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1

Retail properties can be segmented according to one or more of the following criteria:

Size in total rentable area and number of retail units

 

Services or brands offered within the store: brand or category specialist vs. department store

 

Margin turnover: high margin-low turnover vs. low margin-high turnover

 

High service vs. low service

2

CATEGORY EXAMPLES

Costco, Target, and Walmart can be described as department stores that focus on low-margin and high turnover with limited service.

 

In contrast, category specialty retailers such as Holt Renfrew (high end fashion) and Birks (quality jewelry) rely on high margins and high service. These retailers will have much lower product turnover relative to Walmart.

3

CATEGORY KILLERS

Staples is an example of a category specialist with a full line of products. These stores were initially referred to in the industry as category killers since they offered a narrow but very deep range of products, generally in a warehouse format. 

4

2 factors for widespread development of shopping centres

Most consumers value convenience and the ability to comparison shop, they are attracted to a concentration of complementary retail uses. 

5

ICSC categorizes shopping centres into four types of shopping centres

traditional, specialty, hybrid, and mixed-use. 

6

Define Anchor Tenant

The anchor of a retail centre will drive the greatest amount of customers to the centre and is usually considered strong enough to stand alone.'

7

Traditional Retail Shopping Centres

convenience, neighbourhood, community, and regional/super-regional centres.

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Smallest and most common

The smallest and most common traditional centre is a convenience centre, also known as a retail plaza.

9

4 things
Convienance Centres

As described by their name, convenience centres provide convenience for shoppers — usually meaning easy in and out access and a narrow range of goods and services. These properties generally comprise a small number of continuous retail units or "pods" of two to four contiguous commercial retail units (CRUs) with a total gross floor area of 10,000 to 40,000 square feet along with a surface parking lot.' The ideal locations for these centres are high visibility corner locations near or on major intersections, but they may be found anywhere zoning permits on high traffic corridors.

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Convienance Centres
Total Gross Floor Area

total gross floor area of 10,000 to 40,000

11

Convienance Centres
Common Tenants

Common tenants in a convenience centre are as follows:

• Fuel sales

• Convenience store (C-store) — e.g., 7-Eleven, Mac's

• Pizza take-out

• Professional offices — e.g., real estate sales, walk-in clinics and labs

• Financial services — e.g., banks, investment brokers, insurance agents

• Smaller, quick service restaurants such as Subway or Tim Hortons

• Local coffee boutiques and small bakeries

• Dry cleaners

• U-brews/winemakers

• Mini-pharmacies — focus on prescriptions, rather than retail products

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NOTE ONLY

Convenience Centres

Medical-dental tenants are often drawn to these locations due to good parking, ease of access for customers, modest rents, and synergy with other tenants, such as pharmacies.

NOTE ONLY

Convenience Centres

Medical-dental tenants are often drawn to these locations due to good parking, ease of access for customers, modest rents, and synergy with other tenants, such as pharmacies.

13

Successful Convienance Centre Features

List 2

In addition to location on a busy road, a defining feature for a successful convenience centre is easy ingress and egress (in and out). 

14

In addition to location on a busy road, a defining feature for a successful convenience centre is _ _ _ _ _ _ 

In addition to location on a busy road, a defining feature for a successful convenience centre is easy ingress and egress (in and out). 

15

Since convenience centres represent relatively small retail property investments, they are particularly attractive to _ _ _ _ _

Since convenience centres represent relatively small retail property investments, they are particularly attractive to private investors and smaller private real estate investment corporations. 

16

Convienance Centre Cap Rates

The combined impact of a larger number of potential buyers, affordability, and desirability of retail assets result in relatively low capitalization rates compared to larger commercial investments.

17

RISKS ASSOCIATED WITH CONVIENANCE CENTRES

A risk associated with convenience centres is the small number of tenants and tenant relationships.

 

For example, if a key anchor tenant such as Starbucks or Tim Hortons decides to relocate from the centre, the impact on the business enterprises of the remaining tenants may be signifi-cant given the reduction in traffic.

 

The other problem is that one or more vacancies in a convenience centre results in a high vacancy rate relative to larger shopping centres with more tenants. 

18

NOTE ONLY

Neighbourhood Shopping Centres


A neighbourhood centre may be thought of as a much larger convenience centre with a broader range of retailers. The main emphasis remains on providing a convenient range of services, aimed at serving the local neighbourhood and commuters.

 

However, neighbourhood centres will usually have some conventional retailers, often local merchants offering fashion and speciality retail products (e.g., running shoes, bikes, and boutique fashion).

 


Similar to convenience centres, neighbourhood centres are vehicle-oriented rather than pedestrian-oriented. Neighbourhood centres are often designed in an L- or U-shape with the parking area bounded by the "wings" of the centre.

 

NOTE ONLY

Neighbourhood Shopping Centres


A neighbourhood centre may be thought of as a much larger convenience centre with a broader range of retailers. The main emphasis remains on providing a convenient range of services, aimed at serving the local neighbourhood and commuters. 

However, neighbourhood centres will usually have some conventional retailers, often local merchants offering fashion and speciality retail products (e.g., running shoes, bikes, and boutique fashion).


Similar to convenience centres, neighbourhood centres are vehicle-oriented rather than pedestrian-oriented. Neighbourhood centres are often designed in an L- or U-shape with the parking area bounded by the "wings" of the centre.

19

A neighbourhood centre's primary trade area extends about _ _ _ _ _ _

A neighbourhood centre's primary trade area extends about five kilometres. 

20

A neighbourhood centre typically has one or more anchor tenants occupying between __% and __% of the centre's total rentable area. 

A neighbourhood centre typically has one or more anchor tenants occupying between 30% and 50% of the centre's total rentable area.

21

For a neighbourhood centre total centre area size will commonly range between ____ and ____ square feet.

For a neighbourhood centre total centre area size will commonly range between 40,000 and 150,000 square feet.

22

A _ _ _ _ _ __commonly anchors neighbourhood centres. 

A supermarket, also known as a food store, commonly anchors neigh-bourhood centres. 

23

NOTE ONLY

In a neighbourhood centre, retailers renting CRUs will prefer to be near the major anchors because of the positive influence of increased customer traffic volume. Consequently, the rent achieved for CRUs located beside major anchors is often greater than the achievable rent for less desirable or fringe retail locations within the plaza. A common example of this synergy is the strong desire of liquor retailers and brands such as Starbucks to be located beside or very near large food stores. The benefit is multiplied when two good anchors are co-located. For example, a good scenario for Starbucks is to be located beside or very near a liquor retail outlet since shoppers will often combine a visit to both stores.

NOTE ONLY

In a neighbourhood centre, retailers renting CRUs will prefer to be near the major anchors because of the positive influence of increased customer traffic volume. Consequently, the rent achieved for CRUs located beside major anchors is often greater than the achievable rent for less desirable or fringe retail locations within the plaza. A common example of this synergy is the strong desire of liquor retailers and brands such as Starbucks to be located beside or very near large food stores. The benefit is multiplied when two good anchors are co-located. For example, a good scenario for Starbucks is to be located beside or very near a liquor retail outlet since shoppers will often combine a visit to both stores.

24

The community shopping centre is generally larger than the neighbourhood shopping centre and is designed to serve a __ to ___ kilometre primary trade area, including the immediate neighbourhood as well as a group of surrounding neighbourhoods.

The community shopping centre is generally larger than the neighbourhood shopping centre and is designed to serve a 5 to 10 kilometre primary trade area, including the immediate neighbourhood as well as a group of surrounding neighbourhoods.

25

Community shopping centres focus on a mix of _ _ _ _ _ _ _.

Community shopping centres focus on a mix of convenience and general retail merchandising.

26

A community shopping centre size is commonly between _____ and _____ square feet of leasable area, including anchors. 

A community shopping centre size is commonly between 100,000 and 400,000 square feet of leasable area, including anchors. 

27

A community centre will usually have two or more anchor tenants taking up between ___% and ___% of the total leasable area. 

A community centre will usually have two or more anchor tenants taking up between 50% and 70% of the total leasable area. 

28

A key ingredient for community shopping centres _ _ _ _ _ 

A key ingredient for community shopping centres is sufficient surface and covered parking to meet peak demands during holiday shopping periods. 

29

NOTE ONLY

According to the Urban Land Institute, a normal parking ratio for community and regional centres is 4.5 to 5.0 parking stalls per 1,000 square feet of gross leasable area (GLA). Since older centres often have parking ratios in excess of 5.0 stalls per 1,000 square feet of GLA, there may be excess land associated with these properties. If there is potential to replace excess parking with additional free-standing retail buildings, this may add value to the retail property.

NOTE ONLY

According to the Urban Land Institute, a normal parking ratio for community and regional centres is 4.5 to 5.0 parking stalls per 1,000 square feet of gross leasable area (GLA). Since older centres often have parking ratios in excess of 5.0 stalls per 1,000 square feet of GLA, there may be excess land associated with these properties. If there is potential to replace excess parking with additional free-standing retail buildings, this may add value to the retail property.

30

_ _ _ _ _ will have the highest achievable rents of any shopping centre format and the highest common area operating expenses. 

Regional shopping centres will have the highest achievable rents of any shopping centre format and the highest common area operating expenses.