by James Kaplan
Trends across the nation show a decline in department stores, however anchors, the largest and more prominent store in a retail center, remain critical in retail development. Anchor tenants assist in defining the audience of a retail center, as well as the surrounding tenants. Attaining the right anchor to a center can both increase traffic and improve occupancy rates. Should the anchor not be a good fit, the opposite results can take occur.
Because of department store’s downward trends, developers have adopted an outside the box approach when considering anchor tenants. In some cases that may mean a niche store with a strong following. In others, this may mean a tenant not traditionally thought of as an anchor such as a movie theater, gym, medical facility, or school but they attract a similar amount of traffic that other traditional anchors do.
In northern Nevada, developers are experiencing this very challenge in the retail sector. When K Corporation, a locally owned and operated developer, acquired 32,000 square feet of inline space, with the exception of the shadow anchor, in The Crossing at Meadowood Square in Reno, Nevada in 2014, that anchor was Goodwill. The company has now announced the acquisition of the anchor space including an additional 31,400 square feet of retail space for $4.45 million. As Goodwill prepares to vacate the space, K Corporation is redeveloping the center with improvements and setting sights on a new anchor. Upgrades to the center will include façade upgrades for a contemporary look and upgrades to the anchor space pending the new tenant branding requirements.
Goodwill took occupancy in 2008, and since that time, the surrounding neighborhood has changed. Northern Nevada has rapidly grown in the last decade, securing neighboring anchor tenants such as Whole Foods, Pier 1 Imports, Sierra Trading Post and Total Wine & More. Tenants such as this are joined by Meadowood Mall, the only enclosed class A Simon Mall, as well as the area’s newest addition, Rancharrah, a high end residential and commercial community still underway. The evolution of the area has been to one of prominent retail tenants, attracting a different audience to the area than seen in previous years.
In response to the development of the area and the transformation of the typical anchor tenant, K Corporation is looking to both traditional and non-traditional sectors including niche stores, dining, entertainment, as well as other types of tenancy to fulfill the role of anchor. While traditional anchor stores are still opening locations, in some cases with smaller footprints or redesigned to accommodate increased shipping and receiving, newer anchor store types can be closely aligned with what today’s consumers want.
K Corporation’s choice to find the best fit anchor tenant illustrates faith in market, as well as the continued growth of the retail sector in northern Nevada. Adding a regionally recognized, nationally known or popular anchor tenant draws significant foot traffic to a center. The value of well-rounded center is evident for all tenants and consumers; potentially offering a customer to the opportunity to go shopping, enjoy a meal, and run a necessary errand, all without leaving the shopping center itself.
The goal is to target anchors who will attract the same audience as the surrounding retailers. The one constant as the landscape of retail spaces evolve is that location is the most important variable in determining long term success of a center and of its tenants. Strong retailers, restaurants, entertainment and other business types will continue to attract desirable consumers as long as they are located in a thriving submarket with visibility and ease of access.
If you would like more information about this development, please contact Ashley Lawson at ashley@kcorporation.com.