When building a shopping center, you have to understand that it is different from downtown and local business strip malls. A shopping center is pre-planned to bring in the right mix of merchandisers for maximum profits. In addition, the site is selected based upon the amount of traffic it can bring in. Moreover, parking space is relative to the retail area. Customer’s like shopping areas the offer convenience, safety and speed. The first question you have to ask is will your shopping center offer customer appeal?
Do you have the funding?
In the United States, the average shopping mall is approximately 56,212 square feet. They usually have two floors with around four “anchor” stores such as a Macy’s, Dillards, JcPenney and so on. Aside from land or demolition costs, this type of building usually costs around $24.9 million to complete or around $442 per square foot. This pricing assumes that labor is “unionized.” Of course, you need a large and clear tract of land that can be achieved with Houston land clearing. You need the space not just for the mall, but also for parking and landscaping.
In order to finance a mall, you need major leases from companies with strong credit ratings. In addition, you need to prove to lenders that you can attract tenant rosters with triple-A ratings of national chains. This may include local merchants that have good business records and a proven estimation of the market. Furthermore, you have to show that your location and market will provide the profits you need to run and maintain a successful shopping mall.
Questions to ask
How much space do you need and where do you want it? After land acquisition, the first step would be land clearing in Houston. Of course, the amount of space you need sets your rent rate. You need enough space to attract the types of merchants you and your customers want. How much space do you need to handle the sales volume you expect? How much space do you need for inventory and a shipping and receiving area? Will you have enough space for a potential expansion. Also, location is everything. Are you in an area that will provide a lot of traffic? Do you want to cater to more independent and specialty retailers?
How much will you charge for rent? You want to charge enough to make a profit, that is still attractive to merchants. Your rent is stated as a minimum guaranteed rent per square foot of a leased area against a percentage. The percentage is normally between 5 and 7 percent of gross sales. Using a percentage of sales means you get a higher rent if sales are higher. At the same time, you get a lower rent if sales are lower. You can also charge for maintenance of common areas. Then, you have to decided if you will offer a “tenant allowance.” This is a cost allowance toward the completion of a merchant’s retail space.
Architecture and design
To build a shopping mall, you definitely need an architectural team. You first have to decide on the scope of the project and set up a preliminary budget. Then, you want to draft a list of proposed work, budget and outline of plans. Your architectural team with create the schematic design, draft floor plans and elevation drawings. After this, you need to meet with structural engineers and planning agencies to ensure you meet requirements.
Once you have finalized the design, you need to think of materials and finishes, fixtures, equipment and all systems within your shopping mall. You should review your plans with the necessary local agencies and get the right permits. When it comes to deciding on construction services, it is best to go through a bidding process. Although, you always want to hire a reputable company. Although, construction can’t begin unless you start with Houston land clearing.
Managing your shopping mall
Once the construction is completed and the tenants are in, you have to manage the facility. Make sure you have clear instructions for all of your rents and leases. It is critical to have good tenant relations. With a good tenant, you can improve occupancy and rental returns. If you have a busy shopping center, you should meet with your tenants at least monthly. For tenants that have active issues, you should meet with them more frequently. You also want to have a tenant retention plan to protect your tenant mix and rental returns. This can include a standard lease that is fair for all tenants–don’t assume they won’t talk about their leases with other tenants.
Building a shopping mall can seem larger than life. Yet, it is simply a building process, just like anything else. When you break it down into actionable steps, it becomes much easier and a lot less overwhelming.