Who is an anchor tenant?

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Renting premises today is a more profitable business than production, so more and more entrepreneurs prefer to earn in this way. The hardest part of such a venture is finding the right anchor tenant. Let's find out what this phrase means and what features this type of lease has.

Who are tenants

Before defining an anchor tenant, it's worth remembering who is called a tenant. This is an individual or legal entity that enters into a written agreement with the owner of the building (or other property) for the right to use it. In return, the tenant undertakes to pay a financial reward to the owner. Its size and frequency of payments are specified in the contract.

In addition to residential and non-residential premises, equipment, land, vehicles and even entire enterprises can be rented out. By the way, renting various things is called renting.

Types of tenants

If you take into accountnamely tenants of retail space, then, as a rule, there are three types of them:

• Regular tenant. In most cases, he rents a small area, and therefore brings a very modest profit.
• Subtenant. Sometimes the rented area is too much for one company. Therefore, the "extra" space is re-leased to smaller organizations. It often happens that tenants make more profit on subleasing than their outlet located on the remaining territory.
• Anchor tenant. The most desired "client" for the owners of shopping centers. Why? Let's take a look.

Anchor tenant: what is it

To better understand the essence of such a lease, it is worth remembering the history of the appearance of shopping centers.

Because the cost of land on the outskirts of cities and beyond has always been lower, it has always been more profitable to build shops there. There was only one problem: how to attract buyers? After all, to get there, you need to spend more time and effort than just going to a store near your own home or work.

To solve this problem, preparing to open another shopping complex, the territory in it began to be leased to shops with unique products or very cheap ones. It was they who became the magnet that attracted customers to the shopping complex. Such tenants, who actually served as advertising for the entire complex, became known as anchor tenants. The profitability of a shopping center depends on their availability.

Features of this type of lease

For whatspecial features can you recognize the anchor tenants in the mall (shopping and entertainment centers)?

• On average, they occupy from 5 to 15 percent of the total area of premises. The maximum amount of territory they rent is no more than 50%.
• It is these stores (or establishments that provide other services) that usually attract the most customers to the mall, so their advertising can be everywhere in the mall.
• Often the place of the anchor tenant in the shopping complex is located on the second, third floor (or in other less attractive places). This is done so that, getting to them, a potential buyer can get acquainted with the products of lesser-known stores. For this kind of advertising, the landlord usually gives the agreed discount to the tenant or provides him with other benefits.
• As a rule, such outlet offers a wide range of goods at attractive prices for customers. Therefore, most often the anchor tenants of shopping centers are various supermarkets. Their most common specialization is products, chemistry or household appliances. Sometimes there can be several of them at once: for example, on the first floor there is a grocery supermarket, and on the third floor there are household appliances. The second floor and empty seats on the other two are distributed among small narrow shops and offices.

The Benefits of Anchor Leases for Mall Owners

Recently, building owners have increasingly preferred to have as many "anchors" as possible among their clients. Why is that?

• First of all, they attract customers on their own, giving other stores in the mall more visibility.
• The building owner spends less on advertising their space as the anchor tenant runs their own marketing campaign. By the way, sometimes he pays for the decoration of the facade of the building, or at least part of it.
• Such a tenant brings more profit than small retail outlets. By the way, there are times when the landlord does not even receive a fee for the area of used premises and utilities, but a percentage of the company's total revenue.
• Having a particularly successful "anchor" allows the building owner to raise rents for smaller retail outlets whose customer flow increases at his expense.

What are the benefits of an anchor tenant

Becoming an "anchor", the tenant is also rarely left behind and receives certain benefits.

• When choosing the location of your outlet in a shopping center, it has advantages over small stores.
• Receives favorable rental terms due to its special status.
• The façade will usually feature the anchor tenant's logo or advertisement first.

Unfortunately, marketing strategies based on anchor leases are not always successful. Cases are known whenadvertised retail outlets went bankrupt, and the owner of the mall had to look again for a new "anchor". Therefore, along with a lot of advantages (compared to other tenants of the premises), the anchor also takes a significant risk. While the landlord will still benefit financially.

Types of "anchors"

It's worth noting that an anchor tenant is not always a store. It is clear that the main goal of any outlet is to make a profit, but often such clients specialize not in direct sales, but in the provision of certain services. Knowing this, we can distinguish the main types of "anchors".

• Supermarkets. In most cases, they are the anchor tenants of shopping centers. The list of such points can be listed by anyone who has been to at least a small shopping mall. Although most often these are grocery supermarkets, sometimes they may have a different specialization. For example, selling clothes, building materials or appliances.
• Gyms, fitness centers and similar establishments are often anchor tenants.
• Educational institutions. Of course, they are not as common and profitable as the first two types, but in some cases they are the "anchors". Usually these are private foreign language courses, schools for hairdressers, cosmetologists, manicure and pedicure masters, etc.
• Entertainment complexes. One of the most common types of "anchors" after supermarkets. These can be skating rinks, cinemas, swimming pools, bowling alleys, saunas, etc. As a rule,they are very convenient for landlords, since they can be surrounded by numerous restaurants or shops selling related equipment (for example, swimwear near pools, ice skates near ice rinks, towels and soaps and shampoos near saunas).

Examples of anchors

To better understand the essence of the concept under consideration, consider several shopping centers in the city of Moscow.

For example, take the well-known shopping center "Schelkovo". Despite the fact that it has only two floors, more than two hundred retail outlets are freely placed on them. In this case, the main anchors are "Baskin Robins" (children's attractions and a cafeteria), "Real" hypermarket and "Centrfilm" cinema. All these places are distributed throughout the shopping center in such a way as to attract visitors to less popular points.

Another example is the shopping and entertainment center "Gagarinsky". It is interesting that, in addition to the standard "anchors" in the form of Auchan and Sportmaster hypermarkets, as well as branded clothing, jewelry and cosmetics stores, its advantage is its close location near the metro.

This short list of anchor tenants would be incomplete without mentioning the legendary GUM and TSUM, which have been "anchors" for many buyers since the beginning of the 20th century.

For this reason, the Central Department Store exists not only in Moscow, but also in Kyivand Minsk.

Why there are problems with anchors today

In the modern world, shopping centers are no longer a rarity. If ten years ago in small towns there were one or two of them, today there are about five such places in a settlement with a population of approximately 60-80 thousand.

If we talk about big cities or metropolitan areas, then there are dozens of shopping centers in them. All of them are usually quite similar to each other, as well as their "anchors". Usually these are supermarkets or fitness rooms, restaurants. Sometimes inexpensive branded clothing stores (as, for example, in Moscow's GUM).

In this regard, there is serious competition between shopping malls, especially those located in the same area, so building owners are forced to look for unusual anchor tenants so that their shopping complex stands out from the others. However, it is more difficult to find one in smaller towns.

After all, for example, the same ice rink, cinema or swimming pool is a rather expensive enterprise, and in small towns it simply will not pay off. In this regard, landlords are forced to come up with other ways to attract buyers. Therefore, today the anchor system is gradually becoming obsolete. Unfortunately, a worthy alternative has not yet been invented.