Anchor Tenant

An anchor tenant is the large store, usually a grocery or department store, that draws shoppers to a retail center and supports the smaller tenants around it. Anchors often pay lower rent per square foot, but their presence and lease term have a large effect on the center's cap rate.

Buyers price the risk that the anchor leaves. A center with a strong grocery anchor on a long lease will usually trade at a lower cap rate than a similar center whose anchor has a few years left or has already gone dark. Smaller tenants often have co-tenancy clauses that let them cut rent or leave if the anchor closes.

For a cap rate analysis, that means the NOI of an anchored center is only as secure as the anchor lease. Look at its remaining term, renewal options and any co-tenancy language before accepting a quoted cap rate.