Anchor Tenants

colocation

By Katie Edwards, Nonprofit Centers Network

When we work on feasibility studies for new centers, we like to see 2-3 tenant prospects that are financially stable, established in the community, and need a substantial amount of square footage. While “substantial” ranges from market to market, we like to see anchor tenants that would need 15-25% of the proposed space. For example, on a recent project we worked on which was anticipated to be 20,000 square feet, we recommended an organization that needed 5,000 square feet to be considered as an anchor tenant. If there is a high level of demand from medium size organizations (those with 5 to 20 staff), we would recommend that large anchor tenants take up less space, because there is the ability to diversify risk. On the flip side, if the only demand is from small 1-2 person organizations, we recommend searching for more anchor tenants. The usual scale of centers we work on is between 20,000-80,000 square feet.

 

We don’t have a maximum amount of space recommended for anchor tenants. Because of their stability, anchor tenants can be key for a project’s long term sustainability. The size of your anchor tenants does affect the power dynamics in the space and the willingness to collaborate. I worked out of one shared space where the biggest anchor tenant had about 100 staff, and the next biggest tenant had 20 staff. It was a major challenge to the center culture because the largest tenant didn’t have any incentive to work with the smaller groups. I’ve seen this tension in my current shared space, as well as in centers across Denver.

 

I also wouldn’t say there are typical responsibilities for anchor tenants. In some spaces, the anchor tenants have a larger say in center governance (like a representative on the board or steering committee), sometimes they second staff to help with the center management as a receptionist or in shared services (it’s more typical to see this scenario when the anchor tenant is getting a reduced rental rate). Much of this is determined by the tenant organization and how much involvement they’re looking for. Some like a high level of control over their space, while others are more hands off. We do see a lot of anchor tenants being offered longer term leases – 5, 10, and 15 years – to secure the business model of the space.


Last updated byNCNSupportStaff