Shopping Centers Today

MAR 2017

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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Page 57 of 59

58 S C T / M A R C H 2 0 1 7 R E TA I L T R E N D S AT A G L A N C E T H E L A S T S T O P S O U R C E : C O M PA N Y D I S C L O S U R E ; G R E E N S T R E E T E S T I M AT E S CUSTOMER TRAFFIC Department stores have traditionally been the primary traffic drivers for malls; traffic generates sales productivity for in-line retailers LEASING Leases for in-line space can vary greatly; stores near vacant or struggling anchor boxes may be difficult to lease and are discounted VALUE IMPAIRMENT When anchors exit lower- quality malls, replacement tenants are elusive; mall value could be permanently impaired if a suitable replacement is not found CO-TENANCY LEASE PROVISIONS In-line tenant leases often contain provisions that allow them to pay less rent or even to terminate a lease, if there is at least one anchor vacancy for an extended time period SIZE Anchor tenants constitute about half of total mall gross leasable area, so struggling stores or vacancies stick out like a sore thumb FINANCING Anchor stability is a primary determinant for mall financing; it can be difficult to obtain mortgage debt if there are anchor vacancies or if a lease or operating agreement is nearing expiration Weighing anchors Department store anchors might not pay much rent, but they contribute greatly to a center's income in other ways Junior anchor/ Other 10% Anchor 10% In-line tenants 80%

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