Retail · Rollover
Anchor Space Is Taking 25 Months to Backfill. Model It That Way
Backfill demand is real and it is also slower than it was. Both things are true, and only one of them is in most pro formas.
Two facts sit awkwardly together in retail right now. Bankruptcy auctions are clearing well-located leases to stronger tenants at higher rents. And anchor space is taking materially longer to fill than it did two years ago.
CBRE's Georgia data captures the second half. Available anchor space, 20,000 square feet and above, rose 57 percent between 2023 and 2024, from 4.3 million to 6.8 million square feet, as Big Lots, Party City and Joann all liquidated into the same market. Average time to backfill went from 21 months to 25. Asking rents and concessions moved against landlords accordingly.
Why both things are true
Demand is concentrated. Discount, off-price, fitness, healthcare and specialty tenants are expanding, but they are selective about location and they will not cannibalise their own footprint. Well-located space clears fast, often at the auction itself. Everything else waits.
So the national statistic, strong backfill demand, is accurate and useless for underwriting a specific property. What matters is where your box sits in that distribution.
What four extra months costs
More than people assume, because downtime compounds. Four additional months on a 25,000 square foot box at $14 a foot is roughly $117,000 of rent that never arrives. But you also pay taxes, insurance and utilities across those months, you delay every escalation behind the commencement date, and on a levered deal you are covering debt service out of pocket the whole time.
On a five-year hold, four months of extra downtime can move a levered IRR by more than a fifty basis point change in your exit cap. It rarely gets that much attention.
How to underwrite it honestly
Count the competing empty boxes within a few miles. If there are three, you are fourth in the queue and your downtime assumption should say so. Then run the deal at your assumption and again at six months longer, and see whether you would still buy.
If the answer changes, the deal is a bet on leasing velocity rather than on real estate.
Test it: Vacant pharmacy box and Strip Plaza both rank downtime against every other driver so you can see what it is actually worth.
Related notes
How to read this. These are working notes. Figures come from public reporting and from the models on this site, and market conditions change, check anything time-sensitive against the source before you rely on it. Nothing here is investment, tax or legal advice, and no note is a substitute for diligence on a specific property.
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