Selecting Tenants in a Shopping Mall

As a developer of premium regional shopping malls, Homart Development Company designs, constructs, and leases new centers. Early in the development process, Homart negotiates and arranges accommodations for the large department store tenants. Once the department stores are situated and a general mall floorplan is known, Homart must decide how to lease the many smaller store spaces that complete the mall. The types, sizes, and locations of these smaller tenants play an important role in determining the financial success of a center. We formulated this problem of deciding a center's “tenant mix” as a nonlinear integer program and solved it using a linear approximation. Validation results show the method yields a potential 10 to 26 percent improvement in the present worth of a center.