“Retail” means real estate for shopping/dining. Big-Busine$$-Retail-Real Estate was the Retail Finance Panel topic, I led at the Crittenden National Conference Friday. Think about your neighborhood, shopping is fun & easy because there’s a lot of types of retail, renters and owners. Retail Real Estate is Big Busine$$- read below to learn why.
Retail real estate is big business. Owners make money when renters (tenants) pay rent. Lenders, like Banks, give owners money (financing) based on the stability & quality of the rent & types of tenants. In South Florida, like many urban areas, we have a lot of people living in one place (“density”). Because of our density, retailers really want their businesses here.
In the U.S. retail rents are based on the market of supply and demand. In dense areas, owners charge higher rents for retail sites because of this renter demand based on density. When an owner sells retail real estate in a dense area, she can get a higher selling price because of the high rental income and demand. This is some of what we discussed on the panel! For more re density click this video about retail following balconies.
Now, think about the type of retail in your neighborhood.
You probably buy groceries at a shopping center with a big grocery store in it – like a Publix. This type of big grocery store is called an “Anchor Tenant” because it is the tenant that anchors the traffic (shoppers) to shop at the center. All other tenants enjoy this traffic of shoppers generated by the anchor. (example: maybe you get a manicure after shopping, the salon is enjoying the traffic)
You may buy your toilet paper in bulk at Wal-Mart. This type of shopping center is called a “Big Box” – because it looks like a Big Box. Some other shopping centers that are big boxes are Home Depot, Lowes, Best Buys etc.
Maybe you shop at a local center that is all one level and has parking in front. This type of center is called a strip center.
Sometimes you might eat a McDonalds – its just a small building and McDonalds is the only business in there. This is called a single user tenant. There is only one tenant in the building.
The more your learn about retail real estate, the more you may decide its the right business for you!
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