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 fully 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
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 other components. The model is fairly successful in both metro and Tier I cities. In fact, in light of the changing retail dynamics, the response for such projects in Tier II cities has also been encouraging.
Advantages Of Mixed Use Developments To Retailers
- They add captive foot falls
- Food and impulse item sales increase
- In some cases, mixed use developments can also help decrease the base rental and increase revenue for developers who operate on a revenue share model, which also increases feasibility for retailers
- They generate a wholesome social fabric and create destination developments
Retailers Please Note…
If the customer flow is not properly designed and enough parking space is not available, a mixed-use project can result in a bad experience for customers, with obvious negative repercussions on the entire development