Historically, developers (landlords) would react to vacancy in their shopping centers by leasing space without understanding how the surrounding market area may have changed, and which retailers to properly target for the development. Developers who are responsible for managing properties should be more proactive with their developments in order to assess how the market area has changed over time.  Lifecycle of markets don’t change overnight but do change over time as the residential base grows older, thereby requiring different products or services or changes in the market composition (ethnic mix, change in income levels). As space becomes available, landlords need to be aware of what is the best fit for their development.  Knowing the best use of the space would allow the landlord to better target select retailers and secure better longer-term tenants that fit within the mix of the mall as well as the market area.

Furthermore, maintaining a balanced (mixed) array of retail tenants impacts the level of traffic in the center (day time and night time) and the overall reach or attractiveness of the shopping center.  Larger enclosed malls with department store anchors tend to draw from a much larger area due to the composition of the tenant mix.  Smaller strip plazas draw from a limited area and are largely a convenience based destination.

Traditionally, developers build shopping centers in response to a growing residential base.    As additional retail developments cluster around a particular intersection, developers would push to maximize the foot print of their development; however, with limited regard for market supply and demand.  The designs/layouts of the centers were largely based on planning restrictions imposed on the property, seldom on the composition or need within the marketplace.  Perhaps it has more to do with poor planning than poor building.

Developers/landlords need to know the highest and best use of their properties today but perhaps more importantly for tomorrow.