New uses the clamor to fill the empty anchor space in California

Private and institutional capital flooded the retail market in 2022. Deals between First Washington Realty and Donahue Schriber, Kimco Realty Corp. and Weingarten Realty Investors, and Shopcore Properties and Merlone Geier Partners have made one thing clear: box anchor space is nothing to fear when it’s a central feature of a shopping mall with daily needs.

In the years following the Great Recession, the long-term stability of any space over 20,000 square feet was a major concern for investors. Vacancies seemed to increase every year as outdated concepts closed their doors, unable to keep up with the changing retail landscape. Flash forward to 2020 and the pandemic has pushed neighborhood malls and their 20,000 to 40,000 square feet. anchors, back in the spotlight. This type of core retail asset, primarily anchored by grocers, has maintained strong growth with no signs of slowing down.

In Southern California, medical centers, gyms, pet services and other new uses support new development and repositioning of older centers. In Orange County alone, more than 1.1 million square feet of vacant homes have been absorbed since 2020, and rental activity is expected to remain strong for the remainder of the year.

Who are the active tenants looking for an anchor space?

The specialty grocer category grew 2% year-over-year since 2017, with each brand targeting a niche audience, differentiating from traditional grocers. With detailed demographic data, these retailers fully understand their customers, the best locations, the most efficient store formats and the ideal square footage. Led by Sprouts and Northgate Market, specialty grocers are an $11 billion industry in the United States and have a significant impact on the Southern California landscape.

Asian specialty grocer 99 Ranch Market has been focused on expanding into suburban markets and is actively seeking deals in southern Orange County. Target 40,000 square feet. spaces, the grocer is also considering smaller 20,000 square feet. formats in established communities. Korean-American grocer H Mart, meanwhile, has focused its recent expansion on a larger 60,000 square foot. sites in which it can offer a full range of Asian foods and a wide range of Western groceries. In 2021, the brand opened two locations in Irvine that were once home to the Albertsons.