Our shopping habits may have changed a lot in some ways since the construction of the first covered Canadian shopping mall in 1950. Though in many ways they have stayed the same, and so has the way people enjoy shopping.
While the first monster sized shopping mall, Park Royal in West Vancouver, has certainly had its successes, not everyone wants to have to go to a large mall every time they need something. More and more shopping centres are being converted, or are developing plans to be converted, into large, mixed use, luxurious malls, though many Canadians say they love their local shopping centres just the way they are. People still prefer buying from faces they recognize and who know their names, and perhaps more importantly, don’t want to have to take 15 minutes to park and then walk equally as long to get to a single store they want to visit. They like the small local shopping centre feel. Some citizens are even very actively protesting against this new breed of mall.
Likes and dislikes are one thing, and no matter what you do, and how well you do it, there will always be critics. But the real question is, what does this trend means for investors? Of course brand new super malls demand higher rents and can accommodate more tenants, however this doesn’t always mean higher profits, and certainly means waiting longer for significant returns. For those investing in shopping malls, major renovations can mean having to pay out big figures to tenants and extended periods without income. Plus those projects that include residential units don’t always provide the best possible use of the available square footage.
For those looking into commercial real estate investment through shopping centres and who are seeking immediate income along with larger lump sum profits down the road, it is often best to put your money into existing small and medium shopping malls that already offer established tenants and rents. Should you really desire to do some type of renovation to boost your equity you will often find that the best returns are to be had from simple extensions to parking, improved signage and basic cosmetic updates to the fascia.
What about those who say that ‘malls are dead’, and that the Internet is the future of shopping? Studies show that while consumers are certainly doing a lot of research and window shopping online they are still choosing to head to the local shopping centre to execute their purchases for the most part. So there is no need for the Internet to mean doom for smaller retailers or franchises. In fact they are often best served by sticking with affordable rents in smaller shopping malls and focusing a good portion of their marketing budget on Internet and mobile marketing that drives traffic in their physical doors.
Want to learn more about how commercial real estate, or get information on some of the great deals that are available? Contact Howard Manley of Redev Properties today by phone at 1-866-668-7344 or via email at howardm@redevproperties.ca.
Thank you for reading,
www.redevgroup.com
