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, good design and rigorous economic study behind them. It is a standard professional practice in Australia to analyse all aspects of development prior to designing the subject site.
Prior to embarking on the preparation of architectural projects for the development, Urban Design and Economic Due Diligence should be performed to establish the most profitable outcomes for the local area.
Many shopping centres throughout Asia 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’ experience in 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 have been 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 principals when designing large retail centres
Some principals that we apply when studying the locality are:
Retail development principles
- Recognising the focal point in demand for 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.
- Customise all walkable distances within the local neighbourhood.
- Inclusion of best practice examples.
- Ensuring overall well located and well-designed retail premises.
Ancillary Urban Design principles in designing retail centres
- Create public spaces incorporating civic and economic values
- Inclusion of its immediate surrounding and interfaces
- Ensure public spaces are comfortable and engaging for all users.
- Enhance the contribution to public spaces that surrounding buildings make, by encouraging thoughtful, context-sensitive architectural design in new retail premises.
- Improve pedestrian and cycling amenity, and encourage an increase in pedestrian and cycling traffic by maximising the convenience, safety and appeal of these modes of travel.
- Better integrate public transport with retail precincts by increasing public 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 re-use 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 set out 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 upon 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 interest of the client and successful project development.
An economic Due Diligence review will support a project’s economic feasibility in the context of a broader market. 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 to 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 offer mitigation solutions
- Reviewing local market research
- Providing assurance of the business case
- Running sensitivity analyses on investment scenarios
Benefits of Economic Due Diligence for Retail Developments
Rigorous economic due diligence and market feasibility provides significant value for retail development projects, in the form of quantifying the specific monetary value of the investment opportunity for retail development, within a given catchment. This reduces risk for the investment decision, and provides clarity for the future viability of the development.
Property Advisory & Due Diligence
Case Study: Latrobe City Council, Bulky Goods Retail Sustainability Assessment
This is a proven methodology, as 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 the identification of appropriate sites for bulky goods retail development within Latrobe City Council.
Benefits of rigorous economic Due Diligence in designing large retail centres:
Development responds to market demand:
- Capitalise on the market opportunity
- Capture market share
- Sales revenue maximised
- Profits are maximized
Informed investment decision making:
- Develop project with confidence
- Informed planning outcomes
- Strategic timing and staging of development to match market conditions
- Match retail tenant to socio-demographic
- Characteristics
Mitigate risks of under-performing centres:
- Sustainable commercial performance
- Maximise shopping centre performance
Risks of failure to engage rigorous economic Due Diligence in designing large retail centres:
Excess demand for shopping centres leads to:
- Failure to capitalise on 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 jeopardised:
- under-performing shopping centre
- potential shopping centre failure.
To get further support on this subject please contact:
Mecene for details on urban design support here
Sam Qualtrough, Principal, Q Insight for economic analysis support here