Retail is obsolete? Really? We actually see many failed Malls that are successfully redeveloped. Many of these redevelopments were a public and private partnerships. Partnership with communities are the key factor in the future this “old” real estate facilities. When thinking about redevelopment of older centers developers need to understand the differences between the kind of center they are trying to create: a “need” based facility and / or a “want” based retail facility.
Need based is the where consumers first dollar goes. Purchase decision characteristics are driven by rational criteria with high frequency of visits.
Want based is a shopping choice. High variable between high income household and low income. Purchase decisions are more emotional and less rational.
Looking at the financial models of each: “need” rent is based on cost, but a “want” is based on sales. Need based is the basic amenities of a community. Want based defines and adds value to the community and contributes to its economic development. It helps recruiting higher end to change the community. All cities want a “want” based project; however, need based projects are important to keep amenities in the community. Parking needs are different: Ample parking for a need based facilities are necessary because accesss is important and we expect more frequent visits from users. In a “need” based facilities the nature of utilizing the facility, and psychology of the consumers demand lots of parking.
Aestetic needs are very different for each of the uses.
In a mix use enviorments having both want and need facilities near your project is great for office tenant stickness.
When redeveloping, retail facilities anyware developers and owners should understand where they want to go with respect to more a need based facility or a want based facility.
Call me with any question: Sagiv Rosano 213 802 0305.
