October 2022

The Domino Effect

How one or two strategic tenants can have a positive domino effect—and how strategic merchant mix can transform new or underperforming centers into true community assets.

As shopping center owners and operators can attest, one tenant can make or break a retail center. The right anchor tenant can inspire a cascade of consequential co-tenancy decisions that can not only change the tone and tenor of the center—but potentially an entire community. This domino effect is a familiar phenomenon for leasing professionals, who understand not just how tricky it can be to get the right domino in place—but also how dramatic the results can be once that first domino falls.

There is no clearer example of that dynamic in action than Rialto Village, a 96,000-square-foot shopping center in Rialto, California that broke ground in August and is slated to officially open its doors in 2023. For Rialto Village, the headline has been the announcement that Sprouts Farmers Market has signed on as the anchor tenant. Joining Sprouts is a long list of familiar brands including Burlington, Ulta, Five Below, Mattress Firm, In-N-Out Burger, Cold Stone Creamery, and many more.

Community buildings

The Rialto Village story isn’t just an illustration of how one prominent brand can shape or re-shape a center, it’s also a great example of how understanding a community—and building relationships with the people that live in that community—can lay the groundwork for the kind of successful projects that become commercial and social centerpieces for area residents.

Rialto Village is follow-up to the successful Rialto Marketplace project, a project that includes one of the nation’s busiest Walmart locations among its nearly 240,000 square feet of retail. The twelve years it took to bring Rialto Marketplace to life also involved a great deal of persistence, patience, and relationship building with local residents and civic leaders in the City of Rialto. The extraordinary success of Rialto Marketplace, and the trust that was built along the way, led directly to Rialto Village—and the ability to strategically market and develop the property. The timeline for this follow-up project, a considerably shorter four-years of development, was subsequently streamlined due to the expert knowledge of the community and its processes.

The evolving story

While developers almost always have an idea in mind for a new project, the reality is that the details are rarely clear about exactly how to get there. Putting the puzzle pieces together in a way that yields a great retail destination involves weighing a number of factors, figuring out what makes the most sense, and seeing what is realistically achievable.

Those factors include:

• Meeting community needs
• Establishing an anchor-driven identity
• Maximizing GLA
• Satisfying Existing tenant priorities
• Capitalizing on co-tenancy synergies
• Creating logistics and layouts (parking, square footage, center configurations, etc.) that work within existing/available space

In the case of Rialto Village, original layouts and proposed plans for the project featured a long list of different iterations. Some versions had a cinema anchor, others a grocer and a gym. Each of these proposed plans came along with accompanying lease negotiations, proposed tenant agreements, cost estimates, and design changes.

This is an evolutionary process: a kind of architectural and development storytelling, shaped by the factors listed above, by the geography of the site, and even by the geometry of the site. Over time, the story being told may begin to change. But once a true anchor tenant commits to the project—a tenant that meets the needs of the community—a theme and a storyline have been established that shapes the narrative arc throughout the rest of the development process.

The first domino

Securing a commitment from Sprouts was the first domino for Rialto Village. Signing a prominent natural food market brand to a project with Rialto’s demographic profile was a true coup, and one that has been understandably celebrated by local residents and by prominent figures like the Mayor of Rialto. When the project comes online next year, Sprouts will be the only organic grocer in Rialto.

From a developer’s perspective, Sprouts’ commitment brought that kaleidoscope of possibilities into focus and helped distill a virtually unlimited range of possibilities down to a focused path forward. It met urgent and previously unfulfilled community needs in a dramatic and headline-grabbing way and helped establish a level of quality that subsequently generated surplus interest on several of the retail spaces.

In other words, once Sprouts was in place, the dominos began to fall. Building a great tenant roster often takes time, but if a developer can get that first domino right, things have a tendency to accelerate. And in the cases of a project like Rialto Village, the result promises to be a game-changing retail project for a community that continues to find new reasons to celebrate.

The Buzz @ Rialto Village