Definition
An Anchor Pad is the designation of the land beneath the primary retail establishment, often known as the anchor store, within a shopping center or mall. This land can either be owned by the retail store directly or controlled via a ground lease agreement. The anchor store is strategically significant as it draws foot traffic to the shopping center, thereby benefiting surrounding smaller retailers.
Examples
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Regional Mall Setup:
- In a regional mall, the land under the upscale retail department store Macy’s is referred to as the anchor pad. Macy’s owns the land directly and establishes their store, ensuring they control their premises fully.
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Ground Lease Agreement:
- In a shopping district, Home Depot operates from a land parcel referred to as an anchor pad, which is controlled through a 50-year ground lease. The lease agreement allows Home Depot to develop the land without the financial burden of outright purchasing the land.
Frequently Asked Questions (FAQs)
What is the significance of an anchor pad in real estate?
The anchor pad represents a critical portion of a shopping center or mall, usually due to the stature and attractiveness of the anchor store. This draws substantial customer traffic, increasing overall foot traffic for the retail development.
Can an anchor pad be leased?
Yes, an anchor pad can be controlled via a ground lease agreement where the retailer leases the land for an extended period, usually several decades, from the property owner.
Does owning the anchor pad provide advantages?
Owning an anchor pad can provide benefits such as control over the land and less financial dependence on leasing terms, potentially giving the retailer more favorable conditions for long-term planning and modifications.
Related Terms
PAD SITE (or Outparcel)
Definition: A pad site is a separate parcel of real estate typically found on the outskirts of a larger shopping center or mall. These sites are often leased or sold to businesses like banks, restaurants, or smaller retail stores. Example: A Starbucks store operating on a pad site within the parking lot area of a larger mall complex.
ANCHOR STORE
Definition: An anchor store is a major retail store that serves as the principal draw for consumers to a shopping center, increasing foot traffic for other surrounding smaller retailers. Example: Walmart is commonly an anchor store for many shopping malls and strip centers due to its wide product range and large customer base.
GROUND LEASE
Definition: A ground lease is a long-term lease agreement in which the tenant is permitted to develop a piece of property during the lease term, after which the land, and any improvements, revert to the property owner. Example: A multinational retail company leasing a parcel of land from a landowner for 99 years to develop and operate a retail store.
Online Resources
- International Council of Shopping Centers (ICSC): www.icsc.org
- National Association of Realtors® (NAR): www.nar.realtor
- American Real Estate Society (ARES): www.aresnet.org
References
- “Urban Land Use Planning” by Philip R. Berke, David R. Godschalk, Edward J. Kaiser, and Daniel A. Rodriguez
- “Real Estate Principles: A Value Approach” by David C. Ling and Wayne R. Archer
- “Shopping Center Development Handbook” by John Casazza
Suggested Books for Further Studies
- “Retail Development [electronic resource]: Planning and Design” by Prof. Michael J. Rowley and others
- “Shopping Center and Store Leases” by Emanuel B. Halper
- “Financing Real Estate Developments” by Ida A. Berger and David A. Berger
- “Retail Property Risk: Analysis and Mitigation” by Sheenal Talwar and Issam Mohammad
