DESIGNING LARGE RETAIL AND COMMERCIAL CENTRES

Tatjana Medvedev

Tatjana Medvedev

Dec 17, 2023 · 9 min read

Retail and Commercial Centres development.  What should you focus on when designing large retail centres?  Successful modern retail centres are rarely developed without thorough planning, sound design, and rigorous economic study behind them. It is a standard professional practice in Australia to analyze all aspects of development before designing the subject site.

LARGE RETAIL CENTRES

Before embarking on the preparation of architectural projects for development, Urban Design and Economic Due Diligence should be performed to establish the most profitable outcomes for the local area.

Many Asian shopping centres that failed to deliver expected client visitation numbers and profitability targets lacked thorough research in the Due Diligence stage. The widespread success of Australian retail development projects demonstrates the value of rigorous Due Diligence and thorough Urban Design processes.

Our urban design approach draws from 20 years of experience assessing and strategizing potential development sites while creating the best economic and developmental fit for the area.

As a result of this industry experience, we created “Bulky goods design guidelines” that were adopted by the Victorian government. The Victorian Department of Planning and Community Development uses these Guidelines to advise investors, designers, planners, Local Governments, and future developers on effective urban design for large-format retail premises throughout Victoria.

Urban design principles when designing large retail centres

Some principles that we apply when studying the locality are:

Retail development principles

  • Recognizing the focal point in demand for a specific retail character.
  • Ratio and balance of all participating retailers.
  • Connection with its immediate surroundings.
  • Balance of visible parking and provision of as many transport modes as applicable.
  • Customize all walkable distances within the local neighbourhood.
  • Inclusion of best practice examples.
  • They are ensuring overall well-located and well-designed retail premises.

Ancillary Urban Design principles in designing retail centers

  • Create public spaces incorporating civic and economic values
  • Inclusion of its immediate surroundings and interfaces
  • Ensure public spaces are comfortable and engaging for all users.
  • Enhance the contribution to the public spaces of surrounding buildings by encouraging thoughtful, context-sensitive architectural design in new retail premises.
  • Improve pedestrian and cycling amenities and encourage an increase in pedestrian and cycling traffic by maximizing the convenience, safety, and appeal of these modes of travel.
  • Better integrate public transport with retail precincts by increasing accessibility, safety, and comfort.
  • Improve safety and promote the natural amenity of public space and street activity. This can be achieved by ensuring buildings address streets and other public spaces and contain active uses on the ground floor.

Encourage environmental sustainability in the process of designing large retail centres.

  • Use the opportunity of project scale to apply best practice examples and promote new inventions.
  • Promote the efficient reuse of existing assets, prolong the life cycle of structures, ensure energy efficiency, water and resource conservation, and encourage appropriate use of materials.
  • Ensure site location is consistent with or implements any objective, policy, strategy, or plan for the area in the planning scheme.
  • Prepare a site analysis that documents the area’s character and identifies opportunities and constraints of the site. Use the report to generate and test options as part of the design process.
  • Consider how the development will integrate with and impact existing and future uses nearby.

Property Advisory & Due Diligence

The role of an economist in designing successful retail centres is to provide measurable parameters of economic drivers in the client’s interest and successful project development.

An economic Due Diligence review will support a project’s economic feasibility in a broader market context. By examining business risk, market research, retail supply, and customer demand, our experts can assess a project’s economic feasibility and financial risk, helping the client make strategic decisions based on professional, impartial assessment.

Our property economist experts will carry out an economic Due Diligence review by:

  • Assessing the demographic and population profile within the retail catchment
  • Evaluating estimated costs, budgets, and financial models
  • Examining the ‘gap’ between current and forecast levels of supply and demand for retail property
  • Assessing risk and offering mitigation solutions
  • Reviewing local market research
  • Assuring the business case
  • Running sensitivity analyses on investment scenarios

Benefits of Economic Due Diligence for Retail Development

Rigorous economic due diligence and market feasibility provide significant value for retail development projects by quantifying the specific monetary value of the investment opportunity for retail development within a given catchment. This reduces the risk for the investment decision and clarifies the development’s future viability.

Property Advisory & Due Diligence

Case Study: Latrobe City Council, Bulky Goods Retail Sustainability Assessment

This is a proven methodology used in the Latrobe Bulky Good Retail Sustainability Assessment and Site Selection Report. Latrobe City Council commissioned a study to undertake a bulky goods retail needs assessment within Moe, Morwell, and Traralgon. This assessment included identifying appropriate bulky goods retail development sites within Latrobe City Council.

Benefits of rigorous economic Due Diligence in designing large retail centres:

The development responds to market demand:

  • Capitalize on the market opportunity
  • Capture market share
  • Sales revenue maximized
  • Profits are maximized

Informed investment decision-making:

  • Develop the project with confidence
  • Informed planning outcomes
  • Strategic timing and staging of  development to match market conditions
  • Match retail tenants to socio-demographic.
  • Characteristics

Mitigate risks of under-performing centres:

  • Sustainable commercial performance
  • Maximize shopping centre performance.

Risks of failure to engage rigorous economic Due Diligence in designing large retail centres:

Excess demand for shopping centres leads to the following:

  • Failure to capitalize on the market opportunity
  • Competitor centres increase market share.
  • Lost opportunity for sales revenue
  • Lost opportunity for profit

Excess supply of shopping centres leads to:

  • High retail vacancy rates
  • Tangible financial losses, including
  • Lost lease and rental income
  • Ongoing service & maintenance fees
  • Sewerage, plumbing & drainage issues
  • Property neglect & damage

Financial viability jeopardized:

  • Under-performing shopping centre
  • Potential shopping centre failure.
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