At a glance:
- Anchor tenants drive consistent foot traffic, which benefits surrounding retailers and property owners.
- They reduce vacancy risk by increasing leasing appeal to smaller tenants and accelerating lease-ups in new or repositioned retail precincts.
- Long-term leases with anchor tenants support income stability, reduce turnover risk, and strengthen the financial profile of the asset.
- Anchors shape centre identity and brand perception, attracting specific shopper demographics and setting the tone for tenant mix and customer experience.
Retail centres don’t succeed on location alone. Their performance depends on a steady foot traffic, lease stability, and the right tenant mix, and no tenant shapes these outcomes more than the anchor tenants.
Whether it’s a major supermarket, department store, or hardware chain, the anchor tenant sets the tone for how the centre operates, attracts shoppers, and holds its value.
For investors, a well-matched anchor helps cut tenant turnover, speed up lease deals and improve the asset’s overall appeal. Their impact often reaches well beyond their footprint.
This article examines how anchor tenants impact retail property value and why their role is more relevant than ever in today’s evolving retail landscape.
What Are Anchor Tenants?
Anchor tenants are major retail or service brands that occupy prominent positions within a commercial property or retail precinct. Their scale, visibility, and consistent customer draw give them a central role in shaping a centre’s commercial profile.
These tenants typically include large-format supermarkets, discount department stores, or national hardware chains. In neighbourhood centres, brands like Coles or Woolworths offer everyday convenience and attract repeat visits. In larger regional hubs, retailers such as Bunnings or Kmart help establish the site as a destination, expanding its catchment and strengthening its market position.
The presence of a strong anchor sets expectations for the rest of the centre. It encourages leasing activity, builds tenant and consumer confidence, and underpins a steady flow of visitors. For investors, this translates to greater stability. Anchor tenants enhance the centre’s leasing appeal, support financing outcomes, and contribute to long-term asset value.
How Anchor Tenants Impact Retail Property Value
The NSW Innovation and Productivity Council reports that anchor tenants increase a site’s attractiveness, making it easier to lease surrounding spaces to smaller tenants. This clustering effect boosts rental income stability.
From foot traffic to lease structures, anchor tenants are a key indicator of how retail assets perform and appreciate over time.
Below, we break down the main ways anchor tenants shape the performance and long-term value of retail properties.
Driving Foot Traffic and Supporting Retail Performance
Anchor tenants are often the biggest drawcards in a retail centre. Their brand presence and essential services, such as groceries, homewares, or general retail, consistently draw people in. Unlike smaller tenants, they generate predictable, high-frequency footfall that supports the overall performance of the entire site.
This traffic gives smaller retailers greater exposure and increases the likelihood of impulse purchases from visiting customers. A supermarket visit might lead to a coffee stop, a browse through specialty retail, or additional errands, all contributing to longer dwell times and higher sales across the site.
For landlords and investors, this effect translates into real value. Consistent customer flow supports occupancy, stabilises rent performance, and reduces reliance on marketing to attract patrons. A high-performing anchor also strengthens the trading environment, justifying higher rents and long-term leasing interest.
Read More: How To Attract And Retain Tenants For Your Commercial Property?
Enhancing Leasing Appeal and Reducing Vacancy Risk
Anchor tenants help demonstrate a centre’s viability. Their presence gives new and smaller retailers the confidence that the location can attract reliable foot traffic.
This becomes particularly valuable during early development, repositioning phases, or when trying to fill vacant space in a changing market. Once a well-known anchor is secured, leasing tends to move faster. Retailers are more willing to commit when they see a proven traffic draw already in place.
This speeds lease-up periods and puts landlords in a stronger position when negotiating terms. Anchors help reduce vacancy risk, strengthen market perception, and support long-term occupancy outcomes.
Securing Long-Term Leases and Investment Stability
Anchor tenants usually sign long leases with built-in rent increases and clear renewal terms. For landlords, this means stable income and greater confidence when planning.
Their strong brand presence and proven trading performance also make them less likely to default, which increases investor confidence. This reliability can support higher asset valuations and make financing easier to secure.
At the operational level, anchors reduce costs by minimising turnover. Fewer lease expiries mean less downtime, fewer incentives, and more consistent day-to-day operations.
Within a broader portfolio, these steady leases help offset income volatility from smaller or short-term tenants. Over time, this consistency becomes a foundation for long-term asset growth and stability.
Read More: Building Strong Relationships with Your Commercial Real Estate Tenants
Shaping Centre Identity and Customer Perception
Anchor tenants play a central role in defining a retail centre’s market position. Their brand and offering shape how the centre is perceived by both customers and potential tenants. A discount retailer will draw a different crowd than a premium grocer or national service provider, and those customer patterns influence which co-tenants are likely to follow.
These dynamics affect everything from leasing strategy to promotional activity. For landlords, the anchor becomes a reference point for branding, signage, and tenant alignment, helping the centre remain relevant to its core demographic.
A well-known anchor can also lessen the need for centre-wide advertising. Its presence alone attracts foot traffic, giving the centre ongoing visibility without relying heavily on paid campaigns. This brand pull also benefits smaller tenants, especially when promotions are timed or themed around the anchor’s activity.
Read More: What to Look for When Investing in Retail Properties for Profitable Returns
Frequently Asked Questions About Anchor Tenants
What are the effects of an anchor store in a shopping centre?
They boost foot traffic, enhance the shopping centre’s attractiveness, help retain and attract other retailers, and generally increase the mall’s economic performance.
What is an example of an anchor tenant?
Examples of anchor tenants include major department stores, such as Myer or David Jones, big-box retailers like Bunnings, and large grocery chains like Aldi or Coles.
Can there be more than one anchor tenant?
Anchor tenants are typically the largest and most prestigious tenants in the centre. However, a centre may have more than one anchor tenant, such as in a power centre or regional centre.
To conclude, the presence of the right anchor tenant can shift a centre’s trajectory, lifting leasing confidence, setting the tone for daily operations, and reinforcing the asset’s long-term strength.
When owners treat these tenants as central to long-term strategy, not just short-term occupancy, the results tend to speak for themselves: better-performing centres and stronger investment outcomes.
This is why owners and investors who approach anchor strategy with the intent of matching brand positioning to local demographics and retail patterns are better placed to drive sustained returns. Even in underperforming centres, repositioning or introducing the right anchor can renew market appeal, rebalance the tenancy mix, and lift asset liquidity.
Axis Property collaborates with owners and investors to enhance outcomes through customised anchor strategies. Contact us to explore how the right anchor can elevate your retail investment.