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Developing a Sales and Merchandising

Plan for the Common Area

Anita M. Blackford

President – Old Town Square Properties

Specialty Leasing In the Common Area,

What is it?ICSC Definition: The process of increasing shopping center NOI by licensing for a fee, usually one year or less, space within the common area of the center.

Had it’s start in the US in the late 70’s in Boston – Faneuil Hall Marketplace

Vendors have been renting stalls in Middle Eastern and European marketplaces for centuries.

First enclosed regional mall to implement a program was in Austin, TX in 1938 – Highland Mall

What is it now???

Multi-billion dollar business

Maturing portion of the industry

What is the Objective• Maximizing the common area space can yield high rewards,

it’s a delicate balance to improve the customer experience while preserving and increasing the value of the leased space.

• Owner Expectations– Income vs. image– Investment vs. expense

• Creating a Strategic Plan– Inventory– Restrictions– Revenue Streams

• Securing concepts that align with center merchandising mix

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Developing a Strategic Plan for the Common AreaA well executed plan should include :• Research - understanding of your shopping centers key statics

including; sales, demographics, market conditions, key retailers, redevelopment plans and leasing activity.

• Identification of restrictions and exclusives already in place.• Strategic common area merchandising plan that identifies

complementary uses that add to the merchandise mix of the existing tenants.

• “New to market’ and ‘pop-up’ stores to enhance the merchandise mix and bring excitement to the property!

• Generate income for the property!• Incubator for permanent tenant

Create a Comprehensive Common Area Strategic

Plan that includes :

• The number of carts/kiosks/retail merchandising

units with strategic placements to ensure that your

common area leasing program is successfully

maximized.

• A merchandising proposal

• Advertising opportunities

Know your Mall

#2

#3

Know the Best Entrances

Know Retail Zones

Fashion (Teens)

Children

Sports

Home Goods

Footwear

Entertainment

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Merchandising the Common AreaA Zone: Best uses, tenants, visuals and rents

B Zone: Better uses, tenants, visuals and rents

C Zone: Good uses, tenants, visuals and rents

Zone A

Zone B

Zone C

Unique Concepts for the Common Area

Retail Sales Set Rent Levels

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Visual Merchandising & Proper Fixtures

Sell the Product

Know Your Customer

Know what is Hot and what is Not!

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POP-UP Stores & Franchising

Branding is Big• Over the years, national retailers and celebrities have been discovering what

specialty retailers already know: a shopping center kiosk or RMU is a great sales

vehicle.

New Vending Concepts & Upgrades!

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ON MALL

ADVERTISING

IN- Mall Advertising

• Offer mix of media options, strategically

placed to reach shoppers who are in the mood

to buy. In mall advertising provides

opportunities to businesses to target

messages to potential customers at the point

of purchase.

IN MALL ADVERTISING

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STRATFORD SQUARE MALL

Opportunities are endless…

Throughout the duration of the partnership will include:

•The Goddard School Mural in the food

court near children’s seating area

• The Goddard School brochure

distribution in food court

• The Goddard School brochure

distribution at Concierge Service Center

• Ad inclusion in 200 Center Newsletters,

printed every month

Partnership: $800 per month

FELDMAN MALLPROPERTIES

“The Enrichment Experience”…Music, Art & LanguageSponsorship Package

Throughout the duration of the partnership Stratford Square Mall will provide:

• Distribution of Adventist GlenOaks Hospital promotional literature at Concierge Service Center

• Promotional literature rack to distribute Adventist GlenOaks Hospital marketing materials at Play Area

• Automatic participant in related in-center events including Family Days, Health Fair, etc.

• Exclusive health care partners for Stratford Striders ~ conduct interactive blood pressure screenings &

featured on brochures

• Re-Grand Opening of Play Area TBD to acknowledge and celebrate partnership.

Investment Commitment:

$3,000 per month starting May 1, 2010

FELDMAN MALL

PROPERTIES

“Get Treated. Get Well. Get Back to Your Life.” Sponsorship Package

CLASSIFICATION OF MALLS BY SALES PER SQUARE FOOT

• Retail real estate industry participants sometimes classify malls based on– The average sales per square foot of in-line mall tenants,

– The population and average household income of the trade area

– The geographic market,

– The growth rates of the population

– Average household income in the trade area and

– Geographic market

• Based on these factors, in general, – Malls that have a high average sales per square foot and are in trade areas with large

populations and high household incomes and/or growth rates are considered Class A malls,

– Malls with average sales that are in the middle range of population or household income and/or growth rates are considered Class B malls

– Malls with lower average sales and smaller populations and lower household incomes and/or growth rates are considered Class C malls.

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Projecting appropriate rents:

• By Use

• By Space

• History of existing deals

• Market comps-network and do your research know what the completion is charging for rent

– Rental rates can be determined through an analysis of retail sales and rents for comparable (peer) properties. Rent

Determining Rental Rates - Creating Value

A. Comparable

B. Percentage rent

C. Tenants that Generate Greatest sales volume

D. Function of sales volume Potential

E. Market Rent

Importance of Percentage RentANNUAL RENT/PERCENTAGE RENT FACTOR=BREAKPOINT

Breakpoint is the amount of sales where the retailer is deemed to be making money.

GROSS RENT-BREAKPOINT x PERCENTAGE RENT = LL PERCENTAGE RENT

Most Landlords feel that the retailer should pay some portion of the profits to them,

as the success of the retailer is likely due to the location in the shopping center.

$30,000 Annual Rent / 10% Rent Factor= $300,000 Breakpoint

$350,000 Gross Sales -$300,000 Breakpoint =$50,000 x 10% = $5,000

$30,000 Annual Rent/15% Rent Factor = $200.000 Breakpoint

$350,000 Gross Sales - $200,000 Breakpoint = $150,000 x 15% = $22,500

Difference of $17,500

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Show Me The MoneyClass A Centers

A Zone: Best uses, $5,000-$10,000 Month

B Zone: Better uses, $3,500-$5,000 Month

C Zone: Good uses, $2,500 – $3,500 Month

D Zone: Vending & Service uses, $1,500- $2,500 Month

Class B Centers

A Zone: Best uses, $3,000- $6,000 Month

B Zone: Better uses, $2,000-$3,000 Month

C Zone: Good uses, $1,500 – $2,000 Month

D Zone :Vending & Service uses, $800 - $1,500 Month

Class C Centers

A Zone: Best uses, $2,000-$4,000 Month

B Zone: Better uses, $1,500-$2,000 Month

C Zone: Good uses, $1,200– $1,500 Month

D Zone: Vending & Service uses, $600 - $800 Month

Class “B” Center COMMON AREA RENTAL RATES

RMU $1,200 – $2,000 per month January - October

$5,000 - $6,000 per month November & December

*$75.00 monthly marketing charges

*$75.00 monthly utilities fee

Kiosk $1,800 - $2,500 per month January - October

$5,500 - $6,500 per month November & December

*$75.00 monthly marketing charges

*$75.00 monthly utilities fee

Week-end Rates $250 - $500 per day

$500 - $1,500 per week-end

* Many developers include the extra

charges in the gross rent.

THANK YOU

• Questions/Comments?

Anita M. Blackford President - Old Town Square Properties, LLC

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3. Select this course: Developing a Sales and

Merchandising Plan for the Common Area

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