Benefits of Choosing Retail Space in a Grocery-Anchored Shopping Center

Grocery-anchored shopping centers are economic engines in communities across the United States. There are numerous benefits to property and business owners who take advantage of the essential nature of these types of shopping locations. For both investors and retailers across a vast range of industries, it’s wise to consider the possibility of finding your next property in a grocery-anchored retail center.

What Are Grocery-Anchored Shopping Centers?

Grocery-anchored shopping centers (also referred to as grocery-anchored retail centers, grocery-anchored neighborhood centers, or simply grocery-anchored centers), are shopping centers that are centered around a larger grocery store surrounded by smaller (supporting) retail tenants.

Because of the tenant mix variety of small shops anchored by the recession-resistant nature of a major grocery chain, grocery-anchored retail plazas tend to attract regular consumers, providing consistent foot traffic as well as being an economic hub for employment opportunities.

Although the use of e-commerce has accelerated in recent years, the demand for brick-and-mortar grocery stores has stayed fairly consistent. While consumers are turning to online shopping for many types of goods, most shoppers still want to travel to a local grocery store for one of their most basic needs – food. Because the demand for food will never disappear, grocery-anchored shopping centers tend to do well across cities, states, and even different economic markets.

Having a strong anchor tenant brings in consistent grocery store sales to the shopping center day after day, week after week, and month after month. These loyal shoppers also tend to frequent the surrounding stores, especially with the right mix of tenants in the center.

Examples of Anchor Tenants

What type of tenants can you expect to see in grocery-anchored centers?

Although most anchor tenants are grocery stores, they can also be other large big-box stores, department stores, or popular tenants. A few anchor tenant examples include:

• Walmart
• Whole Foods Market
• Trader Joes
• Target
• Aldi
• Kroger
• JCPenny
• Macy’s

Examples of Supporting Tenants

A few types of supporting or additional tenants in grocery-anchored centers include:

• Dry cleaners
• Fitness center
• Hair and nail salons
• Sandwich shops and fast food
• Coffee shops
• Pharmacies
• Beauty supply stores
• Medical use retail

Benefits of Grocery Anchored Retail

When searching for your ideal retail property, there are many reasons to consider a lot that’s located in a grocery-anchored retail center. Whether you’re navigating the decision as an anchor tenant, supporting tenant, or shopping center investor, grocery-anchored retail properties tend to offer the best results for retailers in many areas.

At Regent CRE, we’ve guided hundreds of clients through the process of choosing the ideal retail property in the best location. When evaluating grocery-anchored options, here are five benefits to keep in mind.

1. Increased foot traffic

The presence of an essential business (in other words – a grocery store) in a shopping plaza leads to increased foot traffic throughout the lot. Since consumers always need food, foot traffic in these types of shopping centers doesn’t tend to slow down based on outside factors. The constant foot traffic is excellent for non-anchor businesses, bringing consumers right by their front doors even with minimal advertising. By relying on popular anchor businesses, non-anchor tenants enjoy a significant amount of daily traffic.

For shoppers, the convenience of being able to grab lunch or coffee, pick up the dry cleaning, hit the gym, or get a haircut right before or after stopping at the grocery store can hardly be matched. A well-positioned anchor tenant continually enjoys the business of regular consumers.

2. Higher occupancy levels

Because of the nature of grocery-anchored shopping centers, these types of marketplaces tend to have some of the highest occupancy levels compared to other gatherings of retail businesses, such as an indoor shopping mall. One reason for this is because of the consistent traffic to grocery stores during any market. Another is the convenience of the setup, with customers being able to walk or drive across the center easily to reach their favorite stores.

Higher occupancy levels around the shopping center lead to higher foot traffic and, in turn, more sales for all tenants involved.

3. Ideal locations

Most of these types of shopping centers are already located in highly populated areas with significant traffic. This contributes to a strong customer base from the get-go. Busy, strategic locations also tend to mean steady property values as well as consistent rental rates.

4. Better recession and e-commerce resistance

With the increase of e-commerce and online sales, it can be a tough market for retail stores. Still, consumers want fresh food, and the local grocery store is a necessary place to frequent for most of the local community.

For supporting tenants in the retail sector, capitalizing on both the e-commerce-resistant and recession-resistant nature of the grocery anchor tenants can be one of the best ways to experience consistent traffic.

5. Loyal customers

In nearly any business, repeat customers are less expensive than searching for new customers. In addition to this, returning customers actually tend to spend an average of 67% more than new customers.

While there are many factors that go into creating loyal, repeat customers, being well-positioned in a busy, grocery-anchored retail center is a great start. With the average consumer shopping for groceries at least once per week, the presence of a strong grocery anchor tenant brings shoppers back again and again.

For supporting tenants, capitalizing on a prime location right next to a popular grocery store can be one of the best ways to attract loyal customers while spending less in advertising dollars.

Considerations for Leasing or Buying Commercial Property in a Grocery-Anchored Shopping Center

1. Your trade area

For any retailer or retail industry, it’s important to consider your trade area. In other words, how far will shoppers travel to visit your store? Where convenience stores (such as dollar stores) might only have a 1-mile trade area, big box stores and grocery stores may have a 10 or 20-mile trade area, with customers traveling farther distances to purchase tools, a washing machine, or groceries.

Before deciding whether to buy or rent in a grocery-anchored shopping center, consider your proximity to your target customer. Keep in mind that the nature of having a grocery anchor nearby will likely attract more shoppers to your store than if you choose a standalone building. On the other hand, it’s still necessary to be aware of the needs and patterns of your ideal customer.

2. Competition and diversity

A strong grocery center has a diverse range of tenants that provide a favorable shopping experience for customers. Consider the variety of tenants that already exists within the shopping center and whether your product or service will fit in well with the consumer base that’s already there.

3. Parking and features

Providing the best customer experience possible generates more business and loyal return customers. When evaluating a property, consider important features such as the amount of parking, lighting, and the eye-appeal of the landscaping.

4. Strength of the anchor tenant

A strong anchor tenant provides stability to commercial real estate investors as well as supporting tenants. An anchor tenant that’s in strong demand can be trusted to generate dependable traffic. In addition, strong anchor tenants tend to draw other in-demand tenants to the shopping center, further boosting the overall number of consumers frequenting the area.

Lastly, for property owners, a strong anchor tenant tends to both increase property values and reduce the credit risk that’s associated with the property. Strong anchor tenants with long-term leases are less likely to default on their payments, providing stability to everyone involved.