Regional Malls

Regional Malls come in a variety of shapes and sizes.  They typically have two or more anchor tenants.

Anchor Tenants

Malls typically have two or more large department stores.  The term that is used to describe these large stores is ‘anchor tenants.’  They are said to anchor the mall because they provide a lot of foot traffic to the mall, provide a destination for shoppers and advertise heavily..  their brands are an important component of most malls.  A mall will usually try and position itself to attract a certain clientele based on these brands.  An upper-end mall will want the anchor tenants to be more prestigious brands like Nordstrom’s or Saks 5th Avenue.  other malls that want to attract a more mainstream or middle class clientele will seek anchor tenants like Sears or JCPenny.  Some regional malls seeking to serve a cross section of shoppers will anchor their centers with a mix of higher-end brands and mid-level consumer brands.  Because of the benefits of having good anchor tenants, malls will often give them rent incentives to be in the mall.

Located around anchor tenants are many smaller spaces filled with nationally-branded retailers and restaurants.

National Brands

These days, malls almost never have local, one-of-a-kind stores, usually referred to as ‘Mom & Pop’ or ‘Boutique’ retailers.  Because the costs are so high, most malls and most business owners won’t usually take the risk of locating anything but a proven commodity in a regional mall.

There will usually be some smaller, detached buildings around the outside of the mall on what are known as ‘pad sites’.

Pad Site Examples

Pad sites around a regional mall will almost always be tenanted with restaurants, fast food or banks, with the occasional exception being a service retailer like a automotive shop.  Again, all of these are typically well-known brands.

Regional Malls have expansive common areas, which require maintenance.  Maintenance costs are paid by the tenants as either net charges or common area maintenance charges (CAM’s).

Common Areas

The common areas for a regional mall include large parking lots or garages requiring lighting, landscaping, striping, cleaning, maintenance and security.  There are delivery areas for product delivery, often with loading docks, tailboards, and roll-up doors.  Trucks have to be able to access these delivery areas, requiring extra space and maintenance of that space.  There is also substantial space for trash removal.  There are large common areas both indoors and outdoors for shopper circulation.  Any mall with two or more stories requires multiple elevators and/or escalators.  There are obvious needs for janitorial services, public restrooms, plant watering and maintenance, security services and fire/life safety elements.  These indoor common areas are served by large HVAC systems that cost money to operate.  Common area maintenance can be expensive.  In addition, there are often marketing costs and event costs that are passed on to the tenants in the mall.  For most national brand retailers these costs are more than worth it when they weigh it against the foot traffic generated by being in a regional mall.

What are Common Area Maintenance Charges (CAM’s) with Office Spaces?

A lot of Raleigh Office Space has exterior common areas.  These areas are the parking lots, sidewalks and landscaped areas that need to be cleaned, maintained, secured, lighted and irrigated.  There are expenses in maintaining these common areas that are divided up and billed to the tenants in the building.  It is very important when analyzing an office building that you include both the load factors and the common area maintenance charges in your analysis.