Xymax Real Estate Institute released a report on the average occupancy period of office tenants*1 in May 2014. In the report we analyzed the duration of office tenants' occupancy, which is a period between the start of the lease and the tenant's departure. Now a similar research report featuring shopping centers, one of the important retail properties, is available.
In this research covering shopping centers with 30 or more tenants or those with 5,000 tsubo or larger retail floor, the average occupancy period, which is a period between the start of the lease and the timing when 50% of the surveyed tenants moved out from the property, is estimated with the Kaplan-Meier method*2. In addition, we have also estimated the average occupancy period of retail tenants in office buildings.
This is a useful indicator in various situations in real estate management and use: landlords and developers can use this as a reference of tenant turnover when estimating future performance of the property; retail business operators looking for a space for their store can use this as a reference when evaluating the shopping center.
|Findings from Research|
Figure 1 shows the rate of retail tenants who continue to stay in the shopping center at each point of time since the start of the lease. The rate is 100% at the beginning (0 year, 0 month), then it decreases as tenants leave.
The average occupancy period of retail tenants, which is the period between the start of the lease and the timing when 50% of the tenants moves out from the property, was 10.7 years (128 months). The graph shows a notable straight down vertical line at the sixth year (72 months from the start of the lease). The annual departure rate of the sixth year is 18%, a very high percentage compared to other years (Figure 2).
This is largely due to the typical lease terms of shopping centers. In shopping centers of Japan's leading developers such as AEON Mall and LaLaport, a six-year fixed-term contract is said to be the most popular terms in recent years for an initial lease contract when a new shopping center opens.