4. Tax Equalization board convenes

2009 Property Taz Appeal Herberger's Department Store West Acres Shopping Mall Fargo, ND The marketing objectives of the regional shopping center today results in a symbiotic relationship between the developer and the anchor department stores. The anchor department stores provide the name recognition to the consumer, e.g., Younkers, Herberger's, Sears, J C Penney, Macy's, etc.., these department stores advertise heavily in the local mazkets, lending both name and status recognition to the mall. They provide the appearance of old-line stability to the marketing of the mall. Thus, the existence of the anchor department store creates value to the developer, and to the very name of the mall. By their ability to draw customers to the mall, and ultimately to the in-line spaces, they create financial stability to the mall. In turn, the in-line tenants bring in additional customers into the mall, and into the anchor department stores. Therefore the business plan of a regional mall provides for an actively managed and self-contained, finite retail shopping environment, which works sufficiently for both the anchor and the in-line tenants in the mall. Anchor department stores have generally commanded a lower rental rate than big box retailers as a result of this symbiotic relationship Anchor department stores are a subset of a larger retail mazket for several reasons. Traditionally, big box retailers and discount department stores are 50,000 to 120,000 square feet in size. They are almost always one-story, stand alone structures or could be attached to an open air shopping or strip center. Their land to building ratios is generally higher, as much as 10: I . By contrast, an anchor department store is typically a two to three story building with 100,000 to 300,000 squaze feet. They may or may not include a parcel containing sufficient area to provide adequate pazking. If not, the mall site generally contributes the parking area. They are usually located strategically on a larger mall site to maximize the mall's layout and exposure to incoming traffic. Due to the various dissimilarities between anchor department stores and big box retailers they are two very distinct subsets of retail and subsequently rental activity. While they compete with one another, the financial chazacteristics of each are distinctly different. For example if a 30,000 square foot single story big box retailer has sales of $15MM of goods per yeaz, its sales will average $500.00 per square foot. An anchor department store with 100,000 square feet with equal sales will produce $150.00 per square foot. Assuming both stores pay rent at 2.5% of sales the big box retailer would pay rent of $12.50 per squaze foot while the department store would pay rent of $3.75 per square foot. Therefore, physical and financial disparities alone would suggest that big box retail store rents not be used to determine the rental rates for anchor department stores and vice versa. Market rent for anchor department stores is unique from other property types. The rent is directly related to actual sales as well as a portion of fixed rent. Historical department store data show a direct relationship of rent to sales. As gross sales increase on a per foot basis rent increases as well, usually at a decreasing rate.