Anchor Tenant

An anchor tenant refers to a major retailer established in a shopping mall or retail center that attracts a lot of human traffic to the location.

They are often the destination retailer or chain stores that made consumers visit these locations in the first place.

And consumers become patrons of other smaller retailers since they have arrived at the mall.

While a lot of big box retailers can be categorized as anchor tenants in major malls, the most common types of anchor tenants in Singapore are supermarkets and hypermarkets.

For example, NTUC at Nex shopping center and Giant at IMM Building are anchor tenants of the respective locations.

Anchor tenants usually take up at least 10,000 square feet of retail floor space. But smaller mall might have anchor tenant taking up less space simply due to the limited retail space.

It’s not uncommon for buildings to be designed just so that the needs of these big retailers are met.

For example, travellators for the smooth flow of trolleys and trolley drop-off points at the car park.

But when we consider the extensive setup costs that would be incurred by big retailers to customise a space to their liking, the relationship is very much two-way.

Importance of anchor tenants

The draw of anchor tenants and the high amount of traffic they bring into a mall often creates a lot of business opportunities for other retailers.

Some retailers, especially F&B outlets fully depend on the traffic and key tenants bring. Many of which would close down without the presence of magnet stores.

The businesses that depend on anchor tenants’ patrons the most can often be found located near the entrance of anchor tenants. And customers would be greeted by them as soon as they leave the supermarket after payment at the cashier.

Many of which sell finger food, snacks and bites to cater to shoppers who are hungry after an exhausting time inside the supermarket.

These are often called satellite store.

Power of anchor tenants

Because of the critical role anchor tenants can play towards the success of shopping malls (which can affect REIT prices), they can have tremendous leverage over landlords.

For example, a landlord who has set aside 20,000 square feet of retail space set aside for a supermarket has only a few clients who can potentially take up the space and hit the ground running. Big retailers know this and and use this as leverage to negotiate better rental and terms for the lease. It would be disastrous for a mall to have such a huge space that sits empty.

In addition, anchors know that satellite stores are going to pop up around the immediate vicinity of their premises to feed off their customers.

This can also give them immense influence on determining what types of satellite shops are acceptable and those that are not.

For example, if a hypermarket deems that a certain shop is a direct competitor for a certain category of products, then the landlord might not allow that tenant to be situated around the area and recommend another area to them within the mall.

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