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The CEO of the consulting agency Retail & Development Advisor (RDA) explains why some shopping malls thrive for years while others remain empty—and how not to turn a potentially profitable project into a chronic problem.
Sometimes, developers decide to build a shopping center without any analysis, research, or even a clear concept: “We have a good plot of land, there will definitely be demand, so we’ll build.”
A common scenario is when a developer with extensive experience in residential real estate decides to enter the retail property market. They hire an architect without any shopping center design experience, obtain permits, and begin construction. And only after the opening are they surprised: why aren’t tenants coming? Why is no one interested in the vacant spaces? The answer is simple—intuition in retail is a poor advisor and rarely works.
Such projects almost always lack logic: no traffic analysis, anchor tenants are disproportionately sized, facades may be visually striking but completely non-functional. The project is designed for aesthetics, not shopper convenience. The layout is chaotic, disregarding communications, retailer needs, and customer flows.
It’s important to understand that the residential real estate market and the retail market are two different worlds. In residential developments, there’s demand for square meters. In shopping centers, demand is created not directly by the end customer, but by the tenant—i.e., the business ready to invest in a location because they understand customers will come. What’s being sold is not square meters, but high-quality foot traffic.
Our approach begins with a simple principle: don’t overcomplicate, but don’t oversimplify either. In any case, we always start with analytics, including:
- Catchment area research: who the potential customers are, how many there are, what their income levels are, etc.
- Traffic and competitive environment analysis
- Financial modeling: how much can this facility realistically earn? Under which scenarios? How can capital investment be optimized without compromising quality?
- Architectural adaptation: repositioning entrances, placing anchor tenants strategically, building efficient logistics for tenants and customers
- Concept development: what is our point of differentiation and competitive advantage
All this happens before construction. Only after confirming the project’s economic feasibility do we recommend launching. However, there are cases when developers seek advice after construction has already begun.
For example, one developer came to us with a fully designed shopping center project from an architectural firm. The project looked beautiful but was completely non-functional. We conducted an audit and frankly stated: either we change everything now, or we won’t be able to ensure commercial success. It wasn’t easy—construction had already begun, and some parts had to be redone. But the result was worth it and even exceeded our expectations.
A general trend in Ukraine in recent years is the development of neighborhood shopping centers and retail parks, which have a number of advantages:
- Convenient 15-minute walking or driving access, saving time
- Availability of all essential product categories
- Relatively low investment requirements
- Shorter implementation timelines
However, due to limited space, these formats usually cannot accommodate full-fledged entertainment zones or a large-scale tenant mix, which limits the number of available brands.
Retail parks are a promising niche in Ukraine, though they have long been a standard format across Europe. Their popularity is simple to explain: a significant part of the population lives in suburban areas, where there is demand for accessible shopping without the need to travel to the city center.
Neighborhood shopping centers—whether as standalone buildings or commercial podiums within residential complexes—serve similar functions. They are integrated into residents’ daily lives and provide access to goods and services without the need for transportation. From a developer’s perspective, such projects add value to residential developments: the presence of a shopping center directly increases housing appeal and market value.
Large regional shopping malls remain popular as well, offering customers a wider selection of brands and entertainment—children’s centers, restaurants, cinemas, and more. These centers serve not only as shopping destinations but also as leisure hubs, attracting broader visitor audiences.
I believe the commercial real estate market in Ukraine still holds enormous potential. But this potential will only be realized by those who build systematically, not “by feel.” I would recommend following five key rules:
- Don’t build without analysis – Every plot is a hypothesis that must be tested
- Bring in professionals – Architects, consultants, and brokers with real retail experience
- Don’t skimp at the beginning – Mistakes made early can cost millions later
- Think like a tenant – If I were a retailer, would I open a store here?
- Focus on the needs of both customer and tenant – Why should a shopper come to this mall
Competition is growing, and only the most efficient and professionally developed shopping centers—those capable of critical thinking—will survive.
