- One Of Realica S Three Shopping Centers Is Myriaden In The Mid Sized Norwegian City Of Flekkesund Here The Rental Cont 1 (548.03 KiB) Viewed 42 times
200 m2, the average rent is kr 2 600 per m2 per year and that each
tenant on average rent the space for five years. What is the annual
loss in rental revenue based on the observed process cycle
time?
One of Realica's three shopping centers is Myriaden in the mid-sized Norwegian city of Flekkesund. Here, the rental contracts are here not time-limited to five or ten years as most office contracts are. Contrary, rent agreements are made with a 60-day cancellation period. A tenant that notifies the company for instance by the end of March, will be charged for rent in April and May and will then move out by the end of May. During the pandemic, 20 of the 50 shops in Myriaden closed, mainly due to insolvency and bankruptcy. Realica is now in the process of finding new tenants for these vacant areas and wants to improve the effectiveness of the process where new tenants replace old ones. An important part of this process is to prepare the vacant area and make it look attractive for a new customer. In an ideal market situation, where Realica has many potential clients interested in renting shop space, the company's profitability will be influenced by the number of days that the areas stay unused. It is therefore important to see what can be done to shorten the process starting with the existing tenant cancelling the contract ending with the new tenant moving in and paying rent. The process is highly standardized and based on routines that have been developed over many years. By observing the process, the company has been able to document the following 12 activities in the process cycle: Days per Days Activity activity accumulated 0 0 Realica receives a cancellation notice from Tenant X. Cancellation period, according to contract. 60 60 61 Keys are handed over from Tenant X to Realica. Realica's technical team checks premises to see if a claim against the tenant can be made for any damages and what else needs to be done before new tenant can move in. 66 5 External contractors are contacted for a quote for the planned work. 6 7 8 1234 600 9 10 11 12 Damages repaired and refurbishment works are carried out. The Market Department inspects the shop and decides rental terms (such as price per square meter). Time elapsed before Tenant Y has signed a new contract. Discussions with Tenant Y to adapt the shop to the new tenant's needs. New round with contractors with quotes for remaining work Final inspection together with Tenant Y. Keys are handed over to Tenant Y, start of new rental period 1 5 74 28 14 4 20 7 7 1 1 73 87 91 111 118 125 126 127