What is a pad site in real estate?

In real estate, a Pad Site (also called an outparcel or retail pad) is a freestanding parcel of land located within or adjacent to a larger shopping center, strip mall, or commercial development. These sites are typically positioned along the perimeter of the development—often near major roads, entrances, or high-visibility corners—and are leased or sold separately from the main center.

Key Characteristics of Pad Sites

• Freestanding Location: Usually intended for standalone buildings such as banks, fast-food restaurants, coffee shops, or gas stations.
• High Visibility: Positioned for maximum exposure to passing traffic, often along arterial roads or at the main entrance to a shopping center.
• Separate Ownership/Lease: While part of the larger retail development, the pad site is often its own parcel, with its own parking and access points.
• Drive-Thru & Quick Service: Because of their accessibility and exposure, pad sites are popular with quick-service restaurants (QSRs), pharmacies, and other businesses needing drive-thru operations.

Benefits

• For Developers/Landlords: They can sell or lease pad sites at higher rates per square foot because of their visibility and independence.
• For Tenants: Businesses gain signage, branding, and traffic exposure that may be less available inside a larger shopping center.

Example

In a large retail development anchored by a grocery store, the grocery might be in the main building, while Starbucks, Chipotle, or Chase Bank occupy separate pad sites near the road, each with its own building and parking.