There is no basis for the fear that malls in India will lose their status as shopping and entertainment hubs now that many mall developers are offering space to hotels and offices. The fact is, this is not affecting the overall mall experience of the customer, since in most cases there are separate entries for the hotel/commercial component and the retail part.
The reason why mall developers are nowoffering space to hotels has more to do with the floor space index (FSI) and less with utility. In the case of retail, food, entertainment and multiplex, it is not always possible to utilise the complete FSI of the plot.
The concept of mixed-use development with retail, entertainment, shopping and accommodation all under one roof helps diversify the tenant mix in the total construction, and also de-risks the developer¡¯s investment. It also allows the developers to utilise the FSI and location.
Such developments leverage on the location and provide multiple solutions under one canopy.
Mixed-use developments have evolved to increase the viability of projects and to utilise the location advantage. Residential and office markets are witnessing buoyant growth and are considered as relatively more risk-free development.
A new concept which is also evolving, particularly due to FSI norms, is serviced apartments as an offering within mixed-use developments.
Malls have a good reason to give space to hotels or office complexes:
¡ñ It increases the viability of project and de-risks it;
¡ñ It helps utilise available FSI optimally;
¡ñ It makes the usage relatively more diverse¡ªin some cases mixed use is the best use for real estate development; and
¡ñ It fits with floor plate sizes. Retail historically does not work on more than three floors.
There are already examples of existing and upcoming projects where shopping, entertainment, residential and retail co-exist with office space. The existing ones include Treasure Island at Indore, Inorbit Mall at Vashi, and the upcoming ones include Nirmal Lifestyle, Market City Projects, Phoenix Mills, Express Mall Chennai and DB Mall at Bhopal.
Upcoming mallswhich have a proposed metro station within or parallel to their projects are expected to draw in considerable footfalls, reflecting positively on retailer¡¯s sales.