Line shop

Line shop CRE

A line shop is a type of retail tenant (generally found in a shopping center or mall).

Line shops generally are located in the retail space that lives adjacent to a shopping center’s anchor shops.

Line shops can live on the continuum of tenant quality from nationals, through to franchise operations, through to “mom and pop”. National tenants generally carry better covenants – i.e. are financially stronger, with lower risk of defaulting on tenant commitments (and assets to back up that risk in the sad event of default).

A line shop generally carries a disproportionately higher share of the weighted average rental. This is due to a couple reasons – the most significant being:

  • Anchor tenants are the “bait” that  “attract feet”. That is, they attract customers who bring business to the center and its line shops
  • Anchor tenants’ rentals are generally low (and they will generally sign longer leases). Therefore a landlord (or property fund) needs higher rentals per square meter to subsidise the lower anchor tenant rentals / achieve a higher blended rental across a shopping center to “make the numbers work”

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