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Enhancing Shopping Centre Profitability through Optimized Tenant Mix and Synergistic Placement

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Publication TypeConference Paper
Year of Publication2024
AuthorsGrace Kelly Maureira; F.-Javier Heredia
Conference NameEURO24, 33rd European Conference on Operational Research
Conference Date30/06-3/07/2024
Conference LocationTechnical University of Denmark (DTU), Copenhagen, Denmark.
Type of WorkContributed presentation
Key Wordsresearch; real state; shopping centers; tenant mix; modeling; multi-objective optimization.
AbstractThe strategic allocation of tenants within shopping centers, known as "tenant mix," is crucial for enhancing profitability in the retail sector. This research delves into creating an ideal combination of retail categories and their placement to boost rental income, a primary financial source for mall operators. Utilizing integer linear programming, we propose a model that integrates the concept of tenant synergy at its core—a critical yet underexplored aspect in the literature. This model includes constraints based on the total leasable space available and the strategic distribution of store units. Drawing upon a dataset from 27 shopping centers in Spain, we construct a regression model to estimate base rent, positioning it as the critical component of our objective function to maximize rental income. Additionally, this objective function features a synergy-based scoring system as an extra component, designed to enhance sales revenues and create a balanced retail environment through strategic tenant placement. The e ectiveness of our model is demonstrated through several case studies, highlighting its potential to increase rental income and sales. Our findings o er mall operators a practical tool to optimize vacant spaces, facilitating strategic decision-making in the retail industry.
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