Anchor tenants today bring a lot of value to a shopping center and the tenancy mix. The right anchor tenants should be chosen on the match as it applies to the local shopper demographic. In some cases you may have a few major tenants of this type positioned strategically around the property.
So there are many different types of anchor tenants, some large, some small, and some being part of a much larger group or franchise chain. What ‘anchor’ would you see as appropriate for a new shopping center in your area or town or city? It is a question that arises very often as new shopping center developments are created or planned.
Retail leasing experts bring great value to a shopping center when they can introduce quality anchor tenants to the mix and the future of the property. Here are some questions to consider as part of providing a service like that:
- In what location should the larger tenant be located to optimise their function and integration with other specialty tenants in the building? To answer that question you will need to know why people will visit the property and how they will move through it.
- Understanding the demographic of the shoppers coming to the property will help with planning the leasing process, rentals, and market rentals. Essentially a good tenancy mix will underpin property performance in a major way. To get to know the shoppers and their needs, undertake a marketing survey in the area and review the transport methods that will bring people to the property. As part of that, understand the roads and highways that may have an impact on access and exposure to passing traffic.
- Most anchor tenants will require occupancy for a long period of time. That will usually be 10 or more years. They will ask for options for renewal as part of that initial lease negotiation process. In considering these facts the landlord should require an early advice as to option renewal. If the tenant does not require renewing their lease it is wise that the lease provides for notification of such at least 18 months prior to the event. In that way the landlord can start looking for a new tenant.
- The rental structures for this type of larger tenant will be different and sometimes based on turnover with a base rental. On a ‘per square foot’ or ‘per square meter’ basis the rents will be considerably less that the rent that is paid by the smaller specialty tenants.
- The anchor tenant should be heavily involved in the marketing of the retail property with all the other specialty tenants. There should be a marketing levy for all tenants to contribute to. As to how that levy is implemented and controlled is a question for shopping center management.
In closing on these points, it should be said that the lease structure for a larger tenant of ‘anchor’ status will likely be a lot different than the standard lease applied to the ordinary tenants. An expert retail leasing specialist can bring a lot of relevance to the lease negotiation process and thereby optimise the integration of the main tenant into the mix of others.