How to engage quality retail and hospitality tenants

Market conditions remain challenging for the retail and hospitality sectors still feeling the impact of the global pandemic. What steps should landlords take to keep and attract quality tenants?

September 02, 2022

There’s no denying that the world we live in now is very different from that of two years ago. Globally, the pandemic and its resulting lockdowns forced changes in how we live. 
From our daily routines and working practices, to shopping and dining habits, consumer behaviour evolved across all markets.

Alongside tourism, the hospitality and retail sectors were among the hardest hit by these changes. We’ve turned a corner though, looking to the future with optimism and enthusiasm. So, the question now becomes:

How do agents, developers and landlords engage existing and future tenancies in our new world?

We tapped JLL’s Head of Retail Sales and Leasing, and Metropolitan Sales, Nilesh Patel, for an update on the market. With over 15 years’ experience in retail sales and leasing, specialising in the Auckland CBD and fringe, he has been working closely with clients to navigate the new retail landscape. Ahead, he also weighs in on how to attract quality retail and hospitality tenants.

Market update

Market conditions are still very challenging for the hospitality sector, according to Patel. “Staffing has been the major issue for hospitality, in conjunction with minimum wage increases, rising cost of goods, reduced patronage, all putting pressure on the sector.”

The rapidly changing nature of the retail industry has accelerated existing trends while paving the way for new ones. With less foot traffic, retail stores in once-dominated strip locations have increased their online presence to better reach their customers. It’s no longer simply about getting customers in store – it’s about delivering an omnichannel brand experience. People are doing their research online before going to purchase. Customers already know what they want. The old path to purchase has changed and, in turn, retailers’ focus.

Retailers are now carefully considering their store size and locations to ensure the most cost effective solutions.

This means re-evaluating their network of bricks-and-mortar stores. By pinpointing lower-performing outlets and reallocating focus to more profitable locations, retailers can strengthen their brand through the interplay between the physical store and its online channels.


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Quality > Quantity

When a commercial property becomes vacant, the goal turns to finding a tenant as quickly as possible. However, it’s attracting quality tenants that’s paramount. This requires a strategy and thorough knowledge of the market.

1.    A book is judged by its cover 

First impressions count – and with the majority of new tenants drawn towards modern, clean-looking buildings, the focus is on appealing to their tastes with both the exterior and interior presentation. 

In order to make the best first impression, arguably the simplest and most effective step you can take is to give your property exterior a clean and a fresh coat of paint – and don’t underestimate the significant amount of planning and organisation this will require. You want prospective tenants to feel comfortable and welcome – so aim to create an environment they can see their business and employees thriving in. 

“Design features such as art, statement walls, living walls and bold interior choices will make a huge difference to your property’s overall appeal and feel,” suggests Patel. You should make sure that it appeals to the kind of tenant you’re hoping to attract, developing a theme around a main focal point such as a large mural or feature window.

2.      Research, research, research

Performing market research can be among the most effective ways to fast-track tenancies. “Meet the market and don’t rely on historical data,” says Patel. While the internet can provide you all sorts of broad data for your area, it’s better to gather this information yourself as the location, size or age of your property can drastically change the demographic profile of your potential tenants. “For example, if your building is in a more tech-heavy area, you will need to focus on factors such as internet speed, while if your market employs a lot of parents you will need to consider on-site or nearby childcare facilities.” By regularly surveying your tenants on your customer service and amenities, you can gain critical insight into what matters most, improve loyalty and increase your chances of winning referrals.

Now tenants want a personal relationship with their landlord.

3.      Mates’ rates

If you’re struggling to fill a property, consider offering front-lease incentives. “Rent holidays or capital contributions are an effective strategy to lock in good operators.” The amount of incentive will vary from situation to situation, but is usually associated with the length of the lease term.

4.      Use less to get more

The built environment accounts for approximately 36 percent of global energy consumption and nearly 40 percent of total direct and indirect carbon dioxide emissions. 

Since the government announced a climate emergency in 2020, tenants have become acutely aware of buildings’ efficiencies. 

“Increasingly we’ve seen tenants veer away from cheaper properties to pay premium rent for buildings that have superior energy efficiency and more sustainable management.” 

While implementing more sustainable measures involves upfront investment, these costs are more often than not offset by the returns and benefits for all involved. 

There are some simple ways to make your property more energy efficient, including double glazing, LED light bulbs and insulation.

5.      Acts of kindness

Compassion and empathy will go a long way. At the beginning and throughout challenging times, they chose you, so now it’s your turn. “Demonstrate compassion for what retailers are going through during tough times as there are many factors outside of their control.” It’s a partnership so work with your clients to strategise ways to improve footfall.

6.      Think long-term

A longstanding tenant provides stability and predictability. “Landlords should adopt a long-term outlook on lease negotiations.” The short-term pain will be outweighed by the long-term gain.

The future’s looking bright.

7.      Strong relationships

Now, more than ever, tenants want a personal relationship with their agent. Where possible, face-to-face contact gives tenants confidence. Building strong relationships increases the likelihood of tenants leasing space now and later down the track. 

“Have frequent conversations with them – don’t wait until rent review time to have the conversation,” recommends Patel.

8.      Looking to the future

While the pandemic has served to accelerate changes that were already underway, it’s also spurred exciting opportunities for innovation among retailers. 

Society has changed, so our spaces need to evolve too.

Landlords and tenants who utilise this opportunity will undoubtedly be those that thrive. We also need to meet in the middle. 

“Strip retail leasing will continue to be a challenging market over the next one to two years. There is a large gap between landlord and tenant rent expectations, so a bit of give and take on both sides is needed,” believes Patel. 

“However, with all international borders now open and more workers making the effort to work from the office, the future’s looking bright.”

Contact Nilesh Patel

Head of Retail Sales and Leasing, and Metropolitan Sales

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