Success with South Florida strip malls requires a carefully selected blend
With the growth of the suburbs in the 1950s, strip malls often became a vital part of the landscape. Sometimes called village greens, they were the new downtowns for bedroom communities that didn’t necessarily have an actual downtown.
Over the decades, though, the strip mall’s reputation has waxed and waned. Sometimes seen as essential—but often seen as a necessary evil or even a symptom of suburban sprawl—there is no escaping the fact that strip malls provide two key necessities for consumers: convenience and service.
With this in mind, it’s no small wonder that strip malls can arguably still claim a role as the town square. And boy, are they common in Florida; big and small cities alike.
What makes a strip mall?
Generally speaking, strip malls come in three sizes, each based on square footage and occupants:
- Community centers range from 125,000 square feet to 400,000 square feet, and usually contain supermarkets, box stores, and large discount stores.
- Neighborhood centers range from 30,000 to 125,000 square feet and may contain one supermarket and a mix of convenience stores (defined broadly as anything that provides a convenient service).
- Strip centers are less than 30,000 square feet and contain convenience stores.
Attracting lucrative tenants to these centers is not always an easy task, especially since it’s often impossible to accommodate large, nationally known anchor stores. That being said, there are numerous prospective tenants. And creating the perfect blend of them requires flexibility and creativity, all while keeping a constant eye on convenience.
How to create the right mix in a strip mall
Unlike larger shopping malls, which are buckling under the strain of e-commerce competition, smaller shopping centers are able to provide a niche market for tenants who may be Internet-resistant or just service-oriented. These two traits are why consumers continue to need in-person shopping experiences—and strip malls.
Depending on space, the ideal combination of strip-mall tenants includes a mix of the following:
- Health and beauty (hair and nail salons, day spas, barbershops)
- Restaurants (it’s not so much about fast food, but more about casual and affordable dining)
- Fitness (yoga studio, circuit training)
- Service (dry cleaners, smartphone stores; medical and dental services are also a growing trend in smaller shopping centers)
- Entertainment (like an indoor children’s playground)
- A blend of the bargain and upscale boutiques
What do tenants want?
When considering the proper mix for a strip mall, it’s also important to understand what small-shopping-center tenants require. While some of these businesses may be part of a franchise, chances are that most will be privately owned. As such, they have a great interest in ease of access for potential customers to reach them, adequate and convenient parking, and good visibility.
Because strip-mall tenants are smaller operations, there’s also a strong need for high foot traffic, and a proper mix of tenants can help boost that number. One technique is to consider “co-tenancy,” understanding that certain businesses have specific peak times. By creating a balance, it’s possible to keep the parking lot full all day long so each of the businesses can flourish based on patronage patterns.
What can the owners provide?
In many ways, owners of strip malls need to be hands-on. A specific set of skills not only keeps each storefront occupied, but they also help to keep the shopping center relevant.
- When it comes to rental agreements, don’t be afraid to be flexible and creative. Getting a strong tenant in could mean tenant-improvement allowances, early occupancy, a graduated rent structure, and free or reduced rent. It’s important to learn what works best for the tenant and for the owner.
- It’s all about the details. Paying attention to landscaping, litter, signage, parking lot upkeep, night lighting, and other aesthetics can make current tenants happy and sway the decision of a brand-new tenant or one relocating from another strip mall.
- Speaking of current tenants, potential tenants will definitely speak to them. A satisfied tenant can be a tremendous asset to an owner.
- Consider upgrades. Perhaps there is an outparcel on the property that can be developed to house a single tenant with a drive-thru window.
- As always, owners should never neglect their due diligence. It’s important to know and understand the credit and financial stability of a tenant, as well as their operating history and experience. If a tenant is a relocation from another strip mall, it’s a good idea to get a better grasp on their reasons for relocating.
Working with a strong team
To help the process go more smoothly, owners and tenants should work with a skilled commercial real estate partner. Not only can professionals help find the perfect location for a particular business, they can also assist in putting together a winning combination of them for a particular shopping center.
Morris Southeast Group has a highly skilled and knowledgeable team of pros for all of your real estate needs, either as an owner or a tenant.
To learn more about our services including property management and investment opportunities, call Morris Southeast Group at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.
Tags: Commercial Real Estate Investing, Filling The South Florida Strip Mall, highly skilled and knowledgeable team, Mix of Tenants, rental agreements, strip mall
