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Weekly UpdatesShopping centers will always be in a state of constant change and evolution. In order to keep up with shifting consumer demands and shopping trends, foresight and flexibility are critical to any shopping center's success in today's market. As shopping centers evolve, anchor tenants are finding creative ways to stay viable, and owners and managers are following suit to adapt to consumer tastes.
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Simply defining an anchor tenant in today's market is tricky. In the past, anchors were typically supermarkets and department stores. But, today's anchors can be anything from full-service department stores, mass merchandising retailers and grocery stores, to movie theaters, restaurants, bookstores, electronic stores, upscale retailers, and gourmet food and wine markets.
"One characteristic that qualifies a store as an anchor is that the particular use of the space will drive traffic to that site," says Susan Sgrignoli, CPM[R] general manager of Southwest Plaza in Littleton, Colo., which is owned by General Growth Properties, Inc. (GGP).
Anchors will not only drive traffic and sales to the center, but they can also influence the remaining inline tenant mix of the center.
"The anchor tenants set the tone for the center," said Alan Alexander, president of Alexander Consultants and a former CPM. "Because of their being there, the rest of the center becomes viable. Without them, you are not going anywhere."
In today's market, anchor tenants can no longer rely on their size and influence alone to make their marks on the shopping center environment. To keep up with shifting consumer demands and shopping trends, shopping center owners and managers are working with anchor tenants to ensure that they keep up with the times.
ANCHOR ORIGINS
The concept of the anchor tenant was born in the 1950s, when developers built regional malls with large department stores as the central figures.
"The anchors were the reason people went to the mall, and all the inline stores fed off that traffic," said Ed Shriver, principal at Strada LLC in Pittsburgh.
Then, in the early 1980s, developers, shopping center owners, and managers realized that restaurants and food courts were attracting people to the centers. This attention shift quickly transformed non-traditional establishments into a new type of anchor tenant. From there, large bookstores, like Barnes & Noble and Borders, movie theaters and other entertainment-themed tenants became anchor-worthy.
"Sometime in the 1980s, the whole definition of anchor kind of exploded," said Shriver. "All of a sudden anything that could be a major draw became an anchor."
With so many different types of shopping centers--from the regional malls to lifestyle centers--able to attract a variety of consumers, and therefore a variety of anchor tenants, there is no hard and fast definition of an anchor tenant.
"The things that are driving change in the shopping center industry in all cases are driven by the changing consumer," says Sgrignoli. "The story will be different for every property."
DEMOGRAPHIC DELIVERY
Department stores, in particular, are anchor tenants that continue to change and evolve. Some have reduced their sizes through the years, in order to not become obsolete in today's regional mall environment. In fact, department stores make up about 50 to 75 percent of an enclosed shopping center, according to Sgrignoli.
"It is my belief that you have to have the large department stores to be a true shopping center," said Pamela Schenck, senior general manager of Park Meadows in Lone Tree, Colo., a shopping center owned by GGP. "That is the destination. That is part of the formula."
However, department stores must be open to change in order to effectively cater to their demographics, said Sgrignoli. When a department store inside Southwest Plaza went bankrupt, Dillard's--another retailer in the center--purchased the space and relocated. The move allowed Dillard's to appeal to the plaza's affluent and discerning clientele. The square footage of the store increased from 130,000 square feet to 180,000 square feet and Dillard's was able to construct a Class A store with marble floors, elegant fixtures and upscale merchandise.
"They up-sized the cosmetics counter, expanded the shoe and the luggage departments, and they took a close look at their departments and selectively branded those departments to further drive sales," said Sgrignoli.
By carefully analyzing the market trends, Dillard's successfully launched the re-imaged store.
"They made a huge investment in our community, and in our center, by rebuilding and giving us this new store," said Sgrignoli. "It has been extremely well received, and it has driven a lot of great activity to the enclosed shopping center itself."
GETTING CREATIVE
In addition to adapting to consumer demands, department stores have undergone considerable consolidation in recent years, inevitably leaving vacant spaces in regional malls and other shopping centers. Owners and managers have found it increasingly difficult to lease these dark store spaces.
"If one of the anchor stores goes out, there tends to be a dead end of the mall," said George Redfearn, vice president of development at Tucker Development Corporation in Highland Park, Ill.
Thus, mall owners and managers have to get more creative with these spaces. GGP recognized this challenge in Southwest Plaza when Dillard's relocated and left its former space vacant. Rather than seek out another department store, GGP redeveloped the space for two "mini anchors." GGP leased the upper level to Dick's Sporting Goods to meet the recreational lifestyle needs of their clients, and discount department store Steve and Barry's moved into the lower level.
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ENTERTAINMENT FACTOR
Given the challenges with department stores as anchors in recent years, owners and managers have actively pursued other types of anchor tenants.
"It became evident that, with everything going on with consolidation of department stores, we needed to look a little harder at shopping trends," said Schenck.
At Park Meadows, when Lord & Taylor vacated its anchor space, GGP opted to redevelop the space to bring a lifestyle and entertainment component to the mall.
"If you look at new shopping center developments, lifestyle centers and regional shopping centers, they are anchored by entertainment venues," said Schenck. "The consumer expectation I see today is that a shopping center is there for customers to shop, but also to entertain them."
GGP demolished the former Lord & Taylor space to transform the area into the Vista, a 154,000 square-foot outdoor lifestyle expansion. The Vista, which will open this spring, will be anchored by a large bookstore and surrounded by upscale men's and women's ready-to-wear stores, a furniture store, and an art gallery. This expansion will also have an open area with a coffee shop, gelato shop, wine bar and six white-tablecloth restaurants.
Not only will the Vista meet consumer demands for an upscale retail and entertainment portion of the center, but it also opens up valuable leasing opportunities that haven't been available. Schenck said the Park Meadows shopping center was simply out of square footage before the Vista.
"In the first year we opened, Park Meadows brought 37 new retail venues into the Denver metro area," Schenck said. "The shopping center was successful, but we were landlocked. When a great new tenant wanted to come into the Denver market, we were rarely able to offer them a space because we didn't have space to lease."
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DRAWING IN THE CROWDS
Retail and entertainment lifestyle centers, power centers and town square formats continue to be popular in the shopping center landscape today.
The concept behind these centers is to make the shopping experience longer and more satisfying by combining entertainment, office and sometimes residential space.
"We are trying to create an experience customers enjoy, not just a place to buy things. Those are the magic words of retailing today," said Jim Boyle, general manager of The Shops at Atlas Park, a lifestyle center in Glendale, N.Y., owned and operated by Atco Properties and Management, Inc., in New York City.
Rather than bringing in large department store anchors, The Shops at Atlas Park looked to less traditional anchors to set the tone for its urban clientele.
"More and more sophisticated retailers around the country are no longer locked into the idea that if you are not anchored by a traditional department store or major retailers, you cannot be successful," said Boyle.
The center's marquee tenants include Amish Market, a cinema, Borders Books and a cluster of national and local sit-down restaurants. Getting these tenants in place set the stage for the remaining tenants.
"You have to convince the retailers there really is a synergy [between the tenants]," said Boyle. "If you have certain deals--restaurants, cinemas, a gourmet market--they can start to see how they can build their businesses around that. Obviously, if we didn't have Amish Market, we wouldn't have the wine shop or the flower shop."
Management plays an important role in building the store-to-store relations. "We try to bring the stores together," said Boyle. "Instead of having an event for the entire center, we might put an event together for five stores that have something in common. Or two stores will get together and do a joint marketing program. There is tremendous synergy among the stores."
ADAPTING TO CHANGE
Clearly, managers must act as more than just the eyes and ears of a property.
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