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Why should a shopping mall concept be the foundation of any project, and when should a developer start thinking about it? Read more in the opinion column by Andrii Lototskyi, CEO of the consulting company Retail & Development Advisor.
The construction of a shopping mall should begin not with an architectural design or land acquisition, but with the development of a concept. It is the concept that defines the future property’s economics, positioning, and target audience, and ultimately answers the investor’s key question: does this project make market sense?
What Is a Concept, When Should It Be Developed, and How to Avoid Mistakes
A concept is not merely a document, but rather a study that determines who the space is created for, how large it should be, what exactly will operate within it, and whether it is needed at this location at all.
Ideally, the concept should be developed even before purchasing the land — at the site selection stage. However, in practice, work often begins after the developer has already started the design process. In such cases, adjustments are usually required to meet market requirements and specifics in order to maximize the property’s commercial attractiveness.
Sometimes, already completed properties need to be “treated” and adapted to real demand. This highlights one of the biggest mistakes among Ukrainian developers: the belief that experience in residential construction automatically guarantees success in retail real estate. However, a shopping mall is primarily about people’s behavior and the logic of their movement flows — not square meters.
In retail real estate, developers must focus on entirely different indicators. It is essential to consider market operators’ requirements and category zoning, understand how customer flows function, how to avoid so-called “dead zones,” and study many other nuances. It is best to engage specialists who deeply understand the context and specifics of retail and commercial real estate markets.
Where to Start When Creating a Concept and How to Assess Its Effectiveness
The development of a concept should begin with an analysis of solvent demand and the location’s potential, as the landowner’s subjective opinion is not always supported by market realities. In some cases, research may reveal that placing a retail property on a particular site has questionable prospects. In such situations, we do not recommend using the site for this purpose. However, this is also a valuable insight that allows the investor to avoid a strategic mistake and significant losses.
On the other hand, results may show that the location’s potential exceeds the available development area. In that case, it makes sense for the developer to consider expanding the project — increasing its size or number of floors, attracting more retail operators, etc.
After defining the location’s potential, one of the most important aspects of concept development is forming the optimal tenant mix for the shopping mall. Without the right tenant composition that meets the needs of the target audience, attracting consumers to the mall will be difficult even with an excellent location. If the tenant mix is developed properly — involving well-known international and Ukrainian brands and taking into account their formats and space requirements — the project’s chances of success increase significantly.
At the same time, preliminary brokerage is the most objective metric of a successful concept. At this stage, the property’s attractiveness to tenants across different segments becomes clear. If it proves insufficient, it is worth considering adjustments to the concept based on the needs and expectations of potential tenants.
Ultimately, the key performance indicators of a retail property will be vacancy rate, foot traffic, and turnover. These metrics are significantly influenced by the quality of shopping mall management, marketing, the ability to quickly respond to changes in consumer behavior and the competitive environment, systematic work with tenants, and other factors. However, the concept is the very foundation upon which all other components of a shopping mall’s future success must be built.
How Demand for Concept Development and Developer Requests Are Changing
Developers should not forget that even the best concept can become outdated and lose relevance due to new competitors or changing market conditions. Fortunately, from the very beginning of project development, it is possible to incorporate prerequisites for future concept updates — rebuilding the property, adjusting architectural solutions, widening corridors, or changing the commercial use of premises.
Unfortunately, ceiling height is often something that cannot be changed later, and this becomes a significant limitation for many retail operators. However, updating and reformatting the tenant mix and attracting a new audience is entirely possible even in operating properties. The key is to properly assess the location’s potential, current flows, and the competitive environment both at present and in the near future.
In recent years, we have observed a significant increase in demand for the development and updating of concepts among domestic developers. Among the trends worth highlighting is the noticeable shift toward retail parks and neighborhood shopping centers in a “city within a city” format. This is driven by the need for lower risk and faster project payback under current conditions. At the same time, developers understand the importance of building shopping centers to provide infrastructure for residential complexes and create synergy with other real estate assets.
- Q: How can you order a shopping mall concept?
You can order shopping mall concept development services via the feedback form on the RDA website or by phone at +380 (67) 619 78 87.
- Q: How long does it take to develop a shopping mall concept?
Concept development can take from 30 to 90 business days, depending on the scale of the property and the scope of the project.
- Q: Why order a concept from RDA?
RDA has extensive experience in implementing concepts and a deep understanding of the market and current context. In total, we have developed more than 60 turnkey concepts — from marketing research and architecture to financial models and brokerage.
- Q: How many concepts has RDA implemented in recent years?
Over the past three years, the company has developed more than 40 concepts for retail properties of various formats. Three of them opened last year and are already successfully operating. Another 27 projects are at different stages of implementation, and six of them are scheduled to open this year.
