Walk through almost any major shopping mall in Singapore today and you’ll notice a subtle but significant shift.

Spaces once occupied by sprawling department stores or large-format retailers are increasingly being divided into clusters of smaller shops, restaurants, wellness operators and lifestyle brands. To many shoppers, the change simply reflects evolving tastes. To landlords, however, it represents something far more important: a new economic model for retail property.

For decades, shopping centres were designed around the concept of the “anchor tenant”—a large retailer that attracted visitors and supported neighbouring stores. Today, that model is being replaced by a strategy centred on productivity, diversification and data. Rather than asking which tenant can occupy the most space, landlords are asking which mix of tenants can generate the greatest rental income, strongest shopper engagement and highest long-term asset value.

The answer is increasingly leading them towards smaller, more specialised retailers.

Bigger Isn’t Always Better

The traditional anchor tenant model emerged during a period when department stores and supermarkets served as primary shopping destinations. Their size gave them bargaining power, enabling them to negotiate favourable lease terms in exchange for attracting large numbers of visitors.

But consumer behaviour has changed dramatically.

Online shopping has reduced the importance of physical stores for routine purchases, while brand owners increasingly sell directly to consumers through their own websites and flagship outlets. Large department stores no longer enjoy the same competitive advantages they once did.

For landlords, this creates an opportunity to rethink how space is used.

Instead of leasing 60,000 square feet to a single tenant at a relatively modest rental rate, the same area can be subdivided into multiple units catering to different customer segments. Collectively, these tenants often pay higher rents per square foot while attracting visitors throughout the day rather than at a few peak periods.

The economics can therefore become significantly more attractive.

The Productivity Equation

One of the most closely watched metrics in retail property is sales per square foot.

A tenant occupying a large footprint must generate sufficient sales to justify the space it occupies. If productivity declines, landlords face an opportunity cost: the same floor area might generate higher returns if reconfigured into several smaller units.

This explains why landlords increasingly evaluate tenants based not only on rental income but also on their ability to drive traffic, support neighbouring businesses and contribute to the mall’s overall ecosystem.

A specialty coffee chain with constant queues, for example, may occupy only a fraction of the space once used by a department store, yet generate significantly higher sales density and encourage repeat visits that benefit surrounding retailers.

Diversification Reduces Risk

From an investment perspective, relying on one large tenant creates concentration risk.

If an anchor tenant vacates, landlords may suddenly lose a substantial proportion of rental income while facing prolonged vacancies during replacement.

A diversified tenant mix spreads that risk across dozens—or even hundreds—of operators. Individual closures become more manageable, while the mall can continually refresh its offerings without disrupting the overall customer experience.

This approach also allows landlords to respond more quickly to changing consumer trends, introducing new concepts without undertaking major structural changes.

Why Gross Turnover Rent Is Becoming More Important

Traditional retail leases typically consist of a fixed base rent with a variable component linked to the tenant’s gross turnover.

As consumer spending becomes more volatile, some property consultants argue that landlords and retailers may increasingly favour lease structures with lower fixed rents and a larger performance-based component.

Such arrangements align incentives more closely. Retailers gain greater flexibility during slower trading periods, while landlords participate more directly in sales growth when business performs well.

If adopted more widely, this could reshape landlord-tenant relationships over the coming decade.

Data Is Replacing Intuition

Perhaps the biggest change in shopping centre management is invisible to most visitors.

Modern landlords increasingly rely on sophisticated data analytics rather than instinct when making leasing decisions.

By analysing footfall patterns, dwell time, repeat visitation, demographic profiles and spending behaviour, they can identify underperforming spaces, optimise tenant placement and forecast the likely impact of new concepts.

In this environment, the value of a tenant extends beyond rental income alone. A retailer that attracts customers who subsequently spend elsewhere in the mall may be more valuable than one generating strong sales in isolation.

What Investors Should Watch

For investors evaluating retail REITs, the success of a tenant mix strategy cannot be measured simply by counting new store openings.

More meaningful indicators include:

• Rental income per square foot
• Sales productivity
• Occupancy costs
• Tenant retention
• Rental reversions
• Shopper frequency
• Average dwell time
• Net property income growth

These metrics provide a clearer picture of whether management is creating sustainable value rather than merely refreshing a mall’s appearance.

Conclusion

The future of shopping malls is unlikely to be defined by a handful of giant retailers.

Instead, it will be shaped by hundreds of carefully curated businesses whose combined performance exceeds the value once delivered by traditional anchor tenants.

For landlords, this is a story about capital efficiency.

For retailers, it is a story about adaptability.

For investors, it is a reminder that the economics of retail property are evolving—and that the most successful malls may no longer be the ones with the biggest tenants, but those with the smartest tenant mix.