Property owners measure a shopping center by occupancy. Tenants and customers measure it by its mix. A center fully occupied by tenants that do not generate traffic for one another will begin to empty out within two years, while a center with the right mix will attract foot traffic that also fills the less desirable units.
What Is an Anchor Tenant and Why Is It Critical?
An anchor is a tenant that generates consistent foot traffic: a supermarket, pharmacy, HMO clinic, kindergarten, large convenience store or public service. The anchor usually pays lower rent per square meter, and this is intentional. It generates the traffic that makes it possible to charge higher rents for the smaller units around it. A property owner who tries to maximize the rent paid by the anchor undermines all the other leases.
The Complementarity Principle
The mix should cover the range of needs customers address during the same visit: food, healthcare, services, prepared food and some retail. Duplicating the same use five times creates internal competition and reduces tenants' chances of survival, unless it is a deliberate cluster such as a restaurant area.
Resilient Tenants vs. Sensitive Tenants
Some uses remain viable even during a weak economic cycle: basic food retail, healthcare, hair salons, repair services, education and kindergartens. Other uses are sensitive to the economic cycle: fashion, luxury goods, furniture and high-end restaurants. A healthy mix builds its foundation on resilient uses and adds sensitive ones as a layer that generates higher rents.
Ready for the next step?
Browse available commercial properties or get an offer for leasing out your own space.
Operating Hours and Foot Traffic
A tenant that operates only in the morning and a tenant that operates only in the evening do not keep the center active together. Good tenant-mix planning considers operating hours: retail in the morning, services in the afternoon and food in the evening. This keeps the center active throughout the day and creates a sense of steady demand.
What to Include in the Lease
A precise permitted-use definition, so the tenant cannot change its line of business and undermine the mix. Restrictions on internal competition where lawful and proportionate. Mandatory operating hours, which are critical in a shopping center. Contributions to operating expenses and the center's marketing. And security provisions that allow swift action if the tenant ceases operations.
How We Get Involved
Flamingo builds the tenant mix before the first tenant signs, instead of filling space based on incoming inquiries. This sometimes takes an extra month, but it affects the property's value for years.
