What Is a Power Center?

A power center is a large (250,000 to 750,000 square ft.) outdoor shopping mall that usually includes three or more "big box" stores. This type of property might include smaller retailers and restaurants that are either free-standing or located in strip plazas and surrounded by a shared parking lot. Power centers are built for the convenience of motorists. Unlike traditional big box stores, power centers often have distinctive architectural features.

Understanding Power Center

The first power center opened in Colma, Calif. in 1986. Since then, the power center model has steadily edged out the traditional shopping mall. Renovations of older malls commonly involve turning them into power centers rather than add new retail space to existing facilities. For space reasons, power centers are predominantly located in the suburbs. There are exceptions when urban areas are redeveloped to accommodate a power center.

How Power Centers Fit in the Retail Real Estate Market

Power centers are often designed to make the big-box anchor tenants highly visible to consumers and the additional retailers are laid out to complement their presence. For example, the major anchor tenants could include a large supermarket, a seller of home furnishings and a big-box electronics and appliance retailer. Each major tenant offers frequently sought products that consumers regularly purchase. The anchor tenants are typically chosen so they will not conflict or cannibalize each other’s customers.

For instance, the customer visiting the supermarket restocks on food for their home. They might also drop by the appliance retailer to look for a new refrigerator for their kitchen. Paying a visit to the home furnishings store would offer them the chance to pick out a new sofa for their living room.

The smaller tenants in a power center might be specialty retailers or eateries. This can include hair and nail salons, wine stores and wireless phone sellers. Small casual and quick-serve dining establishments may be positioned here to offer shoppers a place to have a meal as they make their way between the anchor tenants. The amount of time that consumers spend at a power center can increase with the diverse options made available to them. The inclusion of a movie theater on such a property adds an entertainment option to attract more visitors.

Power centers are not immune to market whims and economic downturn. Some major tenants failed and went out of business during the 2008 Financial Crisis. The large vacancies left properties with a reduced draw and potentially decreased interest among the remaining tenants to remain on the property.