Anchor Tenants Leasing Strategies in Retail Shopping Centers

Anchor tenants provide real benefit to a retail property.  The fact of the matter is that the choice of a retail tenant is likely to make or break the overall retail property performance.

When you own, lease, or manage a shopping centre or large retail property with an anchor tenant, it is imperative that you watch the interaction between the specialty tenants and the anchor tenant.  The relationship between the tenant types will help the property reach its ideal customer profile and tenant mix.  If the anchor is under pressure, it is likely to flow into the entire property.

Specialty tenants can feed of the anchor if the clustering and tenant mix is correctly handled.  Putting these well chosen smaller tenants outside the entrance to the larger anchor will help with the property vibrancy.

When leasing premises to anchor tenants, the fact of the matter is that the lease structure is special for both the property and the occupancy.  Here are some ideas to fit into the lease negotiations with these tenants.

  1. Choose a long lease term that gives stability to the property.  In these cases the lease term is usually 10 or 20 years.
  2. The option for the renewal of the lease should be 12 months to 24 months out from the end of the initial lease term.  This will give the landlord time to find a replacement if required.
  3. The property use or the tenancy use should be suitably broad to allow the anchor to comprehensively sell goods and services inside its branding.
  4. Special signage treatment will be needed for all tenants in the property.  Establish some standards for signage that can be applied in all locations such as pylons, bulk heads, frontages, roof, and mall.
  5. Get the permitted use clearly defined for all tenant premises across the property.  This will prevent conflict in sale of goods etc.  Do not give exclusivity to any one tenant unless there is no other alternative.  When it comes to defining permitted use it is better to be specific given that a midterm lease assignment may change tenant in occupancy, and you would not want a change to destabilise the property or the tenant mix in any way.
  6. Mix the locations of ‘destination’ tenants into the groups of ‘specialties’.  In this way you will get more people coming into and around the property.
  7. It pays to get monthly sales figures from all the tenants in a retail property.  The figures can be kept confidentially for collation into shop groupings.  The shifts in sales figures will tell you if the property customer base is changing or sales are declining for any single tenant or tenant segment.  The lease for the property will need to support the sales figure collation process.

A successful retail property is the result of lease planning and balance between the tenant groups of speciality, destination, anchor, and service.  Plan your retail property well and keep updating the tenant mix as part of an annual business plan for the premises.

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