The Urban Land Institute identifies shopping centers under 5 main categories for the purpose of research and industry analysis. These categories of shopping center are not necessarily defined by the size of the buildings or total area of the site, but more by its tenant makeup and the scope of its customer base/captive market.
The 5 main types of shopping center are:
– Convenience Shopping Center
– Neighborhood Shopping Center
– Super Community Shopping Center
– Regional Shopping Center
– Super Regional Shopping Center
Each shopping center has its own characteristics and will have a range of tenants covering a variety of sectors from multiple department stores to convenience stores, apparel outlets to recreational facilities.
The owners, developers and managers of shopping centers have a key role, along with major anchor tenants, in creating the most effective range of tenants who can compliment and improve the business and trade of each other – ultimately increasing the profitability of the shopping center.
Many prospective tenants have stringent requirements with regard to their preferred location or type of shopping center to improve their chances of operating a profitable business. While demographics, physical location and traffic counts are important in the choice of location for tenants – other factors such as whether the shopping center is ‘open air’ or ‘enclosed’ will be crucial. These prospective tenants will also have stipulations as to whether they can operate from an ‘in-line’ location between other tenants or if they need an ‘end-cap’ location with a separate patio dining area.
The shopping center type and tenant mix will dictate the operating receipts for the property owners – Rent, Common Area Charges and miscellaneous income from pay phones, vending machines and other amenity/facility charges. With a more attractive tenant mix the property owners stands to increase operating income.
However, with higher foot traffic and property use there are the related operating expenses to ensure that the center remains an attractive, safe and clean environment for existing tenants, prospective tenants and customers. These expenses include parking lot maintenance, mall maintenance, pressure washing services and other common area costs. Additionally, there are building maintenance and repair costs, tenant space utility costs, office area expenses and other expenses related to advertising real estate taxes and insurance.
The development and management of a successful shopping center property is complex and directly requires competent, skillful property managers, maintenance engineers, leasing agents, lawyers and vendors. The selection of the correct team will ultimately benefit the tenants, owners, customers and all property stakeholders.