Landlords, mom-and-pops make good teams, panel says
Publish Date: February 20, 2015
“I’ve done everything, even babysit their kids,” said one attendee at an SCTLive event titled “Nurturing Independent Tenants,” in San Francisco this week. Panelists and others discussed the best ways to seek talented entrepreneurs and help them succeed and grow into retail chain operators. “Many times local tenants are stronger at what they do than we are at what we do,” said Richard Wolf, senior vice president of leasing at Madison Marquette. “We have a lot to learn from them.”
Particularly in California, a variety of ethnic minority retailers serve their growing communities and make excellent shopping center tenants, panelists said. Immigrant communities can be great sources for landlords scouting out entrepreneurs wanting to launch a retail business, said José de Jesús Legaspi, president of The Legaspi Co., which operates a multitenant marketplace within Macerich’s Desert Sky Mall, in Phoenix. “They are willing to take risks,” Legaspi said. “They move faster than the big retailers. And they inspire more consumer loyalty than big chains.” The Legaspi marketplace collection of tenants selling Hispano-centric goods and services has become a big traffic draw, with 68 percent of those visitors going on to shop at the mall’s traditional in-line tenants, he says.
Kimco Realty hired Korean-speaking brokers and speakers of other languages to help lease its Cupertino (Calif.) Village center, which sits across the street from Apple’s headquarters and caters to Asian shoppers. The decision has proved so successful that the firm is spending about $20 million to upgrade and expand the shopping center, said Nicole Hauscarriague, senior director of real estate for the firm’s Northwest region.
Once the tenant is signed, a landlord should help make sure it gets started on the right foot. “Construction costs can kill you before you even start,” said Sam Hudda, president of Sam’s Jewelers, which operates mall stores throughout the Bay Area. Sam’s serves a largely Hispanic clientele, with pieces selected specifically to appeal to a Roman Catholic heritage.
Kimco’s KEYS incubation program supports and nurtures new retailers, and several other big landlords have similar internal incubation programs offering counseling and reduced rents to small tenants with potential. “Investing in curating tenants can be rewarding,” Wolf said. “But financial pressures don’t allow most redevelopments to spend the time.”
Smaller and temporary tenants are often not included in the center’s social-media program. But such tenants should get special help on the shopping center’s Facebook page, said Linda Johansen-James, president of American Kiosk Management, which operates about 800 kiosks for such brands as Proactiv and looks for new retail kiosk concepts to manage and nurture. “In the past, independent tenants could rely on the traffic created by the center,” said Johansen-James. “But with traffic dwindling, we have to send a lot of emails.”
When a small tenant is having trouble making ends meet and wants a rent reduction, landlords should encourage them first to talk to their suppliers and/or utility providers to help reduce expenses, Wolf said.
Panelists agreed that there is a fine line between nurturing an independent tenant that will grow and creating a professional temporary tenant that is happy to just coast along.