by Michael Flight


Competion Map 1


There are four parts to evaluating and analysing Retail Real Estate for an investment. They are Location Evaluation, Credit Analysis, Financial Underwriting, and Property Condition. These four factors are applicable regardless of the property, whether it is a Single-Tenant building or a Super-Regional Mall.

The first step is to decide what are your acquisition criteria.  An acquisition criteria is your “mission statement” for the type of properties you aim to buy.  A well considered acquisition criteria will keep you focused on specific property types which will act as a sieve through which the properties you want and are capable of purchasing will get sorted through. For example, you might be at the beginning of your retail real estate investing career and are looking for lower price point strip centers with the potential to increase value through leasing vacancy and upgrading the appearance.  You would not look at regional mall packages (big and complicated) and would want to stay away from extensive redevelopment (demolition and rebuilding or environmental problems) because those types of properties require specialized knowledge that beginning retail real estate investors typically do not have.  In another situation, you may have a portfolio of multifamily residential or do not want extensive management hassles, so your criteria might be Net-Leased Single-Tenant retail properties.  Within the NLST category you may even get more specific that you will only invest in Quick Service Restaurants (QSR also known as Fast Food) in major metro areas or Dollar Stores in Tertiary Markets.

The first phase is the finding a property that fits your acquisition parameters. If the property is in the geographic area that you have targeted and fits the type, size and price range that you have set for your acquisition criteria then you would run a preliminary financial analysis to see if it currently or in the future for your redevelopment ideas is worth investigating further.

You will run through a lot of properties at this point looking for the one that fits your financial criteria or your vision to redevelop it into a better shopping center.  Once you find a property for sale you will examine the location features and the physical features of the property to see if it is worth spending the time doing a financial analysis.  This analysis can be used for properties that contain or might attract retailers, restaurant, entertainment uses, service businesses and medical uses.

Shopping Center/Retail Real Estate locations and the type of tenants for the retail real estate that are driven by two factors: the consumers located nearby and the proximity to those consumers.  In academic studies (Bellenger, Robertson, and Greenberg) (Grossbart, Mittelstaedt, Curtis, and Rogers) all things being equal, consumers prefer the closer shopping center or individual store.

The major components that go into shopping center/single-tenant net-lease retail real estate location are:

• Population surrounding the Shopping Center/Single-Tenant Net-Lease Retail

• Demographics Of Trade Area Population And Demographic Trends Of The Trade Area

• Retail Density / Draw At Intersection Or Surrounding Property Location

• Competing Properties On Or Near The Corner And Competing Properties Not Adjacent Within The Trade Area

• Drive Time Of Customers/Users

• Traffic Counts Of Street Or Streets Fronting Properties And Nearest Intersecting

• Visibility Of Property From Main Street Or Streets

• Signage And Pylon Signs

• Layout Of Building(S) And Common Area Improvements On The Site

• Access (Ingress/Egress) To The Property

• Parking: Building Square Feet To Parking Spaces Ratio; Parking Lot Configuration

Population Surrounding the Shopping Center/Single-Tenant Net-Lease Retail

A Trade Area is the geographic area from which a Shopping Center or Single-Tenant Net-Lease retail real estate property attains its customers, clients and shoppers. Additionally, many of the employees who work at the property also live in this area.  A Primary Trade Area is the surrounding geographic area from which 60-80% of the retail property/shopping center’s sales originate.  The limits that define a trade area will be distance (or in urban environments: travel time); natural barriers such as mountains, rivers and parks; man-made barriers such as railroad tracks or highways that may bisect a city and cemeteries. In certain inner-city neighborhoods the trade area also might be defined by one gang territory from another rival gang territory. In rural or far suburban locations the trade area could triple or quadruple in size to encompass the amount of population to support the required sales necessary to make a profit.  A common shorthand reference to Trade Area is when someone refers to “Rooftops” as in “Are there enough rooftops and more importantly the right type of rooftops” for the retailers concept.

Demographics of Trade Area  Population

Additionally, demographics, or the number and incomes of people in the trade area will determine the type of shopping center that serves the particular population. Demographics are destiny, in that specific retailers/service providers look for certain amounts of people with particular income levels.  Going back to the “rooftops” concept above; very few locations on earth can support luxury retail (an old leasing dog friend of mine refers to high end retailers as: Gucci, Pucci, Fiorucci and Sushi). On the other hand; drug stores, supermarkets and McDonalds are ubiquitous throughout the world in one form or another. Demographic reports will tell you how many people and households are located within a radius of the property.

Neighborhood shopping centers (grocery or drug store anchored) will typically have a 3 mile trading radius so your report should be in 1 mile, 3 mile, 5 mile radii in a suburban location.  If it is a “county seat” market in a rural area that is sparsely populated it could be a 3 mile, 10 mile, 25 mile. Conversely, if it is a dense urban area like New York or LA you might need a .5 mile, 1 mile, 3 mile since people take public transportation or walk.

Regional Malls typically draw from a much wider radius so that demographic reports will be 3 or 5 mile, 5 or 10 mile and 20 to 25 mile radii.

Demographic reports should always show population from the most recent US Census data plus current and future population estimates.  You will also need to know the number of Households and Household Income. More detailed reports show race, home ownership and daytime population estimates.  You would want to know this extra information if you are trying to lure specific tenants. For example a Hispanic or Asian grocer would want to know if those races are represented in the trade area.  Likewise, a sub sandwich chain or other restaurant that attracts a lunch crowd would want to know how many people are working in the area with the daytime population statistics.

Trade area rezised

Trade area rezised

In addition to the above example, demographic reports should also include statistics such as age distribution, income distribution, household size, and educational levels of achievement.  The trends in population are also noted. Is the population increasing or decreasing? Is the income going up or down? Is the population aging or experiencing a baby boom. It is always better to have increasing population and higher income levels which would signal disposable income.  However, you can also target niches in lower income or declining population areas because they might be underserved by retailers who specialize in marketing to those populations. For example, Tractor Supply has grown to 1900 stores since its founding in 1939 by selling merchandise to rural areas of the US and Canada.  Rural population has been decreasing and yet Tractor Supply sales have been increasing. A very good book for breaking down demographic trends and a good primer on demography is Big Shifts Ahead: Demographic Clarity For Business  by Burns and Porter.

Some retail developers and investors will also obtain “Psychographic Reports” for a trade area.  Psychographic Segmentation reports are similar to demographics in that they give you a profile of the population in a trade area of your retail property. Psychographic information explains a shopper’s likely spending habits, personality traits, lifestyles, travel and dining preferences, likely hobbies, spending attributes and values. Demographics explain “who” your buyer is, while psychographics explain “why” they buy.

Both Demographic and Psychographic analysis will help you lease to retailers that will be most profitable at the location of your shopping center or retail property.  When leasing a shopping center these reports can assist you to convince a particular retailer to open a location at your property or can assist you with targeting retailers that will add to the Merchandise Mix of your shopping center by providing goods and services the people in your trade area would prefer.

Retail Density / Draw at Intersection or Surrounding Property Location

Retailers are very similar to Lemmings, in that they follow each other to new trade areas.  You want the property to ideally be at the corner of the main and main intersection. You will know the meaning main intersection because there will hopefully be other retail development on two to four of the corners. More retail means more trips to that location.

They might be going to a supermarket one day and they might be going to a Walmart or Target the next day. They might decide to consolidate their trips and also visit a few service providers. They might decide to go get their hair done in the salon might be in an area where there is a store and so they can combine the trips.

You need to make sure that there is not only enough population surrounding the location but you also want additional reasons for consumers/clients to visit the location. Those could also be service providers like a health club or doctors offices however other retailers are the best draw.

Competing Properties On Or Near The Corner And Competing Properties Not Adjacent Within The Trade Area

The competition in a trade area will also be important. You would prefer most of the competition to be in the immediate area. You would also prefer that your shopping center or retail location is the top location in the market. It could be a great intersection and all the right retail tenants are at that intersection but you need to make sure you have the ability to attract people to your shopping center and not have a weak shopping center with one or two bacon anchor tenants and no real prospect of filling them because they’re just are not enough retailers who could successfully merchandise in the trade area. For example, let’s say you had shopping center on an intersection with four other competing shopping centers. And let’s say the other three shopping centers each had a supermarket. What is the likelihood of attracting One additional supermarket to that corner? Again it depends on the demographics but in all likelihood any other supermarket would realize that they would have to come in and slug it out with three additional establish competitors.

Additionally, you need to make sure that you’re shopping center within the entire trade area is positioned well. So you could be in a great intersection but the THE intersection could be a mile or two away. Tenants looking into locating in the trade area where you’re shopping center would be would naturally gravitate towards the dominant intersection and you are shopping center might have trouble leasing and merchandising properly.

Again you have to remember that the trade area has a set amount of spendable dollars. And very rarely do people make extraordinary trips to get to a trade area farther away.

Drive Time Of Customers/Users

Success for a retail property will not only hinge on the surrounding population, it will also depend if that population can get there within a reasonable amount of time.  Driving time takes into account traffic and traffic patterns. For example, a few months ago I was in California staying in Santa Monica. I had a dinner engagement with a friend in Marina Del Rey at 6:30pm.  The GPS told me it was 3.9 miles. The car trip took me 45 minutes.

Drive time also takes into account the type of items being purchased.   For groceries and everyday necessities the drive time to your property in an urban/suburban area should be short.  Not more than 15 – 20 minutes. For extraordinary items like refrigerators, expensive clothing and unusual gift items people will be willing to drive farther to the destination.

For Convenience, Neighborhood and Community shopping centers the drive time should be shorter.  For Power Centers, LifeStyle Centers, Regional Malls and Super Regional Malls people will travel farther.  For Outlet Centers and Festival Centers people will travel even farther. For those special High Street shopping districts like New York’s Fifth Avenue, Caesar’s Forum Shops in Las Vegas, Michigan Avenue in Chicago, Oxford Street in London, Causeway Bay in Hong Kong and Avenue des Champs Elysées in Paris people will travel the world.

Traffic Counts of Street or Streets Fronting Properties And Nearest Intersecting

Traffic Counts are the number of vehicles driving by the retail property on the street or streets that are adjacent to the property.  Preferably those street that have direct access to the property. Traffic counts are usually measured by Average Daily Traffic (ADT) and are a count of vehicular or pedestrian traffic on a 24-hour basis along a frontage street of a shopping center.  Street traffic counts can be obtained through local municipalities, county highway departments and state departments of transportation such as IDOT (Illinois Department of Transportation) and Caltrans (California Department of Transportation).

High traffic counts are desirable but the type of traffic is also important.  Is the speed slow enough that people in cars driving by can see the store signs or get in to the shopping center/retail property.  A major freeway directly next to the shopping center might have traffic counts as high as 100,000 ADT but if there is no exit for 4 miles in either direction those cars are not doing much for the retail property.

In Regional Malls and larger shopping centers you might also monitor the vehicular traffic at different vehicular entrances to the shopping center.  In Enclosed Malls, pedestrian traffic is monitored at entry doors and certain corridors as a way to analyze customer patterns and merchandise the shopping center.  Higher traffic areas also justify higher rents.

Visibility of Property From Main Street or Streets

Most Retail Property Investors will be investing in strip centers or single-tenant net-leased retail properties.  Those properties survive and thrive on visibility. Cars, buses and pedestrian traffic need to see the tenant signage.  You can have a very busy street but if the shopping center is down in a hole or way above on a cliff customers will not see the tenants and it will not be as successful as it could be.  A slightly higher elevation than the road is acceptable but you would prefer level all else being equal.

Additionally, obstructions to the visibility of the property is another negative factor.  We recently looked at a property in northern Wisconsin. Our acquisitions analyst drove 5 hours for a site visit only to find that the property was on a curve in the road and was completely obstructed by another building next to it.  It was something that could not really be seen as an issue from Google maps.

Municipal regulations also can affect the visibility of the property.  Some municipalities have zoning codes that require landscaping to completely obscure the view of the shopping center from the street.  I once had a city planner tell me he did not want to see the signs from the main street on a shopping center we were redeveloping. I explained to him that what he had in mind was a stupid idea since the municipality received 2% of all the sales generated at the shopping center and if people could not see the tenants they would keep driving across the street to the shopping centers literally in the next town where they would shop at competing stores.  Then further the tenants in our shopping center would move out and the vacancy created would also reduce the real estate taxes paid by the property. Thankfully with the election of a new administration this city planner moved on to some other unfortunate town he could ruin for the sake of pretty landscaping.

Finally, property owners themselves can reduce the visibility of the tenants by creating very strict sign criteria.  See Signage and Pylon Signs below.

Signage and Pylon Signs

Physical stores need customers to know about them and be able to find them.  Storefront signs and pylon signs (billboard type signs at the entrances or in front of property) in essence scream out to passing motorists … LOOK AT ME!

The shopping center or retail property should have at least one Pylon Sign (sometimes called a Monument Sign) and preferably as many as you can get.  In addition, the outparcel (Outlot) tenants will usually have their own pylon sign along with signage on 1 to 4 sides of their building. One trick to getting more signage is when you create the out parcel make sure the land is subdivided and it is on its own tax parcel.  Zoning usually allows separate parcels to get their own signage plus that tenant will also get its own tax bill to pay so it is separated from the shopping center Pro Rata share.

I prefer shopping center Pylon Signs with the name of the project (shopping center name) and the Anchor Tenants or Key Tenants (Junior Anchors that draw from a wider area or do lots of advertising).  The reason being is that people are looking for the anchors and people driving can only focus on a few things. A Pylon Sign with 10 to 20 small tenants listed on it becomes this mass of names which passing motorists then miss entirely.  It actually becomes visual white noise and defeats the entire point of the pylon sign concept. Most small tenants when they advertise will use the name of the anchor in their ads (as in … Next to Kroger or near Best Buy).

For in line tenants in a strip shopping center the facade should be a clean, flat background to make the signage visually “pop” as much as possible.  I would recommend different heights for facade to break up a long line of stores. The different heights are a visual cue for the eye to slow down at various points and focus.  Many anchor tenants will also have lease clauses that delineate they must have the highest point in the facade. Size matters to these guys. A great way to instantly add value to a center is a minor or sometimes major facade renovation along with having the tenants replace their signs.  A good lease will require a tenants to not only pay for removal of their sign but also upgrade their sign if you renovate the facade (a smart tenant will also limit this to once every 5 or 10 years). When acquiring a center or budgeting for a facade renovation we add $7500 to $10,000 per tenant for sign replacements to make sure every one is clean and new.

For tenant signs we recommend wall mounted, lighted, individually lettered with no visible conduits or wires.  We especially do not allow fluorescent backlit Box Signs which make the center look like an outdated dump. I look at a shopping center with a bunch of Box Signs as a great way to add immediate value with a change of tenant signs.   We prefer the tenants use their own prototype signage and their distinctive corporate logos. The different colors again add visual variety and those tenants spend millions of dollars on a corporate brand. Why not let that brand work for your property?   We have also encouraged them to apply for sign variances from the municipality to get larger signs because we want them to be a successful as possible.

With strip shopping center’s that have covered walkways or a canopy over the sidewalk and within certain enclosed malls do tenants also have a Blade Sign. A Blade Sign either attaches to the canopy overhead or to the wall above the door so that a pedestrian walking down the sidewalk or mall corredor can see which stores are on the path ahead of them.  Blade Signs also serve to indicate the entrances to the stores to pedestrians.

A Sign Criteria is usually an addendum to the lease which states what a tenant can install on the building.  Some landlords insist on every tenant having the same color individually lettered red signs in the same size and same font.  This creates a visual monotone effect which makes it hard to distinguish tenants at the shopping center.

When a tenant is successful the retail property owner is successful and in most situations successful tenants create additional taxes and jobs for the community.  Good signage and visibility are vital to the success of your project and assists the customer trying to find the store.

Layout of Building(s) and Common Area Improvements on the Site

Building layout and placement of the buildings and common area improvements within the shopping center are also important.  It is very important that the Offering Memorandum for a potential acquisition have a site plan which shows the buildings and improvements as they are arranged on the property.  Better yet is the addition of a leasing plan which shows the tenants, sizes of spaces and space/store numbers. When evaluating a rent roll you should compare store sizes and locations to what the tenants are paying.  Rents will typically be more for smaller spaces and higher visibility. Spaces in an out parcel with 3 small stores near the road should command higher rents than a 10,000 square foot space in the angle (“Crotch”) of an “L” shaped center.

Along the lines of the quote from master architect Louis Sullivan “Form follows function”, the location and design of each space within a shopping center will determine it’s leasability.  Which in turn will determine your income and cash flow generation opportunities.

Older shopping centers where sometimes built in the middle of a piece of land for parking both in front and the rear. Since retailers now only want one point of entry into their store and shoppers will naturally park in front of the store any of the parking behind the store if it is more than necessary to get trucks back there for delivery and a few parking spaces for employees is non-utilize land.  If that land is accessible and you could provide some sort of signage in the front it is an ideal space to either sell off or develop as self storage. Another great use for excess land behind a shopping center is senior housing or higher density residential housing if the zoning allows or you can get a variance to build it.

Additionally, and Concordia Realty has done this a number of times, you may have a less than stellar strip center or mall and you empty out a portion or all of the shopping center to free up a pad to build a larger anchor tenant.  We did this in Milwaukee where we built a multiscreen cinema at the rear of the property and an Office Depot towards the front side of the property. We relocated Walgreens out to a front pad and then emptied the rest of the 500,000 square foot mall.  Next we abated the asbestos and demolished the property preparing a pad for a Super Walmart. Today, Southgate at 27th and Morgan is a resoundingly successful shopping center.

Poorly designed shopping centers may also have obsolete bay sizes for the tenants, meaning that the stores are very deep and have narrow frontage.  An old Retail Real Estate joke is “If a space is 1000 square feet a developer will want to build it with 10 feet of frontage and 100 feet of depth and a retailer wants it with 100 feet of frontage and 10 feet of depth”.

Below are humorous illustrations originally done by John Baker for Adolfo Cruz which make fun of the forces that affect shopping center design:

Typical Shopping Center Design

Whats A Shopping Center Diagram Typical

Anchor Tenant Designed Shopping Center

Whats A Shopping Center Diagram Developer

Developer Designed Shopping Center

Whats A Shopping Center Diagram Anchor Tenant

City Planner Designed Shopping Center

Whats A Shopping Center Diagram City Planner

Whats A Shopping Center Diagram City Planner

Shopping centers with small store spaces greater than 75 feet of depth will have trouble leasing the spaces.  Ideal bay size for small shops is 20 feet frontage by 60 feet deep which gets you a 1200 square foot space.

A shopping center with too many larger spaces (i.e. larger than 5000 square feet but smaller than a junior anchor which would be around 12,000 to 20,000 square feet) it will be difficult to find tenants to fill those spaces. Additionally, oddly shaped spaces that are not rectangular in shape are very difficult to lease because it is difficult for a tenant to merchandise. An “L” shaped space or other non-rectangular configuration also creates blind spots for the merchant so that they cannot see certain areas of the store.  These corners in stores are a shoplifters dream. Additionally, a pie shaped space where the frontage is narrow and the rear is wider is not only difficult for a tenant to merchandise but they do not get the signage and visibility needed to be as successful as possible.

Too many out parcels in front of a shopping create spaces with poor visibility that will be difficult to lease and get optimum rents.  You should also check to see if there is a height restriction are the out parcel buildings so that if and when they are sold off the new owner doesn’t take what may have been a single-story fast food restaurant and make it a two or three story office building.

Second story space in a strip center is usually a liability and not an asset.  It only really works and super dense population areas. In a typical retail setting the space will be very difficult to lease and will not obtain anywhere near the rent that you would get for a ground-floor space.

If a shopping center is poorly configured it could be an excellent opportunity for a redevelopment.  A major caveat is that the population densities and the location have to support this extremely capital intensive exercise.

Access (Ingress/Egress) to The Property

Getting in to the shopping center or retail property is as important as it being seen.  You want a shopping center to have multiple points of entry and exit (Ingress/Egress). Urban planners and department of transportation engineers seem to conspire to make shopping centers have less entrances.   If a shopping center is located on a corner of an intersection of two major streets, you would want fall left-hand and right hand turning in and out of the entrance is on both streets.

A raised median on one or both the streets that prevented left-hand turns in or out of the shopping center of the main road would be a major negative. Likewise, if the municipality prescribes “Right In/Right Out Only” turn at a minor entrance, you will need at least one entrance where you can get both Left and Right turns In and Out of the shopping center. Full Ingress/Egress (Right/Left In & Out) and preferably a signalized (traffic signal/Stop Light) entrance are necessary for top tennant sales and success of the retail property.

The optimal configuration for access to a retail property is at least two entrances on the main road (one entrance near the intersection of main roads) and separate truck entrance at or near the back of the property (you do not want heavyweight trucks traversing across the front parking lot and crushing the pavement  or backing up traffic making a turn into the shopping center).

Parking: Building Square Feet to Parking Spaces Ratio; Parking Lot Configuration

Parking!!!   Does the property have enough parking?  National tenant leases will usually have a clause specifying the number of parking space per 1000 square feet of leasable area (also known a the Parking Ratio).

The Urban Land Institute ( ULI )and the International Council of Shopping Centers ( ICSC ) have both done extensive studies on parking requirements but as a general rule of thumb they recommend and shopping centers with gross leasable areas between 25,000 and 400,000 square feet have a minimum parking ratio of four (4) spaces per 1000 square feet of Gross Leasable Area (GLA).  Additionally, for shopping centers with square footage of 400,000 to 600,000 square feet the parking ratio should be 4 to 5 spaces per thousand square feet of GLA. Lastly, Malls larger than 600,000 square feet they recommend five (5) spaces per 1000 square feet of GLA.

Typical parking requirements in a suburban area are usually 4-5 parking spaces per 1000 square feet of GLA.  These numbers were developed when suburban areas were less dense and so the network of public transportation or other transportation options we’re not as varied as they are today.

In super dense areas like Southern California the zoning requirements are forcing developers to use even less parse parking in the hopes that people will be forced into taking public transportation, riding bikes or walking. Having been to some of these shopping centers, I can say it is not working.  Those design requirements actually create more carbon emissions and more traffic as people drive around the parking lot and back out onto the street circling to find a parking space.

Developers of larger shopping centers and even casinos have gotten much better at parking space utilization through electronic indicators showing customers where the open spaces are located.

Sit down, full service restaurants require a higher parking ratio. Also, a recent favorite type of tenant to fill large spaces has been the health club.  However many retail tenants including supermarkets and off price fashion retailers do not want to be located close to a health club because they are parking hogs. Health clubs put a lot of stress they put on the parking load. At certain times in the morning and after work the health club fills up with people there for an hour to an hour and a half. Many times after going to the health club those patrons are too tired, too sweaty or just uninterested in going to load up on groceries or browse the racks at a TJ Maxx.

Parking requirements for retail have been reduced overtime so if the parking lot has a lot of our new space it could be the opportunity to add an out parcel with fast food or an additional 3 to 4 store small convenience center in front.

Self driving cars are all the rage right now in the media.  The story is that self driving cars will completely eliminate the need for large parking fields in front of the shopping center. At this point in time, I think you should still plan for people to be driving and utilizing the parking in the shopping center or retail property you acquire. As a bonus, if self driving cars do decrease the need for extra parking area it could be possibly redeveloped into some other use that will create additional cash flow for your property!

Tenant Mix

Another important factor in evaluating an existing shopping center is the tenant mix. Tenant mix is the merchandising of a shopping center. You can think of it as similar to a department store whereby having an assortment of complimentary merchandise attracts a wide variety of people. Tenant mix is an example of the sum being greater than the parts.    The key is complimentary, because some tenants attract clients and customers that might discourage or repel other customers. Another key is that women are the main driver in shopping trips and cross shopping. Men are grab and go.

Two great books for understanding shopper behavior are Why We Buy: The Science of Shopping and Call of the Mall both by Paco Underhill.

An example of positive tenant mix is fashion retailers feeding off each other and encouraging more shopping.  If you have a department store, like Nordstroms that does a good job with women’s fashion, cosmetics and shoes; you will usually find women’s specialty fashion stores (couture, casual, athletic, large sizes, petits, business, etc.), women’s shoes stores, womens accessory stores, women’s lingerie, soaps & smells, etc.

An example of negative tenant mix would be something that would make women feel uncomfortable.  Putting a rowdy biker bar in the middle of a group of women’s fashion tenants would have an adverse effect on other tenants sales even if all the biker’s were complete angels.  That is why most anchor tenants have Use Restrictions on the type of tenants a landlord can put in to the shopping center along with Exclusive Use Clauses  to prevent too many competitors in the shopping center.  A typical set of use restrictions could be: “auditorium, meeting hall, school, church or other place of public assembly, “flea market”, mortuary or funeral home, dance hall, billiard or pool hall, massage parlor, video game arcade, bowling alley, skating rink, facility for the sale, display, leasing or repair of motor vehicles, any on-premises consumption of alcoholic beverages (except as incidental to a primarily restaurant use) including any night club, bar, sports bar, or any restaurant where the on-premises consumption of alcohol exceeds forty percent (40%) of gross sales, gambling parlor, off track betting facility, headshop, hookah parlor, adult bookstore or adult audio/video store.”  These tenants, for real or perceived reasons would usually not be in a First Class or Class A shopping center and would be a negative reason for large parts of the population to go to that property.

Anchor tenants will usually establish the tenant mix for a shopping center. For example, if you have a convenient center anchored by a 7-Eleven,  other stores that would want to be next to that store would be geared towards convenience. You will probably see fast food like a sub sandwich shop, a dry cleaner, and other service retail that feeds off the traffic generated by 7-Eleven.  A supermarket likewise generates convenience trips. Discount fashion tenants like Marshalls, TJ Maxx, Nordstrom Rack, Steinmart and Burlington create demand for discount shoes (Shoe Carnival, Famous Footwear, DSW, Payless), specialty women’s fashion (Rainbow, Gap Factory Outlet, Discovery, Avenue) and childrens clothing (Carters, Once Upon A Child, Gymboree).

An opportunity to upgrade a shopping center would be improving the tenant mix by attracting different anchor tenants or “Bell Cow” tenants.  Bell Cows are the hot tenant (s) (currently Ulta and H&M are really hot tenants ) that will attract other hot tenants. It may be easy to fill space with a church or a thrift store but those type of tenants really reduce the other tenants that may be willing to locate in your shopping center.  Those tenants also reduce the number of shopper trips and the image of the shopping center.


Shopping Center/Retail Real Estate is all about LOCATION, LOCATION, LOCATION.  If the retailer cannot do business they cannot pay rent. Retailers and service providers need customers located nearby and the property should be easy to see and get in to the parking lot.  The major components that go into shopping center/single-tenant net-lease retail real estate location are: population; demographics; demographic trends; competing properties; drive time; traffic counts; visibility; signage, layout of buildings; access (Ingress/Egress) to the property and parking.

Michael J. Flight

Principal at Concordia Realty Corporation
CEO & Co-Founder of Liberty Real Estate Fund
Co-Founder & Chief Strategy Officer of Invest On Main
Co-Founder of Blockchain Real Estate Summit

Michael J Flight was named the Godfather of Blockchain Real Estate by Forbes Crypto Editor Dustin Plantholdt. Michael achieved that distinction by co-founding Liberty Real Estate Fund, the World’s First Net Lease Security Token FundTM and creating the Blockchain Real Estate SummitTM. More recently, Michael has co-founded Invest On Main (IOM.ai) the Real Estate & Alternative Asset marketplace of the future and AcceleratedLaw a faster, more affordable way to create and tokenize securities offerings!

Michael is a real estate entrepreneur and real estate tokenization pioneer who is an expert in retail real estate investment, redevelopment and real estate on the blockchain. He started his commercial real estate career in 1985, and then co-founded Concordia Realty Corporation in 1990, which continues to partner with some of the world’s most well-known banks, insurance companies, hedge funds and institutional investors in many successful investments.

Michael is a real estate entrepreneur and Blockchain Real Estate evangelist who is an expert in retail real estate (Shopping Centers and Single-Tenant Net-Leased) investment, redevelopment and real estate on the blockchain. He has an extensive record of value-add shopping center redevelopment and with partners Merchant Equity Group, LLC as a pioneer in de-malling (repurposing enclosed malls). Michael has been active in commercial real estate over the past 35 years.

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