It’s no secret that with vacancy rates reaching record highs, shopping center landlords have been more willing to accept non-retail tenants, including medical offices, schools and religions institutions. What few might realize, however, is that working with non-retail uses can sometimes be a boon for shopping centers, especially when it comes to professional services tenants such as financial advisors, insurance companies and accounting firms.
These types of tenants tend to accept longer lease terms than traditional retailers, are financially sound and often bring in additional traffic to the centers they are in, says Andre Koleszar, Atlanta-based vice president and regional officer with Regency Centers, a Jacksonville, Fla.-based shopping center REIT with a 44.9-million-square-foot portfolio. On average, professional services firms sign leases for 10 years, while a standard lease for a retailer would involve a five-year term.
“My perspective on them is they are great tenants to have. They tend to draw clients that might not otherwise come to the shopping center, most of them are quite solvent, we will likely enjoy a longer-term deal with them and they tend to renew. It’s a great return on investment,” says Koleszar.
Attracting a professional services firm to a retail property, however, is no easy task.
They tend to be sophisticated tenants with a unique set of requirements for their retail locations and, especially in today’s economic climate, are very concerned about spending money wisely, notes Greg Schuster, senior vice president and principal in the corporate services division of Cassidy Turley, a national commercial real estate firm. Schuster, who is based in the company’s St. Louis office, represents such clients as Allstate Insurance, Edward Jones Investments and H&R Block.