What is an Anchor Tenant?

Anchor tenants are businesses that serve as the major tenant in a shopping mall, office building, or business district. A tenant of this type is usually a company that is well-established, has a good reputation, and serves as a magnet for other businesses that want to locate in the same general area and possibly attract business from either the anchor tenant or its customers. Also known as a draw tenant or key tenant, the lack of an anchor tenant will often mean difficult economic times for the owners of the property, since attracting other businesses will be much more difficult.

One of the more common applications of the anchor tenant approach is found with shopping malls. Typically, malls will seek to include at least one or two well-known retail chains or department stores within the selection of stores available to shoppers. Smaller malls may design the structure so that an anchor tenant is included at each end of the mall, with lesser-known merchants located in the expanse located between the two. This approach helps to make access to the key stores easy, while also providing a great deal of foot traffic to the other merchants, thus enhancing the possibility of sales for all stores within the facility.

Another example of the use of an anchor tenant can be seen with an office building. Here, the top floor may serve as the hub of operation for the draw tenant. The lower floors are reserved for companies that hope to do business with either the key tenant proper, or at least the employees of this primary tenant. For example, if the top floor of an office building is located on the top floor, the lower floors may be occupied by lunch counters, a restaurant or two, and retailers who carry business attire. The mix of tenants may also include businesses that offer services to support the work of the law firm, such as detective agencies, notaries, and printers specializing in business cards, brochures, and business documents.

The decision by an anchor tenant to move the operation to another location can serve as the death knell for a mall or office building. This often occurs as business and shopping centers shift from one area of a community to another. Typically, the smaller merchants will close within a year or two after the anchor tenant has vacated the premises, unless another anchor tenant can be enticed to take over the vacated space. Even then, if the nature of the new key tenant is different from the nature of the recently vacated tenant, the change may still result in the departure of a number of the smaller merchants, which in turn increases the chances for closing the entire facility.