Leasing Strategy of a Shopping Centre <ul><li>Date: 29 Jun 2002 </li></ul><ul><li>Speaker: Ivan Ng, Government Property Ag...
Contents <ul><li>Part 1 Types of shopping centre </li></ul><ul><li>Part 2 Leasing strategy for a new  shopping centre </li...
Part 1  Types of Shopping  Centre PQSL: Leasing Strategy of a Shopping Centre
1. Types of Shopping Centre <ul><li>Territorial -  Festival Walk, Times Square, Pacific Place </li></ul><ul><li>District -...
1.1 Determination of Types of Shopping Centre <ul><li>By location (district/accessibility)  </li></ul><ul><li>By size </li...
Part 2  Leasing strategy for a  new shopping centre PQSL: Leasing Strategy of a Shopping Centre
2. Leasing strategy for a new shopping centre <ul><li>What do we want?  </li></ul><ul><li>Location factors - transportatio...
<ul><li>Tenant mix (by categories) </li></ul><ul><li>Anchor tenant - don’t be dominated by Department store </li></ul><ul>...
<ul><li>Terms and conditions - both risky at the beginning, therefore a lower base rent + higher t/o rent and longer rent-...
2. Leasing strategy for a new shopping centre <ul><li>Leasing process </li></ul><ul><li>Finding tenant - by Landlord or th...
2. Leasing strategy for a new shopping centre <ul><li>Tenant Mix </li></ul><ul><li>by categories </li></ul><ul><li>by loca...
2. Leasing strategy for a new shopping centre <ul><li>How to determine the tenant mix? </li></ul><ul><li>Where you are (po...
2. Leasing strategy for a new shopping centre PQSL: Leasing Strategy of a Shopping Centre
2. Leasing strategy for a new shopping centre <ul><li>Chain store or theme store </li></ul><ul><li>Food and beverage - res...
2. Leasing strategy for a new shopping centre <ul><li>Turnover Rent (a profit sharing basis) </li></ul><ul><li>Mechanism -...
2. Leasing strategy for a new shopping centre <ul><li>From Tenant’s point of view: can pay a lower base rent while the Lan...
2. Leasing strategy for a new shopping centre <ul><li>Tenancy Agreement </li></ul><ul><li>Terms -usually 3 years certain <...
2. Leasing strategy for a new shopping centre <ul><li>Excluding from Land Registration Ordinance S.(3)(2) </li></ul><ul><u...
2. Leasing strategy for a new shopping centre <ul><li>No need to be by Deed -- Conveyancing and Property Ordinance S.4(2)(...
2. Leasing strategy for a new shopping centre <ul><li>Valuation of Shop </li></ul><ul><li>Comparison method - nearby shops...
<ul><li>Part 3  Tenancy Administration </li></ul>PQSL: Leasing Strategy of a Shopping Centre
3.1  Tenancy Agreement <ul><li>Terms  </li></ul><ul><li>Area? State or not? Referring to plan? </li></ul><ul><li>Rent: inc...
3.1  Tenancy Agreement <ul><li>Termination and break clauses </li></ul><ul><li>Rent review- refer to arbitrator or expert ...
3.1  Tenancy Agreement <ul><li>Expert Witness </li></ul><ul><li>usually professional </li></ul><ul><li>relies on own judge...
3.1  Tenancy Agreement <ul><li>Option to renew </li></ul><ul><li>Users requirement? Whether other use require landlord’s a...
3.1  Tenancy Agreement <ul><li>Tenant’s obligation </li></ul><ul><li>Maintenance responsibility -- usually landlord be res...
3.2 Technical and Management issues <ul><li>Fitting out requirement </li></ul><ul><li>MOE requirement </li></ul><ul><li>Ai...
3.2 Technical and Management issues <ul><li>Toilets facilities </li></ul><ul><li>Telephone ? Where and how many ? Types </...
3.2 Technical and Management issues <ul><li>Marketing and Promotion </li></ul><ul><li>Regular events e.g. fashion show, ca...
3.3  Tenant mix review <ul><li>Budgeting at the end of each year </li></ul><ul><li>Review the performance of the centre an...
3.3  Tenant mix review <ul><li>Sales Performance </li></ul><ul><li>Rental Payment </li></ul><ul><li>Management Problem </l...
3.4  Interesting tips for Shopping Centre  <ul><li>Shopfront – transparent, signage, glass door, door handle etc. </li></u...
3.4  Interesting tips for Shopping Centre <ul><li>Information Desk </li></ul><ul><li>Toilets </li></ul><ul><li>Foodcourt l...
3.4  Interesting tips for Shopping Centre <ul><li>Display area </li></ul><ul><li>Booth/kiosk </li></ul><ul><li>Ambience mu...
3.4  Interesting tips for Shopping Centre <ul><li>4 “P” </li></ul><ul><li>Place </li></ul><ul><li>Price </li></ul><ul><li>...
3.4  Interesting tips for Shopping Centre <ul><li>New Concept for Retail Leasing -- 4 “R” </li></ul><ul><li>R elationship ...
<ul><li>Thank You! </li></ul>PQSL: Leasing Strategy of a Shopping Centre
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Leasing Strategy Of A Shopping Centre

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Leasing Strategy Of A Shopping Centre

  1. 1. Leasing Strategy of a Shopping Centre <ul><li>Date: 29 Jun 2002 </li></ul><ul><li>Speaker: Ivan Ng, Government Property Agency </li></ul>JUNIOR ORGANISATION – Pre-Qualification Structured Learning THE HONG KONG INSTITUTE OF SURVEYORS
  2. 2. Contents <ul><li>Part 1 Types of shopping centre </li></ul><ul><li>Part 2 Leasing strategy for a new shopping centre </li></ul><ul><li>Part 3 Tenancy administration </li></ul><ul><li>Part 4 Past examination exercise </li></ul><ul><li>Part 5 Q & A </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  3. 3. Part 1 Types of Shopping Centre PQSL: Leasing Strategy of a Shopping Centre
  4. 4. 1. Types of Shopping Centre <ul><li>Territorial - Festival Walk, Times Square, Pacific Place </li></ul><ul><li>District -- Tuen Mun Plaza, Dragon Ctr </li></ul><ul><li>Local/Neigbourhood -- Wong Tai Sin Estate Shopping Centre </li></ul><ul><li>Thematic -- Golden Shopping Ctr </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  5. 5. 1.1 Determination of Types of Shopping Centre <ul><li>By location (district/accessibility) </li></ul><ul><li>By size </li></ul><ul><li>By quality and quantity of customers </li></ul><ul><li>By quality and quantity of tenants </li></ul><ul><li>By the Landlord’s intention </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  6. 6. Part 2 Leasing strategy for a new shopping centre PQSL: Leasing Strategy of a Shopping Centre
  7. 7. 2. Leasing strategy for a new shopping centre <ul><li>What do we want? </li></ul><ul><li>Location factors - transportation, competitors, complimentary facilities </li></ul><ul><li>Demographic factors - population, income group, age…. etc who would come and what do they want? </li></ul><ul><li>Design - numbers of shops and sizes </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  8. 8. <ul><li>Tenant mix (by categories) </li></ul><ul><li>Anchor tenant - don’t be dominated by Department store </li></ul><ul><li>Chain stores/Unique stores </li></ul><ul><li>Entertainment facilities </li></ul><ul><li>Location of tenants e.g. foodcourt etc. </li></ul><ul><li>In US, large department stores at both ends with small shops along the passageway </li></ul>2. Leasing strategy for a new shopping centre PQSL: Leasing Strategy of a Shopping Centre
  9. 9. <ul><li>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) </li></ul><ul><li>Fit-out coordination </li></ul><ul><li>Management, cleaning and security - inhouse vs contract out </li></ul><ul><li>Marketing and promotion </li></ul>2. Leasing strategy for a new shopping centre PQSL: Leasing Strategy of a Shopping Centre
  10. 10. 2. Leasing strategy for a new shopping centre <ul><li>Leasing process </li></ul><ul><li>Finding tenant - by Landlord or thru Agent </li></ul><ul><li>Agreed on location, term, use, area on rent </li></ul><ul><li>Sign the offer (binding) - payment of first month’s rent and deposit </li></ul><ul><li>Fitting out </li></ul><ul><li>Signed the Tenancy Agreement (usually later than possession date) </li></ul><ul><li>Stamping </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  11. 11. 2. Leasing strategy for a new shopping centre <ul><li>Tenant Mix </li></ul><ul><li>by categories </li></ul><ul><li>by location </li></ul><ul><li>by size </li></ul><ul><li>by price </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  12. 12. 2. Leasing strategy for a new shopping centre <ul><li>How to determine the tenant mix? </li></ul><ul><li>Where you are (position) and what do shoppers want to find in your centre ? </li></ul><ul><li>By survey, observation and analysis </li></ul><ul><li>Design of trade mix </li></ul><ul><li>Anchor tenant : department store </li></ul><ul><li>Category killers </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  13. 13. 2. Leasing strategy for a new shopping centre PQSL: Leasing Strategy of a Shopping Centre
  14. 14. 2. Leasing strategy for a new shopping centre <ul><li>Chain store or theme store </li></ul><ul><li>Food and beverage - restaurant or food court </li></ul><ul><li>Entertainment - ice rink, cinema, bowling centre </li></ul><ul><li>Apparel/cosmetics, F & B??? </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  15. 15. 2. Leasing strategy for a new shopping centre <ul><li>Turnover Rent (a profit sharing basis) </li></ul><ul><li>Mechanism - base rent or a % of the Turnover (gross receipt), whichever is the higher </li></ul><ul><li>On annual basis but receive monthly (to reflect season fluctuation) </li></ul><ul><li>Merits: </li></ul><ul><li>from Landlord’s point of view: while there is a guarantee of minimum income, the Landlord can receive more if the business is better than expected </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  16. 16. 2. Leasing strategy for a new shopping centre <ul><li>From Tenant’s 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 </li></ul><ul><li>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 </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  17. 17. 2. Leasing strategy for a new shopping centre <ul><li>Tenancy Agreement </li></ul><ul><li>Terms -usually 3 years certain </li></ul><ul><li>Why? </li></ul><ul><li>Excluding from Part V of Landlord and Tenant Consolidation Ordinance -- 6 mths NTQ </li></ul><ul><ul><li>Exclusion: A tenancy agreement for a fixed term of three or more years “ which contains no provision for earlier termination… other than for breach” </li></ul></ul>PQSL: Leasing Strategy of a Shopping Centre
  18. 18. 2. Leasing strategy for a new shopping centre <ul><li>Excluding from Land Registration Ordinance S.(3)(2) </li></ul><ul><ul><li>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: </li></ul></ul><ul><ul><li>Provided that nothing herein contained shall extend to bona fide leases at rack rent for any term not exceeding 3 years. </li></ul></ul>PQSL: Leasing Strategy of a Shopping Centre
  19. 19. 2. Leasing strategy for a new shopping centre <ul><li>No need to be by Deed -- Conveyancing and Property Ordinance S.4(2)(d): </li></ul><ul><ul><li>(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; </li></ul></ul>PQSL: Leasing Strategy of a Shopping Centre
  20. 20. 2. Leasing strategy for a new shopping centre <ul><li>Valuation of Shop </li></ul><ul><li>Comparison method - nearby shops of same categories, rateable value etc. </li></ul><ul><li>Zoning method </li></ul><ul><li>Vacant and to let? Should the shops next to each other will have same unit rent? </li></ul><ul><li>But in reality not, as there is a tenant mix? </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  21. 21. <ul><li>Part 3 Tenancy Administration </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  22. 22. 3.1 Tenancy Agreement <ul><li>Terms </li></ul><ul><li>Area? State or not? Referring to plan? </li></ul><ul><li>Rent: including what? </li></ul><ul><li>Any rent-free period, how to assess? Management or A/C charges during rent-free, what provision does given during rent-free </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  23. 23. 3.1 Tenancy Agreement <ul><li>Termination and break clauses </li></ul><ul><li>Rent review- refer to arbitrator or expert witness </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  24. 24. 3.1 Tenancy Agreement <ul><li>Expert Witness </li></ul><ul><li>usually professional </li></ul><ul><li>relies on own judgement for decision </li></ul><ul><li>may be sued for negligence </li></ul><ul><li>appeal can be made on valuation error </li></ul><ul><li>simpler procedure </li></ul><ul><li>fee is various </li></ul><ul><li>Arbitrator </li></ul><ul><li>may not be profession </li></ul><ul><li>made judgement on evidence submitted </li></ul><ul><li>immune from proceeding </li></ul><ul><li>appeal only on point of law </li></ul><ul><li>cumbersome procedure </li></ul><ul><li>fee follows the scale of fee </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  25. 25. 3.1 Tenancy Agreement <ul><li>Option to renew </li></ul><ul><li>Users requirement? Whether other use require landlord’s approval? </li></ul><ul><li>Submission of gross receipt for T/O rent </li></ul><ul><li>Landlord’s obligation </li></ul><ul><li>Insurance and Indemnification </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  26. 26. 3.1 Tenancy Agreement <ul><li>Tenant’s obligation </li></ul><ul><li>Maintenance responsibility -- usually landlord be responsible for external and structural while tenant to non-structural and internal repair </li></ul><ul><li>Sub-letting </li></ul><ul><li>Stamp Duty </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  27. 27. 3.2 Technical and Management issues <ul><li>Fitting out requirement </li></ul><ul><li>MOE requirement </li></ul><ul><li>Air-conditioning provision </li></ul><ul><li>Electricity provision </li></ul><ul><li>Location of lifts and escalators </li></ul><ul><li>Directional sign - directory and ceiling hanged </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  28. 28. 3.2 Technical and Management issues <ul><li>Toilets facilities </li></ul><ul><li>Telephone ? Where and how many ? Types </li></ul><ul><li>ATM machine/bank </li></ul><ul><li>Seats </li></ul><ul><li>Landscaping </li></ul><ul><li>Ambient music </li></ul><ul><li>Odour or smell </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  29. 29. 3.2 Technical and Management issues <ul><li>Marketing and Promotion </li></ul><ul><li>Regular events e.g. fashion show, car exhibition, lucky draw, seasonal greetings </li></ul><ul><li>VIP card to patronage - given respect for frequent shoppers </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  30. 30. 3.3 Tenant mix review <ul><li>Budgeting at the end of each year </li></ul><ul><li>Review the performance of the centre and the tenant’s performance, by categories and unit sale </li></ul><ul><li>3 “R” </li></ul><ul><li>R enew, R elocate, R emove </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  31. 31. 3.3 Tenant mix review <ul><li>Sales Performance </li></ul><ul><li>Rental Payment </li></ul><ul><li>Management Problem </li></ul><ul><li>Financial Status </li></ul><ul><li>Competition with others </li></ul><ul><li>Any new replacement through application list or in the market </li></ul><ul><li>Magazines, Agents, etc. </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  32. 32. 3.4 Interesting tips for Shopping Centre <ul><li>Shopfront – transparent, signage, glass door, door handle etc. </li></ul><ul><li>Shopfront design, attractiveness </li></ul><ul><li>Decoration, routine or seasonal </li></ul><ul><li>Flower pot, seats </li></ul><ul><li>Directory - Pamphlet </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  33. 33. 3.4 Interesting tips for Shopping Centre <ul><li>Information Desk </li></ul><ul><li>Toilets </li></ul><ul><li>Foodcourt location </li></ul><ul><li>Restaurants - types and location </li></ul><ul><li>Chain stores </li></ul><ul><li>Dept Store/Hypermarket as anchor tenant </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  34. 34. 3.4 Interesting tips for Shopping Centre <ul><li>Display area </li></ul><ul><li>Booth/kiosk </li></ul><ul><li>Ambience music </li></ul><ul><li>Skylight </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  35. 35. 3.4 Interesting tips for Shopping Centre <ul><li>4 “P” </li></ul><ul><li>Place </li></ul><ul><li>Price </li></ul><ul><li>People </li></ul><ul><li>Promotion </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  36. 36. 3.4 Interesting tips for Shopping Centre <ul><li>New Concept for Retail Leasing -- 4 “R” </li></ul><ul><li>R elationship - VIP for loyal customer </li></ul><ul><li>R etrenchment - Use IT technology </li></ul><ul><li>R elevancy - create an image </li></ul><ul><li>R ewards - give something back to shoppers </li></ul>PQSL: Leasing Strategy of a Shopping Centre
  37. 37. <ul><li>Thank You! </li></ul>PQSL: Leasing Strategy of a Shopping Centre
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