Achieving success when investing in retail assets is challenging, especially when you are pursuing value-add…
In the world of commercial real estate, retail centers are an income-producing approach to buying commercial real estate in any market. This property type is easy to both manage and finance. And, in this category, there is nothing better than a center with an established anchor tenant.
A great anchor tenant will generate a stream of revenue for a retail center that can not be produced in any other way. As a “destination point,” it indirectly generates business for other tenants of the complex which allows owners to fill up their rent rolls and generate huge cash flows.
This is why it is crucial to keep track of which brands are looking to expand. Here are 12 anchor tenants which will be expanding their presence throughout the course of 2017 and beyond.
Since it’s humble beginnings in the basement of Nordstroms downtown Seattle, Washington store, Nordstrom Rack has since exploded onto the retail circuit now accounting for a fifth of revenues across the Nordstrom family of brands. The road to expansion is clear as the new retail giant announced that it would be opening 100 new stores across the United States and Canada through 2020. This will add to its current total of 121 brick-and-mortar locations and is a welcome reprieve to centers which have or will lose anchor tenants such as Macy’s.
Do not let the name fool you. For those of who have not come across this German grocer on the American retail market, I have only one word: ALDI’s! LIDL is the sister company of the ALDI grocery chain. The same ALDI’s chain that proved that you could have high revenues without high budgets for marketing or store displays. Using the same tactics, LIDL will be invading the United States’ east coast with 150 stores opening throughout 2018.
In a world where the label “Organic” can raise prices by 50%, grocers like Fresh Thyme Farmers Market experience the rise in profits. Since its founding in 2014, the Illinois-based specialty grocery chain has opened 48 stores all near large Midwest MSA’s. Per a December 2016 press release, Fresh Thyme’s CEO Chris Sherrell plans on bringing the total number of stores to 70 in 2017 along with continued expansion planned throughout the Midwest for years to follow.
This big box department store had one mission, to re-educate the world on what it means to be “manly!” This fast growing retailer of rugged clothing and solution based workwear announced that there were 100 cities across the United States where they will be planning store openings.
Originally only associated with affordable, trendy clothing options for the young or young at heart, H&M will be showing all that it has to offer starting in 2017. The international chain has planned to launch 425 new stores, mostly in the United States, while also integrating the H&M home and H&M beauty concepts into new and current locations. The added retail space required for these expansions is something that many current property owners are sure to celebrate.
Another purveyor of high-quality organic groceries, Sprouts Farmers Market, has been named one of the fastest growing retailers in the United States. The company announced 11 new locations which are planned to open in major states across the U.S. all within the second quarter of 2017. This is only part of a larger expansion by the grocery chain which will encompass a total of 35 stores scheduled to open by the end of 2017. Current company requirements dictate that all new stores must be in markets which allow sustainable growth with respect to social and environmental well-being.
Although their drone delivery technology is not quite advanced enough to transport an entire grocery order; Amazon will be expanding deeper into the grocery business. The Seattle-based Amazon has plans to introduce convenience stores as well as curbside pickup locations. Per a December press release, the online retail giant plans to build small brick-and-mortar stores that will sell produce, milk, meats, and other perishable items.
Since Target CEO Brian Cornell unveiled the new “Flex-Format” design in December of 2016, the retail giant has continued to move forward with the expansions of its new small-format locations. One hundred new brick-and-mortar locations will serve as pickup stations for online orders as well as carry an assortment of product mixes customized according to the demographics of their urban locations. The chain has already opened 23 of its “Flex-Format” stores. The models are in cities such as Philadelphia and Chicago and only require around 50,000 square feet. What is even more surprising is that sales productivity levels for these small urban locations are almost double that of traditional stores.
With their simple menu and the single message of “Eat More Chicken!”, the Chick-fil-A brand is expanding at a record pace. Over the last four years, the chain has on average opened 95 new locations per year. That number is something that may become a minimum in the coming years as Chick-fil-A sets its eye on urban locations across the United States.
In a time when department stores have reported lackluster financial performance and are closing hundreds of locations, TJX brands, which include Marshalls, T.J. Maxx, and Homegoods, have experienced rock solid growth year over. So, naturally, the retail chain will be expanding its store base on the back of this sustained revenue growth. Moving forward, management states that they believe there is room for a total of 5,600 stores in their current markets. This would mean an expansion of 2,000 new units, which is just shy of a 50% increase from the current 3,600 stores over the next five years.
Years ago, most people would have laughed at the idea of a coffee house/café being considered an anchor tenant. But those were the years before Starbucks; the massive coffee giant showed that they could generate $21 billion in annual revenue and with no signs of slowing down. During the company’s last bi-annual investors presentation, it was announced that they planned on an expansion which would see an additional 12,000 locations by 2021.
Making good on their 2015 promise to win the “Burger Wars,” the Dublin, Ohio-based chain is working to fill their quota of 1,000 new locations by the year 2020. This expansion features nearly 200 locations across the United States with each of these new stores adhering to the ‘Image Activation’ program which the company unveiled back in 2014.
Just one of these established anchor tenants with their wide brand recognition will draw not only other recognizable tenants but customer traffic as well.
If you want to learn how to attract these types of tenants and even more ways to increase the value of your commercial properties, then join us March 16-19 in sunny Orlando, Florida for J.Scott Scheel’s Commercial Property Academy. Here at the Commercial Academy, we not only teach you how to acquire these types of properties but also how to increase value to any of your current or future real estate assets.