There is no basis for the fear that malls in India will lose their status as shopping and entertainment hubs now that many mall developers are offering space to hotels and offices. The fact is, it is not affecting the overall experience of the customer, since in most cases there are separate entries for the hotel / commercial component and the retail part.
The reason why mall developers are now offering space to hotels has more to do with the FSI and less with utility. It is a current scenario across India. However, in the case of retail, food, entertainment and multiplex, it is not always possible to utilize the complete FSI of the plot.
The concept of mixed use development with retail, entertainment, shopping and accommodation all under one roof helps diversify the tenant mix in the total construction, and also de-risks the developer's investment. It also allows the developers to utilize the FSI and location. Such developments leverage on the location and provide multiple solutions under one canopy.
Mixed used developments have evolved to increase the viability of the projects and to utilize the location advantage. Residential market and Office market is witnessing buoyant growth and is considered as more risk free development. A new concept which is also evolving, particularly due to FSI norms, is serviced apartments as an offering within mixed use developments.
Malls have good reason to give space to hotels or office complexes these days:
• It increases the viability of project and also de-risks it
• It helps utilize available FSI optimally
• It makes the total use more diverse - in some cases mixed use is the best use for real estate development
• Floor plate sizes have also in some cases forced developers to utilize the space for other purposes, since retail historically does not work on more than three floors
There are already examples of existing and upcoming projects where shopping, entertainment, residential and retail coexist with office space. The existing ones include Treasure Island at Indore, Inorbit Mall at Vashi, and the upcoming ones include Nirmal Lifestyle, Market City Projects, Phoenix Mills, Express Mall Chennai, DB Mall at Bhopal, etc.
Upcoming malls which also have a proposed metro station within or parallel to their projects are expected to draw in considerable footfalls, reflecting positively on retailer's sales. An example would be Mantri Square in Bangalore.
Success Rate Of Mixed Use Development Malls
Internationally, mixed use developments have been used to form the social fabric and have done well. Mixed use developments create a captive catchment for the retailers and the other components. The model is fairly successful in both metro and Tier-I cities. The response for such mixed used development projects in Tier-II also has been encouraging.
Advantages Of Mixed Use Developments To Retailers
• They add captive foot falls
• Food and impulse item sales increases
• In some cases, mixed use developments can also help to decrease the base rental and increase revenue for developers who operate on a revenue share model, which also increases the feasibility for retailers
• They generate a social fabric and create destination developments
Disadvantages To Retailers
If the customer flow is not properly designed and enough parking space is not available, a mixed-use project can result in bad experience for the customers of the entire development.
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