Co-Tenancy Analysis

Co-tenancy analysis evaluates the performance impact that neighboring businesses have on each other when they share a retail center, strip mall, or commercial corridor. Certain tenant combinations generate traffic synergies—a grocery anchor drives visits that benefit adjacent quick-service restaurants—while incompatible tenants may create negative spillovers or simply fail to share customers.

Analysts use foot traffic dataFoot Traffic DataFoot traffic data captures the volume, timing, and patterns of human visits to physical locations such as stores, mal... to measure cross-shopping rates: the percentage of visitors to one tenant who also visit another tenant in the same center during the same trip. High cross-shopping rates indicate strong co-tenancy synergy. Performance correlation analysis compares revenue or traffic trends between co-located tenants over time to identify whether an anchor tenant's strength reliably lifts neighbors. Regression models quantify how much of a store's performance is attributable to its co-tenants versus its own trade area characteristics.

Retailers evaluate prospective sites partly based on the quality and synergy of existing co-tenants—a home improvement store may perform better next to a garden center than next to an electronics retailer. Shopping center developers curate tenant mixes to maximize cross-shopping and aggregate traffic. Lease agreements often include co-tenancy clauses that allow a tenant to reduce rent or exit if a specified anchor tenant leaves, reflecting the recognized importance of co-tenant-driven traffic. Co-tenancy analysis ensures that site selectionSite SelectionSite selection is the analytical process of evaluating and choosing optimal physical locations for new stores, facili... accounts for the powerful effect that neighbors have on a store's ability to attract and retain customers.