Supermarkets Are Strong Anchors For Today's Shopping Centers

Retailers that serve the everyday needs of consumers, such as grocery stores, always have been reliable drivers of shopping center traffic, and the recent recession underscored their value as tenants. Now, as the economic environment grows more robust, this retail real estate trend continues, with well-located, grocery-anchored shopping centers attracting shoppers and commanding both investor and tenant interest.

With 23 of the 95 shopping centers in Levin’s portfolio anchored by grocery chain stores, we see this on a ground level. Tenants in centers for which we provide management and leasing services include major supermarket brand names like ShopRite, Stop ’N Shop, Fairway Market, Giant, Pathmark and A & P.

Although traditional supermarket chains face new competitive challenges within their own industry (from dollar stores, convenience stores and big box retailers) and from e-commerce, our experience indicates they will remain stable tenants and desirable anchors for three reasons:

1. Supermarkets are non-cyclical businesses. Grocers are purveyors of necessities. Consumers may trim their food budgets, eliminate luxuries and seek out bargains in hard times, but they must continue to visit supermarkets. Well-managed grocery businesses are better positioned to weather a downturn than virtually any other kind of retailer.

2. Supermarkets attract recurring traffic. U.S. consumers make an average of two trips to the supermarket weekly. Retailers that are co-tenants with grocery stores benefit from this regular exposure to the shopping public. And since one-stop shopping is popular in our time-crunched world, consumers are likely to combine a trip to the grocery store with visits to retailers in the same location.

3. Supermarkets face less competition from online shopping than other retailers. While the volume of online grocery purchases (usually for non-perishables) is growing, those same shoppers tend to continue in-store visits for certain items or to pick up the orders they placed through the store’s online option.

Levin Property Turn-Around Illustrates the Value of Grocery

The transforming power of the supermarket anchor tenant is illustrated in Levin’s recent reinvention of Post Road Plaza. Once the top performer in its trade area, the 40-year-old property had waned in popularity. Demographic shifts, a dated look and anchor tenant bankruptcies all contributed to the decline of this 260,000-square-foot shopping center. Levin was engaged as managing and leasing agent to restore Post Road Plaza’s market position and as construction manager to address its renovation.

Under Levin’s direction, a multi-disciplinary team was contracted and began the $15 million modernization process. Central to Levin’s vision of a restored Post Road Plaza was a brand name supermarket as anchor tenant. To our leasing team, Fairway Market, a popular Manhattan-based grocery store with an aggressive plan for expansion into the suburbs seemed perfect. And Post Road Plaza’s 75,168 square feet of space in affluent southern Westchester County was a perfect fit for Fairway as well. The cachet of the award-winning new anchor, a sought-after tenant throughout the region, helped draw national brands as tenants: Dave & Buster’s, Marshall’s Shoes, Lane Bryant and Smashburger. Existing tenants Modell’s and Dress Barn expanded into new prototypes and the revived Post Road Plaza was on its way to reclaiming the area’s top-performer spot.

Look for news and observations from Levin Management executives in upcoming posts here at Retail Property InSites. Please join us and share your comments about our posts or about your own management experiences and challenges in retail real estate.


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