Prudential Financial

Retail Tips

Retail properties can range from a single, one-tenant building to over a million square feet of assorted shops that display goods or sell services to the public. Explore the three types of retail properties and tips about buying or leasing these properties:

Shopping Centers
A group of stores catering to a trade area that offers a variety of goods and/or services and on-site parking (the tenant "mix"):
  • Super regional center—has three or more major department stores, is often enclosed (mall), is 750,000 to 1 million square feet, and draws from a large trade area of 12 miles or more.
  • Regional center—has one or two department stores, a variety of smaller stores, and is larger than 300,000 square feet. It will draw from an eight-mile radius or more.
  • Community center—usually has a supermarket, junior department store, and a variety store, is larger than 100,000 square feet, and draws from a three- to five-mile radius.
  • Neighborhood center—is built around a supermarket and/or drugstore, provides convenience goods and services to a neighborhood, is 30,000–100,000 square feet, and draws from a one- to three-mile radius.
  • Convenience center—is a small cluster of stores along a street, 5,000–40,000 square feet; trade area is the immediate neighborhood. May have a convenience market, laundromat, dry cleaner, etc.
  • Specialty center—often has a theme, usually has no anchor tenant, and generally is local in influence. Examples might be home-improvement centers, gift shops, or auto service and sales.

Back to top

Freestanding Store
One commercial building meant to be occupied by a single user. It is typically found near major shopping centers on major routes, and fills a specific need in the area.

Back to top

Strip Commercial
A string of stores in a commercial area with no central leasing, management, or theme.

Back to top

Things to Consider Before Leasing or Buying
  • Improvement allowances—The landlord budgets for carpeting, tile, bathrooms, etc.; additions to basic leased area. This allowance is sometimes called "T.I." (tenant improvements).
  • Location—traffic counts, ease of access to store, convenience to shoppers.
  • Cost of occupancy—expense pass-through, improvements, insurance, etc.
  • Overall draw of customers to center—Does center have a steady stream of shoppers?
  • Demographics—Are goods or services attractive to people in the trade area?
  • Effectiveness of management—Does the landlord respond to complaints or suggestions?
  • Parking availability—Is there adequate parking for customers?

Back to top

Primary Concerns for Buyers
  • Physical condition of property—Is the price adjusted to reflect the condition of physical plant?
  • Net income generated by leases—What is left after expenses of operation are paid?
  • Occupancy level and tenant mix—Are there vacant ("dark") spaces? Are tenants attracting shoppers?
  • Stability of tenants—What is the turnover rate? How long have tenants occupied the center?
  • Upside potential in income—Are rents under market? Do leases escalate to keep pace with inflation?
  • Protection from large increases in operating expenses—Tenants share in expense increases; physical condition of center is good without deferred maintenance.
  • Area growth patterns—Is area gaining or losing population? Will new competition emerge?

Back to top

Find a Commercial Services Representative
Once you decide to sell or lease office space, a Commercial Services specialist will assist you every step of the way.

Back to top