Turning Around Troubled Shopping Centers: Strategies to Make Money in Difficult Markets
Retail is a popular commercial real estate investment sector for investors who prefer longer leases and lower maintenance requirements. While there are numerous types of retail stores that tend to perform very well, there are also shopping centers that have been on an extended downturn over the past two decades. For instance, indoor shopping malls are no longer as popular as they were in the 20th century and the trend looks to continue as online shopping grows in popularity.
Individual markets might also be less popular among companies and investors alike because of high prices or a lack of foot traffic from a poor location. No matter the reason, finding out how to make money in a difficult market can pay dividends for your portfolio. The following looks at some of the strategies you can use to turn around a troubled shopping center.
Understand that You Can’t Change Locations
If you’ve already invested in a shopping center that’s located in a difficult market, you should first understand that you can’t change locations. Let’s say that several of the tenants in your shopping center are brands that are designed to appeal to young adults between the ages of 18-24. If the shopping center isn’t located near a college or large employment centers in the area, you might not receive the foot traffic that’s required to turn around the shopping center. It may also prove challenging to find high-quality tenants that are willing to give your retail property a strong consideration.
Review Your Investment Plan
If your investment is not performing well and the building is in a market that doesn’t appear to be advantageous for prospects, you should review your investment plan. If you’re in a difficult market, consider making improvements to your building that garner more attention from consumers and businesses. Consider updating your investment plan to more comprehensively account for the challenges you’re facing.
Speak with Current Tenants
Before you settle on a revitalized strategy, speak with your current and past tenants to gain more insight on why the market is proving to be difficult. They may have insight on why the shopping center isn’t performing as well as you’d like it to. Something as simple as outdated appliances and restrooms could be turning customers away.
The first step towards turning around a troubled shopping center is to make sure that the building is filled with reputable businesses that are guaranteed to be appealing to the main demographics in the area. To accomplish this goal, make sure that you advertise online. Whether you use paid online advertising or social media marketing, online ads allow you to perform targeted marketing campaigns that reach the exact types of tenants you’d like to have in your building.
An effective strategy for making money in a difficult market is to repurpose the building. If the market doesn’t appear as though it flip soon, the building itself may need to be repurposed for different types of businesses. For instance, dollar stores and banks almost always perform well even in mediocre locations.
Your current facilities might not accommodate the types of tenants that will allow your property to perform well. Consider seeking out developers who have experience with repurposing retail sites. While many investors use this as an opportunity to cash out, you could also stay on to reap the rewards.
Another option at your disposal is to use some of the space for item storage that companies can use to maintain same-day delivery services. Online sellers are constantly searching for local sites that can provide delivery capabilities for nearby consumers.
Keep in mind that repurposing a retail store doesn’t mean that you need to change the property completely. Instead, you should do away with the poorly performing brands for more appealing and profitable ones. Doing so may help you gain market success. You should be able to better understand how you can improve your retail facilities by studying the location that you’re in and the current economic conditions.
Every retail investor wants to earn high returns that never waver. However, some things are beyond your control. If your shopping center isn’t performing well, you don’t need to sell it off immediately. Instead, you can use the strategies and techniques mentioned above to revitalize your property.