Property Type, Retail 2021-05-14 08:00:00

Property Type, Retail

Retail property types are properties used to market and sell consumer goods and services. This category includes single tenant retail buildings, small neighborhood shopping centers, larger centers with grocery store anchor tenants, and "power centers" with large anchor stores.

Anchor tenants are those that draw in customers. They are surrounded by small retail tenants who benefit from the presence of anchor tenants. Indoor malls generally have several anchor tenants, which are spread out on the edges of the property. The anchor tenants are strategically placed on the edges of the mall property to maximize foot traffic in between them, giving smaller tenants a better chance to make sales.

A strip mall or outdoor mall may also have tenants. There may be several anchor tenants at these malls, although only one is not uncommon. As outdoor/strip malls have displaced indoor malls, indoor malls have lost many anchor tenants. This is a downward spiral for the indoor mall. As anchor tenants disappear, small retail businesses in the mall suffer and eventually close. Foot traffic continues to dry up as more businesses close, and the downward cycle continues.

A power center is a type of outdoor mall. It contains several big box retailers such as Best Buy, Ross, Home Depot, and Target. These big box retailers are anchor tenants.

Retail lease types span the spectrum. These include single net, double net (NN), triple net (NNN), and gross leases.

Retail is dominated by the business cycle, as the space is consumer-driven. When the business cycle is expanding, consumers are being hired and are flush with cash to spend. As the cycle declines and consumers are laid off, retail feels the impact through decreased sales.

Retail leases are long-term. But retail can also be a demanding customer, requiring more up-front modifications to make a space work for them.

 


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