In the retail classification of commercial real estate classes, there are many types of buildings that have different intended purposes. Understanding these intended purposes is useful for investors, renters, and developers, as it can help them paint a more accurate picture of how these properties should be valued.
The types of retail properties will have several advantages and disadvantages based on a number of factors including competition, location, pricing, market fluctuations, and more. Retail buildings are the brick-and-mortar for B2C shopping, so the more specifically that you can define a piece of commercial real estate, the better. That said, there is some overlap between the different types of retail properties that we’ll outline.
It should also be noted that the classifications of retail properties will differ in the eyes of local governments and taxing authorities, developers, property managers, and even tenants.
Anchor store meaning: You'll see the phrase "anchor store" used throughout this list. Anchor refers to "main attractions" in shopping centers. Grocery stores, for example, are anchor stores for many local strip malls because they attract foot traffic that the other stores might benefit from. Department stores are anchor stores for shopping malls.
That said, here are 13 different types of retail properties and how they’re loosely defined.
Malls come in many shapes and sizes but generally have larger square footage (400,000 to 800,000) with inward-facing stores. They’re generally enclosed and surrounded by large parking lots. A regional mall, for example, has a couple large anchor department stores that tend to stay in business year round and draw people in, regardless of the other stores in the piece of CRE. A couple of examples of anchor retailers are Macy’s and Dillard’s. Malls typically draw customers in from a 5- to 15-mile radius. The super-regional mall subtype is larger than 800,000 square feet. The 5.6 million-square-foot Mall of America in Minnesota is an example of a super mall. It’s also the largest mall in the U.S. with around 500 stores.
Due to the rise of e-commerce and online retailers, the number of malls is generally declining. There are currently around 700 malls still in the U.S., which a Business Insider article predicts will dwindle to 150 by 2032.
2. Shopping Center or Strip Mall
A shopping center or strip mall is a type of CRE that’s made up of several attached stores that are managed by one entity. Parking lots are generally located in front of the stores. There may be one or two large anchor retailers such as a grocery or hardware store located in this CRE. Strip malls and shopping centers vary significantly in size, but are generally less than 30,000 square feet. A shopping center may generally be smaller than a strip mall, but the difference between their definitions isn’t wide, as they are similar pieces of CRE. Shopping centers and strip malls draw customers from a 1 mile or less radius.
Shopping centers and strip malls are among the most numerous types of CRE in the United States, with around 68,000 centers accounted for in 2017.
3. Community Retail Center
All community retail centers are considered shopping centers or strip malls. However, community retail centers are generally much larger, at 150,000 to 350,000 square feet. This type of CRE will have multiple anchor stores including grocery stores, drug stores, and more. Restaurants will also be located within these spaces. Community retail centers may only draw in customers from a shorter, 3 to 6-mile radius.
According to ICSC research, there were almost 10,000 community centers within the United States.
4. Power Center
A power center can be thought of as a more specialized version of a shopping center, with 75% to 90% of its space dedicated to the anchor stores. They’re typically around 250,000 to 600,000 square feet. Although one or two anchor stores may dominate power centers, they may also be surrounded by restaurants and other smaller stores. Also note that Power Centers tend to be located near interstate highways. Power centers draw customers in from a 5- to 10-mile radius.
According to ICSC research, there were around 2,200 power centers in 2017.
5. Fashion Center
All fashion centers may be malls or shopping centers — but not all malls and shopping centers are fashion centers. A fashion center is defined by having several high fashion retail stores with famous, well-known brands in an 80,000 to 250,000 square foot space. Fashion centers may have anchor department stores that are larger, luxury department stores. They may be entirely indoors or have outdoor spaces. They also tend to attract customers from the same radius as malls at 5 to 15 miles. Examples of fashion centers include Fashion Centre in Pentagon City (Virginia), Scottsdale Fashion Square (Arizona), and The Fashion Mall at Keystone (Indiana).
Fashion centers aren’t officially recognized, so data isn’t available on how many there are in the United States. However, they are generally rarer.
6. Factory Outlets
Not to be confused with fashion centers, a factory outlet center is primarily for clothing manufacturers and retailers to locate their outlet stores. However, shoppers also find a number of household brands at outlet centers, as well. Outlet stores are where brands sell products that may have been overstocked, closed out, or reduced in price for a number of different reasons. They will generally be 50,000 to 400,000 square feet in space. However, they draw customers in from a large radius of 25 to 75 miles.
There were around 350 outlet centers in the U.S. in 2017; according to Outlet Bound, there are just over 220 outlet centers in the U.S. as of 2023.
7. Out Parcel
This classification of real estate involves parcels of land that are part of a larger piece of property. These parcels are then leased out to individual retail tenants like fast-food restaurants, shops, and others. Other types of CRE that we mention may out parcel land to retail, as this model can be used with shopping centers and strip malls, for example.
8. Big Box Retailers
Big box retailers are exactly what the name implies — megastores that take up a lot of square footage and dominate a shopping area. Some examples of big box retailers are Costco and Sam’s Club. A piece of big box retail property will be between 30,000 and 200,000 square feet and have only one large store. The number and distance of customers that big box retailers draw in will vary significantly by location.
9. Free Standing Retail
We’ve listed this type of retail after the big box CRE type because they’re the most similar. Only, freestanding retail is instead based around smaller, well-known retailers. They’re similar to big box retailers in that they will have freestanding buildings that aren’t connected to other retailers, as seen in strip malls. This piece of CRE is single-use, so its size and customer radius will vary depending on the brand. Walgreens and CVS are often freestanding retail stores that fall within this category.
10. Convenience Retail
A convenience retail center is the smallest form of strip mall, generally only having a couple of stores with a small on-site parking area. The name comes from the fact that convenience stores such as a 7-Eleven are the most common retailers found in this CRE type. These centers will be far less than 30,000 square feet, and draw a customer base from less than a 1-mile radius.
A mixed use property is the CRE property that combines any of the above types that we’ve listed. As an example, a mixed-use property may be a shopping center with retailers on the ground floor with offices or apartments on the second and third floors. In urban spaces where square footage is limited, mixed-use properties are common.
The size and specifications of a mixed-use property can vary significantly. Assess each unique piece of mixed-use property based on the two or more types that it combines.
12. Theme/Festival Center
A theme or festival center is a piece of CRE that’s strictly leisure, tourist, or retail with the caveat that it has stores under the umbrella of a single theme. They’re generally only in very urban areas near historic districts, entertainment centers, and amusement parks. A specific type of entertainment such as an aquarium or a zoo might serve as the anchor for this CRE. This type is generally 80,000 to 250,000 square feet and draws an audience from a large radius of 25 to 75 miles.
Note that there were only around 159 theme/festival centers in the U.S. in 2017.
13. Office/Industrial Conversion
The prevalence of work-from-home businesses has led to more office buildings sitting empty in lieu of prospective tenants. As a result, there has been a rise in offices and industrial spaces, with prime locations being converted into retail property. This may be a mixed-use conversion where part of the space is maintained as offices while retailers and amenities are added to make the space more attractive to prospective renters. Others may be total conversions, or urban renewal projects, with local governments and developers.
Office/industrial conversions are an exciting, recent occurrence that opens up many retail opportunities that were previously inaccessible. The average square footage and customer radius is still a developing statistic that will vary greatly on the location of the conversion.