High potential for shopping malls in southwest Bangkok
June 02, 2014 00:00
By The Nation
The southwestern part of Bangkok is considered to have high potential for shopping centres, according to Knight Frank Chartered (Thailand) Co.
This area focuses on four main types of retail businesses – shopping centres, hypermarkets, community malls and specialty stores.
A shopping centre is a large building consisting of various types of retail businesses conveniently connected by walkways.
A hypermarket is an integrated format that fuses qualities of a department store and a supermarket.
A community mall is new type of format that reflects an adjustment to the changing lifestyles of most consumers who want to shop in a place that has everything near their home.
Retail shop spaces in community malls are rented easily due to the ease of access of customers who only have to drive two to five minutes from their home.
A specialty store is a retail business that sells a specific group of products with many subcategories. These stores will have to stock a lot of supply and the operators will have service expertise in relation to the product.
Surasak Limpa-arayakul, executive director and head of consulting and valuations, said last week that the southwestern outskirts house many residences, encompassing single family homes, townhouses and most recently, many condominiums that have been completed or are under construction.
This area features many work locales, such as manufacturing facilities, so it is densely settled.
The purchasing power of this populace is not as high as in the eastern part of the city, but well-known brands are expanding their presence along with the expansion of the capital, and the public infrastructure and transport network is improving.
These factors are encouraging more and more people to move to the suburbs, distancing themselves from the crowded city. Other economic issues include the high cost of living in the city and the increasingly high cost of gasoline. This has encouraged people to buy goods and services close to their homes.
The demand for retail business space in this area is reflected in the high occupancy rate of 96.9 per cent on average. The occupancy rate in a shopping complex – 98.8 per cent – is higher than 93.6 per cent in a community mall.
A study by Knight Frank Thailand found eight retail developments that are preparing to open for business. Only one is a shopping complex, Central Plaza Salaya, but there are also eight community malls.
The average retail rental rate ranges from Bt400-Bt2,500 per square metre per month. The rate within the same complex can vary, based on the location of the shop. If the shop is situated in a high traffic area, the rent will be high.
The type of shop also affects its rent. For instance, fashion businesses will be subject to a higher rental rate than restaurants. Smaller spaces will command a higher rate than larger spaces. Stores that are magnets, drawing patrons to the complex or department store, usually enjoy a lower rate.
They might also be under an arrangement where the rent they pay is a portion of their gross profit. This would apply to a business such as Starbucks, for example. Also, stores that are anchor tenants occupying a large space, such as gyms and department stores, usually pay lower rates.