Shawn Massey, CCIM, SCLS

Why do Co-Star, Xcelligent and LoopNet Disrespect Retail?

 I find myself in a role as one of the primary retail real estate advocates in my market.  For example The MAAR Commercial Real Estate Council for the past two or more years has held their annual golf tournament the same week most of the retail real estate brokers, developers and other industry professionals are in Las Vegas for the ICSC Annual Conference.   Although, a greater challenge than trying to get MAAR to change their date for their annual golf tournament so more retail brokers and developers could attend is getting the area CIE (Commercial Information Exchanges) such as Co-Star, Xcelligent and LoopNet to classify retail assets in a similar fashion to office and industrial real estate assets.  I will explain later why this is very important and critical to the retail real estate industry.

For Example: The classification of office buildings as either A, B or C usually relates to design and functionality, the year of construction and the building’s location. Classification differs slightly from city to city, but generally follows a standard pattern, which is described below:

  • Class Buildings. These buildings sport modern construction with state-of-the-art functionality and architectural design, infrastructure, life safety and mechanical systems. Class A buildings are also located in the most sought-after areas. Not surprisingly, Class A buildings typically command the highest rents, include the best amenities and, consequently, offer the least attractive concession packages for tenants.
  • Class B Buildings. These buildings are usually highly functional, well-located facilities more than 10 years old. Class B buildings generally feature a less desirable design and infrastructure than Class A buildings, although a well-located B building can be renovated and reclassified as Class A.
  • Class C Buildings. Generally, Class C buildings are more than 25 years old and have not been renovated. C buildings are functionally and architecturally obsolete and are located in less desirable areas. They command the lowest rents and attract the least credit-worthy occupants. It is not likely that a C building could be rehabilitated to A status, regardless of its location.


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Industrial real estate is classified very similar to the office classifications above.


So why is retail not classified the same way by the CIE’s and even within the retail industry?  I could not find a simple answer to my question.  Below is the chart produced by the ICSC (International Council of Shopping Centers) and then a more descriptive breakdown of different retail classifications that I was able research.



Table I: Summary of ICSC Shopping Center Classifications

Type                                                                           Sub-type        Concept Size Range

Malls Sq.ft.

Regional Center General merchandise,                         fashion                      400-800,000

Super Regional Center Same as regional;         more variety                                                                                                                                      & assortment            Over 800,000

Open-air Centers

Neighborhood Center                                             Convenience            30-150,000

Community Center                                                  General merchandise;                                                                                                                    convenience                         100-350,000

Lifestyle Center Upscale;                                       national specialty;                                                                                                                            entertainment,

outdoor                      150-500,000

Power Center Category-                                         dominant anchors,                                                                                                                          few small tenants    250-600,000

Theme/Festival Center Leisure;                            tourist-oriented;                                                                                                                                retail & service          80-250,000

Outlet Center                                                            Manufacturer’s                                                                                                                                 Outlet stores              50-400,000

Sources: Runstad Center, ICSC


Strip Center / Retail Park: Indicates a shopping center that is not enclosed and that its stores’ entrances typically face the parking lot.

Mall & Other : “Mall” indicates that the shopping center is enclosed and the shop’s entrances are predominantly facing the center’s interior while “Other” indicates retail properties that are neither enclosed malls nor unenclosed strip centers/retail parks.

FEATURES – Property characteristics that determine the market niche of the shopping center.

Airport: A consolidation of retail stores located within a commercial airport.

Anchor only: Indicates the transaction was only for the property occupied by the (an) anchor tenant .

Anchored: Indicates a shopping center with at least one anchor tenant.

Bank branch: Indicates the sale of a bank branch.

Big box: A size qualifier for any freestanding retail property standing alone, e.g., Home Depot, Target, Walmart. These properties are often essentially large warehouse buildings.

Convenience store: Indicates that the center has a convenience store.

Drug store: Indicates that the center has as a tenant a major drug store chain.

Freestanding: Typically refers to a single-tenant property that is separate from a shopping center.

Grocery: Indicates the center has a grocery store, including hypermarkets and big box grocers such as a Sam’s Club or Walmart.

Lifestyle center: Upscale national-chain specialty stores with dining and entertainment, usually in an outdoor setting. Note that while lifestyle centers have typical size guidelines (150,000 – 500,000 sf), the center’s size does not dictate its classification.

Mall: Indicates that the shopping center is enclosed and the shop’s entrances are predominantly facing the center’s interior.

Other: A catch-all definition indicating a retail property that is neither an enclosed mall nor an unenclosed strip center/retail park. This term is often associated with Urban/Store front and freestanding properties.

Outlet: Indicates a shopping center comprised primarily of factory outlet stores where manufacturers sell product at a discount. Outlet centers are often but not always open-air rather than enclosed shopping centers.

Power center: Indicates a shopping center that generally contains three or more category-dominant anchors, including discount department stores, off-price stores, wholesale clubs, and relatively few small tenants.

Restaurant: Can be a feature of a shopping center but does not refer to the sale of a restaurant unless that restaurant is located within a market’s central business district (CBD ).

Strip Center: Indicates a shopping center that is not enclosed and that its stores’ entrances typically face the parking lot.

Theater: Indicates the presence of a movie theatre within the shopping center.

Unanchored: Indicates that the center has no anchor tenant. This is exceedingly rare.

Urban Retail / Store front: Indicates a retail property that sells in a CBD and is not part of an enclosed mall or open air center.

Source:  Real Capital Analytics.

We hear all the time that REIT’s are looking at “First Tier Markets” and “Core Assets” such as grocery anchored retail for acquisition.  I know internally in our discussions, we talk about retail as A, B or C quality with maybe a +/- sign added to the description.  Why can’t the retail industry and CIE’s further establish a classification of A, B and C in similar fashion to office and industrial properties?

Why is this type of classification important to the retail real estate industry?

  1. Better understanding of the true rental rate – In Memphis, the rental rate for overall retail commercial properties is slightly less than $10 PSF NNN.  Try finding a vacancy in any of the better trade areas or better properties for anywhere close to that amount.
  2. Better understanding of the true vacancy rate – In Memphis, the overall vacancy rate for retail commercial properties is just slightly below 15%.  It is my observation the vacancy rate for B+ or better retail real estate in my classification is 3% or less in our market.  I hear the same thing for Nashville, Little Rock and other markets throughout the Mid-South.
  3. Helps appraisers with valuations – I receive calls all the time from area appraisers trying to establish a true rental rate and vacancy rate for either proposed new developments or for existing projects.  They find it hard to justify that a developer is going to get $30 PSF NNN when the overall market is less than $ 10 PSF.  Some of that comes from a lack of true understanding of retail.
  4. Will provide a catalyst for financing on new developments – When the banks see that well conceived first quality retail projects are in demand by credit worthy retailers than the money will begin to flow to these projects.
  5. Will help brokers justify asking rents in the better retail projects – Whether I am representing the landlord and/or tenant in a transaction I hear constantly that the rent is over-priced and the market rent is closer to $10 PSF because that is what is published on the various CIE’s.

Will this further classification process be difficult?  The answer is absolutely and it will take time before the assets are all classified correctly.  As you see in the above retail classifications there are many sub-categories within retail real estate alone that make any additional classification a difficult task.  Although, it is necessary!  In retail it is quite probable that you can have an “A” trade area, with a newly constructed development that is still not an “A” asset due to ingress or egress, tenancy or a myriad of other factors that make retail unique.

An office example of misclassification:  I recently received a flyer from a well known local broker on an “A” quality office building he was advertising for lease.  When I opened up the document I saw a 3,000 square foot freestanding brick building on a side street in a B trade area that was in good condition, but had some age.   Obviously, this is not an “A” quality office building.    

I do not want to give Co-Star, Xcelligent and LoopNet a hard time.  They do an excellent job in their database to include as many retail properties as possible.  Their research staff is constantly working with industry professionals to ensure the information accuracy.  We may need to further commit some of our time to aid them in making sure they have accurate information.  I personally need to do a better job!

So consider this more of a plea for the different information providers to bring a new retail real estate classification to the next level in similar fashion to office and industrial classifications.  It will make life a little simpler for many of the industry players and promote quality new developments to take place throughout the Mid-South.

I will continue to work on MAAR and the Commercial Real Estate Council in the Memphis area to get a better date for their annual golf tournament (I am terrible golfer with absolutely no chance of winning, but love the “Make a Wish” cause that is supported.) that will include the retail industry represented.  In addition, I will champion the cause to add a retail tenant representative category to their annual industry Pinnacle awards similar to office and industrial awards rather than just one award for overall retail.  They may get tired of this retail advocate soon on their boards and councils, as I am always pushing for retail to be at the next level.

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Shawn Massey, CCIM, SCLS is a partner with The Shopping Center Group a 3rd party retail real estate advisory firm in their Memphis office, an adjunct professor in the graduate real estate program at The University of Memphis and a co-founder and Chairman of the Board for the Memphis Business Academy charter schools (K-12th grade) in the Frayser area of Memphis.  

For all your retail real estate needs (tenant representation, landlord representation and property, investment & land sales) I hope that you will choose The Shopping Center Group and me to represent you and your business.  We understand that representation is a privilege and that you have a choice!

The opinions expressed in this post are entirely my own.  They should not be considered the opinion of The Shopping Center Group, LLC in which I am associated.

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One comment

  1. Ron Coppock /

    Amen, brother! Excellent article, Shawn. I think a better understanding of true values will only help all parties involved. This will only happen with a better classification system.

    Ron Coppock
    KW Commercial Atlanta Perimeter

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