With retail consolidation in full swing, remaining anchors have more clout with landlords.
“They are becoming much more demanding,” says Michael Dee, a retail expert at Grubb & Ellis. And, with fewer and fewer retailers to anchor a project, developers are giving in.
While anchors have always received lower rents or co-tenancy provisions, they now also want to limit the number of pad sites so their stores have more visibility, and to create more parking.
Some anchors, such as Kohl's, now ask for higher contributions from landlords for tenant improvements, says Dee. For example, the retail chain may ask for $15 to $18 a square foot, compared with, say, $12 before, according to Dee.
The power shift underscores the need for developers to have good relationships with winning retailers, says Wendy Seher, director of anchor leasing for Federal Realty, which owns and manages 17.4 million square feet. “You have fewer and fewer anchor tenants to choose from because of consolidation.”