RealTown Words

A modern classification of retail stores, characterized by off-street parking and clusters of stores, subject to a uniform development plan and usually with careful analysis given to the proper merchant mix. After World War II, shopping centers were developed in the once-open tracts of suburban land as retail and consumer service stores followed their customers to suburban areas.

Neighborhood centers usually consist of a supermarket, variety store, service station, and a few smaller specialty shops. They are designed to serve the immediate neighborhood. The most simple and common design for a shopping center is the “strip center,” with stores built in a line and facing the street or parking area and an anchor store at each end (such as a supermarket and a large drugstore).

Community centers usually contain supermarkets, department stores, variety stores, drugstores, and apparel shops. They are larger than neighborhood centers and designed to serve the entire community.
Regional centers are large planned centers, sometimes enclosed malls, containing many national chains and up to 50 or more stores. Easy access, free parking, and large selections have made regional shopping centers a way of life in many suburban areas.

A shopping center lease is usually a net lease with the rental determined on a percentage basis. The applicable percentages vary greatly among the types and sizes of retail stores, with the large department stores paying a lower per-square-foot minimum rent and a lower percentage than smaller stores. All tenants must belong to a merchants’ association, which promotes the shopping center through institutional advertising. Stores must be operated during established hours and limited to the use specified in the lease. The tenant must pay a pro rata share of taxes, maintenance, and insurance; agree to keep his or her books open for audit; and sometimes use a special type of register to assure the landlord that the tenant accurately records the gross sales upon which the percentage ratio is based. The landlord may go as far as employing spot buyers to make sure that sales are properly recorded on the register.

Most shopping center leases contain some form of “radius clause” that might forbid the landlord to rent premises to the tenant’s competitors within a specified radius of the shopping center or that might prevent the tenant from opening another store within a specified radius of the center. However, these noncompetition clauses have come under attack by the Federal Trade Commission as unreasonable restraints of trade, illegal under the Sherman Antitrust Act.