Many shopping centres have lately had to deal with the problem of vacancies; the occupancy rate for newly constructed schemes is slightly higher than 90 per cent. Due to the low purchasing power index in some towns, cities, and entire regions, and the cannibalisation of several retail chains, even the largest tenants are wary of locating new retail outlets in shopping schemes. Therefore, owners and landlords of shopping centres may consider leasing space to local entrepreneurs as an alternative; these tenants, who have often worked in retail for more than a decade, fully understand the potential of the local market.
“Basically every newly constructed shopping centre, as well as the existing facilities, have a nearly identical tenant mix. Of course, the presence of anchor tenants is vital for attracting consumers and encouraging other tenants to lease space in the building; usually, those are leading fashion brands. However, in more and more schemes space is dedicated to local manufacturers and entrepreneurs. In some shopping centres, space assigned for local retail chains approaches 10 per cent of the total supply,” said Maciej Mędrek, Associate Director, Retail Agency, DTZ.
Local tenants enter the shopping centres for several reasons. First of all, there has been visible downward pressure on rents in shopping malls with a weak position in the market, both in large cities and small towns. This makes it possible to lease space not only to large retail chains, but also smaller local brands. Secondly, local entrepreneurs looking to expand their business are aware that retail outlets in shopping centres are a more cost-effective and secure choice than a high-street location. Even factoring in significantly higher rents, the risk is lower, thanks to the possibly higher sales profits. What is more, local entrepreneurs decide more and more often to create private labels or service outlets dedicated especially for the new shopping centre.
“In recent years, there has been a visible trend for creating fashion, accessories, jewellery, or culinary brands in local markets. Many entrepreneurs start their businesses by opening retail outlets in shopping centres located in their home towns. Right from the start, the manufacturers focus on quality, which equals or even surpasses the largest brands; high quality is offered at a relatively higher price. These local companies often boast professionally designed websites, and the layout of their shops is similar to that of popular brands located in the most frequented shopping centres. These factors help them gain popularity with the consumers, and good business decisions allow them to expand rapidly thanks to opening outlets in other shopping centres, both in the city and in the region,” added Maciej Mędrek.