What is a mall or shopping center or retail center?
Better yet, what is the definition of a retail shopping center? Retail properties all have the same end goal, to sell products to consumers. How each retail center is constructed or designed may vary in size, shape and format. There is not a one-size-fits-all approach to retail real estate when it comes to evaluating which type of retail center would benefit best in a particular location. The following list was consolidated from International Council of Shopping Centers, better known as ICSC, report dated January 2017. This list was designed to answer the question of what is a mall or shopping center or retail center.
Malls are located throughout the US and are designed primarily as open-air or enclosed malls. Actually, the majority of malls are enclosed malls whereas all tenants are under a single roof. The ICSC report identifies two primary types of malls including Super-Regional and Regional Malls. For the ease of understanding the basic retail asset’s I think we can put these two malls in the category.
Malls are often anchored by two or three apparel anchors or a movie theatre. They typically feature many apparel tenants as well as restaurants (or food courts if more vintage in nature). The gross leasable area, or GLA for industry veterans, starts usually in the 400,000 square feet range and will go as high as over 1,000,000 square feet.
Trade Area Size
5 – 25 miles
Acreage Range
60-120 Acres
% of Industry GLA
14.9%
Typical GLA
400,000 – 1 million+ SF
Lifestyle Centers
Lifestyle centers gained popularity in the early 1990’s, according to Wikipedia, and were first label by Poag and McEwen. These retail centers usually cater toward upscale consumers providing a higher-end shopping and dining experience than your typical mall. These assets are usually located in affluent suburban areas and many times are open-air retail centers.
Trade Area Size
8 – 12 miles
Acreage Range
10-40 Acres
% of Industry GLA
2.2%
Typical GLA
150,000 – 500,00 SF
Factory Outlets
As defined, factory outlets are stores that sell factory-made goods direct to consumers for less than current retail price. In reality, these outlet stores are usually more of an open-air mall which is providing name brand apparel and discounted housing goods. They are considered destination retail outlets given the large trade area size. The draw to factory outlets is the name bands sold at a discount.
Trade Area Size
25 – 75 miles
Acreage Range
10-50 Acres
% of Industry GLA
1.2%
Typical GLA
50,000 – 400,00 SF
Power Centers
Power centers are commonly known as “big box” locations. These retail centers will typically be leased to discounters, home-improvement retailers and large specialty chains. Across the US, you will likely find many of the same “big box” retailers clustered together. Just think of Lowe’s, Sam’s Club, Best Buy, and Bed Bath and Beyond. Another good example is Home Depot and Walmart. It is highly likely that you will encounter many of the national fast-food chain restaurants within close proximity of these Power Centers.
Trade Area Size
5 – 10 miles
Acreage Range
25-80 Acres
% of Industry GLA
13 %
Typical GLA
250,000 – 600,00 SF
Community Centers
Community centers are larger versions of a neighborhood center and will typically offer a wider range of apparel and other soft goods than a neighborhood center. A community center may have three or more anchors (or junior anchors) whereas a neighborhood center typically will have a one or two. It is common for a community center to have a grocery store as well as many other day-to-day necessity tenants.
Trade Area Size
3 – 6 miles
Acreage Range
10-14 Acres
% of Industry GLA
25.4 %
Typical GLA
125,000 – 400,00 SF
Neighborhood Centers
The most common and recognizable retail real estate in the US is the Neighborhood Center. This is your typical grocery anchored strip mall that serves the immediate population within a 3-mile trade area. Neighborhood center retailers typically cater to day-to-day needs of the community. Tenants in neighborhood centers would likely include grocery stores, pharmacies or drugstores, banks, hair and nail salons, some medical providers such as eye care or dentistry and much more depending on the community. A good example of a neighborhood center is The Hub Shopping Center.
Trade Area Size
3 miles
Acreage Range
3 – 5 Acres
% of Industry GLA
30.8 %
Typical GLA
30,000 – 125,00 SF
Convenience Centers
Convenience centers are smaller properties that usually service the immediate retail trade area. Think of convenience stores, such as 7-Eleven or other quick service convenience stores that are located in a small retail building usually less than 30,000 square feet. Given their size and location they typically do not have any major retail anchors. A good example of a convenience center is Cherokee South.
Trade Area Size
< 1 mile
Acreage Range
< 3 Acres
% of Industry GLA
12 %
Typical GLA
< 30,000 SF
To wrap up, while there are many factors to define a mall or shopping center or retail center, they all have one goal in common. To sell goods and products to consumers. Tri-Land Properties has specialized in the redevelopment of grocery anchored shopping centers since 1978. To learn more about Tri-Land investment opportunities, reach out to RJ Johnson.
Monthly Archives: January 2023
When it comes to passive real estate investing, it seems like everyone has an opinion. Some say it is best to buy real estate and manage it yourself, while others say to simply invest in a public REIT and have it managed by a professional while paying high fees.
In general, real estate is an important asset class to hold in your portfolio due to its tax benefits and inverse relationship to the stock market, as we have consistently seen that real estate rental income often rises as the stock market declines.
There really is no right or wrong answer as to whether active or passive investing is better. It all depends on your goals, time commitment, and how willing you are to learn and put in the needed effort to make active investing work for you.
What is Active Real Estate Investing?
Active real estate investing is when you directly own and operate a real estate asset or real estate portfolio. This typically involves sourcing the property to buy, negotiating the terms of the purchase, and obtaining financing and equity commitments needed to close on the property. After that, the investor is responsible for finding tenants, negotiating lease terms, collecting rents, and finally handling any repairs and maintenance needed on the property.
Many people can successfully manage one or two residential properties on a part time basis, but when buying multiple assets and creating a large real estate portfolio, it will quickly turn into a full time business.
It may seem like running a real estate business would be easy, but when scaled, it can get very difficult and time consuming. In order to be successful, a property owner needs to develop solid professional relationships with the likes of contractors, vendors, lenders, real estate agents, and other professionals. That, coupled with dealing with tenants and maintenance issues quickly adds up to a time consuming job.
While active real estate investing does take a lot of time and effort, there are plenty of advantages. History has proven it is almost always a growing asset class. In addition to the appreciation and rental income, real estate comes with some tax advantages that are generally unavailable with other asset classes, especially when actively managed.
What is Passive Real Estate Investing?
Passive real estate investing employs more of a “hands-off” management strategy. Think of it as an investor outsourcing their real estate management to a professional manager and pays the manager for their service and a portion of profits for their professional service.
There are several ways to invest in passive real estate including publicly traded and non-traded REIT, private real estate firms, crowdfunding, etc.
Another way to invest passively in real estate is through a private real estate syndication. In a real estate syndication, you invest in a real estate deal with many other investors typically through a Limited Liability Company or LLC. This LLC helps protect the real estate investor from potential liability associated with operating the real estate. With a syndication, even though the investment is passive for the limited partners, the investment project as a whole is actively managed. Because it is managed by a professional real estate development firm, the investment gains can be significantly higher than most other passive investments.
Tri-Land Properties is a commercial real estate developer that focuses on grocery anchored real estate. We believe that passive real estate investments are the better choice for most people because of the enormous knowledge and time it takes to become a true real estate professional. By investing with Tri-Land, an accredited investor can have access to institutional grade grocery anchored real estate investments run by a 40+ year successful real estate company. To learn more, please contact RJ Johnson at Tri-Land Properties.
RJ Johnson can be contacted regarding passive real estate investing with Tri-Land Properties.