Shopping Centre
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3.1 Tenancy AgreementTerms Area? State or not? Referring to plan?Rent: including what?Any rent-free period, how to assess? Management or A/C charges during rent-free, what provision does given during rent-free
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3.1 Tenancy AgreementTermination and break clauses
Rent review- refer to arbitrator or expert witnessPQSL: Leasing Strategy of a Shopping Centre
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3.1 Tenancy AgreementExpert Witnessusually professionalrelies on own judgement for decisionmay be sued for negligenceappeal can be made on valuation errorsimpler procedurefee is variousArbitratormay not be profession made judgement on evidence submittedimmune from proceedingappeal only on point of law
cumbersome procedurefee follows the scale of feePQSL: Leasing Strategy of a Shopping Centre
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3.1 Tenancy AgreementOption to renewUsers requirement? Whether other use require landlords approval?Submission of gross receipt for T/O rentLandlords obligationInsurance and Indemnification
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3.1 Tenancy AgreementTenants obligationMaintenance responsibility -- usually landlord be responsible for external and structural while tenant to non-structural and internal repairSub-lettingStamp DutyPQSL: Leasing Strategy of a Shopping Centre
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3.2 Technical and Management issuesFitting out requirementMOE requirementAir-conditioning provisionElectricity provisionLocation of lifts and escalatorsDirectional sign - directory and ceiling hanged
PQSL: Leasing Strategy of a Shopping Centre
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3.2 Technical and Management issuesToilets facilitiesTelephone ? Where and how many ? TypesATM machine/bankSeatsLandscapingAmbient musicOdour or smellPQSL: Leasing Strategy of a Shopping Centre
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3.2 Technical and Management issuesMarketing and PromotionRegular events e.g. fashion show, car exhibition, lucky draw, seasonal greetingsVIP card to patronage - given respect for frequent shoppers
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3.3 Tenant mix review
Budgeting at the end of each yearReview the performance of the centre and the tenants performance, by categories and unit sale3 RRenew, Relocate, Remove
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3.3 Tenant mix review
Sales PerformanceRental PaymentManagement ProblemFinancial StatusCompetition with othersAny new replacement through application list or in the marketMagazines, Agents, etc.PQSL: Leasing Strategy of a Shopping Centre
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3.4 Interesting tips for Shopping Centre Shopfront transparent, signage, glass door, door handle etc.Shopfront design, attractivenessDecoration, routine or seasonalFlower pot, seatsDirectory - Pamphlet
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3.4 Interesting tips for Shopping CentreInformation DeskToiletsFoodcourt locationRestaurants - types and locationChain storesDept Store/Hypermarket as anchor tenant
PQSL: Leasing Strategy of a Shopping Centre
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3.4 Interesting tips for Shopping CentreDisplay areaBooth/kioskAmbience musicSkylightPQSL: Leasing Strategy of a Shopping Centre
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3.4 Interesting tips for Shopping Centre4 PPlacePricePeoplePromotionPQSL: Leasing Strategy of a Shopping Centre
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3.4 Interesting tips for Shopping CentreNew Concept for Retail Leasing -- 4 RRelationship - VIP for loyal customerRetrenchment - Use IT technologyRelevancy - create an imageRewards - give something back to shoppersPQSL: Leasing Strategy of a Shopping Centre
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Thank You!PQSL: Leasing Strategy of a Shopping Centre