Thailand's leading real estate agent

Love thy neighbourhood shopping centre: Community malls take off

By on Sep 10, 2012 in Property News, Residential

Appealing to a more specific target group than larger developments, these complexes are proving popular in communities throughout Bangkok

Shoppers in Bangkok are certainly spoiled for choice when it comes to retail outlets. Along with large-scale malls, community malls are becoming a part of everyday life. In Sukhumvit alone you will find community malls on almost every corner. Today, community malls are found in most neighbourhoods, both in central Bangkok and increasingly in emerging suburban residential locations.

A community mall in Thailand is a small-scale retail development designed to serve its immediate catchment area and a specific neighbourhood. Many often ask what the right size is for a community mall? In practice, there is no right size or set formula for successful community malls. The scale of the development is often dictated by the size of the catchment area and the number of existing and future projects, which determines the level of competition. Typically, community malls will have a net lettable area of 5,000 to 10,000 square metres.

In a competitive environment with growing supply, the market will eventually face the point of saturation, particularly in overdeveloped locations. To determine the success of retail developments, one would need to judge the performance based on at least two years of operation.

In the first six to 12 months, new malls tend to attract the attention of shoppers who want to explore new retail concepts, but many of whom would be one-time shoppers. The success of any retail development relies on the ability to establish a regular repeat customer base that will support its long-term performance.

With the influx of new community malls, what would then determine which projects will survive and which do not? Several factors need to be taken into consideration to ensure the success of community malls.

Community malls are meant to serve only a specific neighbourhood, unlike large-scale malls such as CentralWorld or Siam Paragon which draw in the masses from all locations. The estimated volume of shoppers should therefore be realistic and confined to only a small catchment area in which the development is located.

Community mall rents usually range from 500 to 1,200 baht per square metre per month for typical shops, excluding anchor tenants. Rents for kiosks and small booths will be approximately 15,000 to 30,000 baht per unit per month. The rent must be set at a level that retailers and businesses can afford. If retailers cannot survive, the development will consequentially fail.

The tenant mix for community malls tends to follow the same pattern, which includes a combination of a supermarket, restaurants, coffee chain, pharmacy, banks, services and shopping which are the basic needs required for a neighbourhood. Today we cannot deny that food and beverages as well as trendy hangout spots are essential components of any retail centre; therefore food and beverages tend to account for most of the tenant mix. With today’s competition, the quality of tenants is important. Whether branded or unbranded, tenants should be professionals as it will reflect on the overall quality of the development.

The design and concept are also important, particularly to draw in shoppers. Many malls today, both community and large-scale, are based on unique design concepts such as Chocolate Ville, Asiatique The Riverfront and Terminal 21. While unique concepts certainly attract shoppers, retail projects must also ensure that the design has the right fundamentals in terms of circulation and functionality; otherwise it may just be a short-term fad where the project can lose its popularity quickly over time.

Accessibility and convenience are the keys to establishing a customer base, particularly ease of parking and access. Community mall shoppers tend to be those that value convenience and prefer it to the congestion found in larger malls. Successful community malls are those that provide convenience and sufficient parking spaces, sometimes more than required by law. The common problem for community malls located centrally where the land plot is small is inconvenient access and parking, which can deter shoppers.

As with any type of development, location is the key. Developers should explore new and emerging residential locations where there is demand for retail, but quality developments are lacking. Areas that are overdeveloped should be avoided. Development of new community malls in central Bangkok is also likely to slow. With higher land prices, it may not be financially feasible to develop community malls on prime plots.

For long-term survival, community malls need to first establish what it is that shoppers in their neighbourhood want and need, offer those elements in a convenient and accessible location and design format, and only then can they generate repeat shoppers, which will enables them to maintain long-term profitability and competitiveness.

Source : Bangkok Post 9 September 2012 written by David Simister, Chairman of CBRE Thailand

No comment





 

emailSubscribe Via Email

Privacy guaranteed. We will not share your information.

Follow Me on Twitter

Follow Me on Facebook

Subscribe via RSS Feed

Copyright © 2020 CBRE (Thailand) Co., Ltd. All Rights Reserved.