The Local Tenant Advantage

Wall Street has this part of the retail real estate world wrong – for now.

The fact is, investors LOVE national credit tenants and largely dismiss local mom-and-pop businesses.

This is a massive blind spot, and one of the reasons we’ve seen so much opportunity in the strip center space.

We do plenty of deals with nationals, but I’m just as happy to lease space to an experienced local operator who has already demonstrated that they know how to run their business successfully.  But you have to understand how to identify them accurately.

Rethinking What “Credit” Means

But where’s the credit?

That Chinese restaurant is that family’s identity. It helps put their kids through college. It’s their livelihood, and they are going to protect it at all costs.

That’s the credit!

In fact, if you do your diligence up front and ensure the operator is great, your space will likely remain full for decades to come.

I call them Local Legacy Operators, and they should be viewed as a separate category: proven local businesses whose operating history, customer loyalty, and personal commitment create a form of credit Wall Street consistently overlooks.

For example - a friend of mine has had the same local mom-and-pop hair salon tenant for around 30 years.

They’ve built a great business, they pay a fair rent (on time), and the landlord has not had to eat the cost of vacancy, a TI allowance, or a leasing commission in three decades.

Sure, they don’t have the “AAA credit” Wall Street seeks, but plenty of those credit tenants vacate too.

Local Favorites Can Be Destination Tenants

I ran this idea by Placer, our Gala sponsor, and asked for some data around it, and they turned it around fast.

One example is Tacos El Gordo in Chula Vista, California.

Placer data shows that between January and June of this year, 64.7% of customers visiting its Broadway location traveled more than seven miles to get their Mexican food fix.

Meanwhile, a Chipotle just a few blocks up the road drew only 24.2% of its visitors from that distance over the same period.

This is simply a massive draw.

Tacos El Gordo also attracts a high-value diner base. During the first half of the year, its visitors came from areas with a median household income of $93.3K, ahead of Chipotle’s $86.0K.

Its visitors also skewed more heavily toward Esri’s “contemporary” household segments – young, modern consumers whom many retail brands spend heavily to reach.

Guests also stuck around, with an average dwell time of 37 minutes, nearly double the 19 minutes logged at the nearby Chipotle.

For a landlord, that means more time on site, more exposure for co-tenants, and more opportunities for a taco run to turn into a full shopping trip.

Local Operators Can Bring a Different Customer Mix

Let’s use another example from the casual dining space in Frisco, Texas.

At Preston Ridge, the Texas-grown craft burger concept Rodeo Goat sits in the same center as Buffalo Wild Wings, one of the country’s most recognizable casual dining brands.

According to Placer, in Q2 2026, Rodeo Goat diners were more likely to visit Nordstrom Rack (8.0% versus 5.0%) and Best Buy (8.1% versus 6.6%), while Buffalo Wild Wings guests leaned more toward value-oriented retailers like Ross (10.0% versus 6.2%) and T.J. Maxx (9.8% versus 8.4%).

Both audiences clearly spend at the center – but for a landlord courting higher-end tenants, the local burger joint may be the more attractive traffic engine, delivering an audience more inclined to shop upmarket.

Smaller Concepts Can Deliver Outsized Loyalty

A third comparison points to a different kind of value: timing and loyalty.

Here, the smaller player is solidcore, the boutique strength-training concept, measured against Club Pilates, one of the most widely franchised names in the category.

In Q2 2026, the solidcore studio on Irby Avenue in Atlanta concentrated 45.9% of its weekday visits in the 10 a.m. to 4 p.m. window, 8.9 percentage points above the 37.0% share for Club Pilates across the Atlanta metro.

It also retained members more effectively: 18.3% of solidcore’s June visitors came at least four times during the month, compared with 12.3% at Club Pilates - a gap of 6.0 percentage points.

Many centers go quiet on weekday afternoons, so a tenant that fills that window and brings the same members back several times a month delivers a steadier baseline of foot traffic than its size alone would suggest.

A Category of Their Own

We love national tenants and do plenty of deals with them.

But looking back at my 20 years as a retail landlord, leasing to a proven local operator has often been just as good as leasing to a national, and often comes with a faster deal and greater staying power.

It is simply wrong to see the retail tenant world as “national versus mom-and-pop.”

There should be another category.

America’s Local Legacy Operators, for the win!

For more data-driven retail analyses, follow placer.ai/anchor.