Even with the rise of online shopping, the majority of sales still go down in physical stores. There's an enduring love affair with brick-and-mortar shops that just won't quit.
What does that mean for your brand?
It's not just about setting up shop anymore. Consumer expectations are high, technology is evolving faster than ever, and the retail landscape is constantly shifting.
Why? Elevated consumer expectations, advanced technologies, supply chain innovations, and progressive industry trends — to start.
It’s a tough world out there.
Let's take a quick peek at how multi-site retail organisations are stepping up their game in managing their full commercial real estate lifecycle, from maximising retail space value to optimising project lifecycles, tracking lease portfolios, capitalising on the power of IoT for operational excellence and more.
The State of Retail Real Estate
By August of 2023, the UK vacancy rate was 2.9%, although this rose to 5.3% for shopping centres. In London, the vacancy rate was 2.6% as take-up reached a 12-month high in Q2. Increased financing costs, reduced availability of capital, and elevated input costs like land and materials have slowed construction.
Plenty of demand still exists for prime retail corridors, and given the spare supply outlook, the probability is high that the retail real estate market will remain tight throughout 2024
Smaller neighbourhood centres are gaining traction, but high inflation has raised the costs of materials and labour, resulting in greater insurance premiums and payouts. Nevertheless, people are starting to prefer a smaller, familiar, and personalised shopping experience.
Pain Points in Retail Real Estate Management
Managing the full real estate lifecycle can be challenging and complex. Common issues like selecting new sites, managing lease scenarios, and extended project timelines can cost a business time and money.
Maximising Retail Space Value
Leveraging real estate site planning and market analysis are the beginning stages of the process flow. This is where you identify goals from a real estate strategy standpoint. Think about running a demographic and psychographic analysis to determine market preferences. Then you can tailor the space accordingly.
Consider developing a concise budget that includes all pre-opening expenses. Then, prioritise these expenses based on necessity and the potential ROI.
Streamlining Retail Real Estate Management
The first step to optimise any workflow is consolidating data. This requires a unified solution for the retail real estate lifecycle that enables a business to make smarter, data-driven decisions.
The right tools will consolidate disparate systems of data from site selection, project management, lease administration and transaction management, and facility and asset management, to ensure everyone is looking at the same information.
A comprehensive platform enables retailers to manage lease agreements from initiation to expiration, enhancing accessibility and data accuracy, while reducing the risk of inconsistencies or even missed lease expirations. This type of holistic view allows stakeholders to make more strategic decisions.
Enhancing Decision-Making with Data
Turning raw data into actionable insights requires clean data visualisation. Since 65% of the population are visual learners, the best way to reach people with data is through graphics.
Think about it. Before we start to read, we absorb data through picture books. It’s the first way our brains learn to take in information.
Visual learning includes innovative dashboards. From property acquisition and portfolio management to strategic planning and operational efficiency, this technology is empowering.
What do data-driven decisions result in?
- Validated compliance and simplified reporting
- Holistically managing landlord relationships
- Knowing where the business is exposed
- Better understanding of TCO by type of lease
- Reduced overpayments
Real-time data gathered through configurable dashboards provides immediate visibility into critical retail metrics.
Maintenance Management
It doesn’t matter how smart you are when it comes to buying retail real estate, if you’re not taking care of it effectively.
A diversified CMMS (computerised maintenance management system) and a trusted service provider network help retailers navigate an increasingly competitive market.
Project Management and Expense Control
Only 34% of organisations complete a project within budget. Real estate project management for retail is all about streamlining construction, openings, and capital improvement projects to enhance your schedule and budget.
Full budget management capability helps a retailer:
- Oversee the financial aspects of all work being done
- Tracking estimates
- Maintaining contracts
- Managing the entire project lifecycle
It’s always wise to craft budgets that encapsulate bid-related expenses and project requirements. That way there’s no surprises down the road!
Bidding and Contractor Management
You’ll get the best opportunities when you combine everything into a single source of truth.
A single platform for bid management streamlines processes, centralises data, and enhances collaboration, to elevate the bidding experience. This will ensure easy access, reduce redundancies, and foster a better understanding of bid details.
Performing a Comparative Analysis of Bids
Bid analysis is a crucial tool for mitigating risks and ensuring the success of projects. A few ways to perform a comparative analysis are:
- Implement a weighted scoring system
- Establish clear bid evaluation criteria
- Combine quantitative metrics with qualitative assessments
Compliance and Financial Auditing
It’s important to gain a thorough understanding of local, state, and federal regulations governing retail real estate. Navigate zoning and land use regulations specific to your potential acquisitions. Understand the implications of these laws on property development, use, and modifications
The retail real estate industry is heavily regulated, with strict standards for lease accounting and financial disclosure. You want to make sure that your software solution keeps up with ASC, IFRS, GASB and other accounting standards and regulations.
Retail Lease Management Solutions
Dedicated lease management tools centralise lease information, key dates, and notification triggers, automating renewals, and ensuring you never miss a deadline.
When it comes to lease administration, features and functions tailored for multi-site retail include:
- Multi-location lease management
- Centralised lease database
- Lease abstraction including CAM reconcilation
- Automated Processes
- Bidding period management
What’s Next?
The retail real estate sector continues to evolve, as retail performance comes back to life after the pandemic. Store openings outpaced store closings in 2023, despite weaker retailers falling by the wayside.
Retail asset and lifecycle management software is evolving, whether that’s through installing smart thermometers or implementing lease management software. This can be used to operate assets more efficiently, make better decisions, and gain a greater competitive edge.
Ready to unlock the full potential of your retail real estate and facilities management? Find out how in the full eBook, Maximising Retail Success in 2024.
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