Business
Shopping Malls: Value-Added Solutions to Secure More Tenants and Position them for Success
The landlord and tenant relationship has changed over time, and we are seeing this shift take place across every real estate asset class. Real estate was always a transactional business, and between the time that a lease was executed and a potential renewal was negotiated, there was very little communication between parties. Whether it was a family renting an apartment to live in, or a company leasing an office to house their employees, or a retailer leasing a storefront to sell their goods, as long the space remained in good condition and the rent checks came every month, both parties fulfilled their commitments and everybody was happy.
When a tenant was deciding where to lease a space, the decision really came down to location and terms. But as competition for tenants continues to increase, landlords have started to leverage technology geared towards adding value to their tenants with the goal of differentiating their space from their competitors. By creating value-added services for their tenants, landlords have hoped to increase the desirability of their assets to secure the highest price per square foot along with building loyalty to increase renewal rates.
Technology has been used in the real estate industry for many years, but it was typically used to market available spaces and to create more efficiencies for the landlord to increase their bottom line. The latest wave of PropTech solutions have a very different purpose. They are designed to improve Tenant/Resident Experience. Landlords are moving away from the binary mindset of simply providing space, and they are injecting a culture of hospitality and service. I often even hear landlords now refer to their tenants as their customers.
Regardless of asset class, landlords are reevaluating their relationship with their tenants, and augmenting their offering with technology. In the office sector, there is no shortage of solutions on the market designed to enhance the Tenant Experience. Tenant Experience Apps enable a host of experiences from mobile access control, to bookable amenities, to controlling the temperature and air quality in the space. In Multifamily, Resident Experience Apps offer similar features, but their main objective is to build a sense of community amongst their residents. The thesis behind this technology is that if a resident builds strong ties to the other residents in their building, their likelihood of renewing at the end of the lease increases exponentially. In a prior article I detailed the tenant focused solutions that Prologis has deployed in the Industrial sector, including EV chargers for their tenants’ fleet of trucks, dynamic truck routing software to increase shipping efficiency, and rooftop solar to help their tenants save on energy while being more environmentally friendly. In today’s article, I wanted to focus on how shopping mall owners are leveraging technology to increase value for their retail tenants.
Shopping malls have been under massive pressure well before the pandemic. A combination of changes in shopping habits (primarily due to online shopping), paired with the fact that too many malls were built too close together, resulted in the closure of many shopping centers. One tactic that seemed to work to bring shoppers into the mall was to include attractions such as rides, rope courses, skating rinks, and a variety of entertainment options. I recently wrote an article about the ways that entrepreneurs were reviving retail centers by layering in Art and Entertainment experiences. Landlords are continuing to invest in attractions to drive foot traffic to their malls in order to sign new retailers and to justify the rents that they charge. And in retail leases more so than other types of leases, the landlord’s incentives are directly tied to tenant’s incentives. Most leases within a shopping mall are Percentage Leases. In addition to a base rent amount, these leases usually include a monthly fee to the landlord based on a percentage of the Gross Sales of the retailer. Many landlords are turning to technology to continue to drive value to their tenants.
One of the leaders in this space is Hyperin based out of Helsinki, Finland. Hyperin’s customer is the shopping mall owners, but their purpose to add value to the retail tenants. They deliver this value via their platform with services that fall into 3 main categories:
Below I dive deeper into each module to detail how this landlord-provided platform adds value to their tenants.
Manage
The “Manage” component of Hyperin’s solution provides an integrated dashboard to administer all of the retail tenant’s customer communication as well as sales reporting, contracts, marketing, footfall key numbers and statistics in a single place. It enables multi-channel collaboration between the retailers and their customers. Instead of storing email and phone calls in spreadsheets or disparate databases, Hyperin’s platform securely stores all of their customer data in a single interface. The dashboard provides instant access to all of the retailer’s key metrics. Additionally, it details granular information including people counting, business intelligence and consumer analytics. Retailers automatically collect and display sales metrics on any desired timeframe (monthly, weekly, daily). Tenants can use the self-serve functionality to communicate their own unique branded offers either through direct mail or instant messages right from the portal.
These features can also be managed through HyperIn Mobile Intranet which leverages cutting edge tools to enable shopping malls’ employees and tenants to connect on-the-go. It brings an engaged workplace to their fingertips. The most frequent needs can be tackled any time and any place, including releasing internal news, submitting push messages, report sales, access to the shopping mall’s event calendar, personnel managements, access, and more.
Monetize
The “Monetize” component of Hyperin’s solution is designed to allow tenants to increase revenue by leveraging creative advertising and promotional spaces online and throughout the mall. This includes advertising on digital screens and kiosks strategically located throughout the shopping center. Tenants can create multiple advertising campaigns that target potential customers and promote customized offerings. Additionally, retailers can generate new revenue by allowing advertising from other companies to appear on their website and other underutilized space within their store. The platform takes care of all of the details including ad design, booking calendars, and acceptance of your terms and conditions.
Connect
The “Connect” component of Hyperin’s solution is designed to aid consumers to help find your location and build loyalty. One of the features includes wayfinding which provides tenants with guided step-by-step directions to your store (similar to GPS for driving directions) directly in the App. In addition to locating your store, retailers can upload digital floor plans which guide customers directly to the merchandise that they are looking for. Retailers can also create customized loyalty programs which incentivize customers to shop in your locations and continue to come back time-and-time again. As an example of loyalty benefits, retailers can provide customers with complimentary parking, QR code based coupons, and even the ability to pre order food at the food court or other restaurants within the mall. Hyperin ties everything together for retailers through customized websites with digital catalogs to provide a true omnichannel experience.
One Platform
What makes Hyperin such a compelling offering is that it provides retailers with everything that they need on a single platform. Mall owners and retailers can find many of the features mentioned above from individual single-use solutions. For example, there are many companies that offer services such as Wayfinding, or communications tools, or sales reporting software, but the majority of these companies are standalone solution providers that only solve a single problem. To add to these challenges, most of the single-use platforms on the market today have their own databases that lack the ability to integrate with other solutions. Not only does this require a retailer to purchase, operate, and train their teams on a many different platforms to run their business, but it also limits their ability to aggregate all of the data together to make informed decisions. For example, being able to measure footfall traffic is critical, but this metric lacks context if you are not able to overlay other data on top of it to decipher the exact reasons why traffic increases or decreases. However, if you are able to augment footfall reporting with data on company promotions and advertising campaigns, retailers can determine what activities are directly responsible for driving consumers to their store.
In the hyper competitive retail industry, retail tenants need every edge that they can get. Most retailers do not have the resources that the industry titans like Target, Walmart, and Kohl’s have to constantly analyze consumer behavior and quickly adjust to changes in the macro environment, making it incredibly difficult to compete head-to-head. Hyperin was built to even the playing field by arming retailers of all sizes with industry leading technology.
Tenants Have More Power
Hyperin is an example of technology that landlords provide to their tenants to differentiate their real estate from other similar locations. As the real estate industry continues to get more challenging, leverage has shifted to the tenants who have more negotiating power. There are more vacant spaces than there are tenants to fill those spaces, so landlords have to work harder and get more creative to lure tenants. In the past, a landlord’s only lever to pull was reducing price per square foot to increase interest from prospective tenants. While downward pressure on rental rates continues to create challenges for real estate owners, PropTech solutions provide them with additional tools to make their spaces more appealing to tenants. If landlords can deploy creative solutions to not only aid their tenants in reducing non-rent costs, but to also improve top line growth, they can position their vacant spaces with competitive advantages. This will help them secure tenants with the best possible terms while increasing the likelihood of retaining and renewing leases upon expiration. The real estate industry continues to change, and technology holds the keys to success.
In you are interested in learning more about Hyperin, please check out their latest press release on how retailers are leveraging Green Ads to win more business: Link Here
