With numerous reports highlighting the increase in retail space, it is no small wonder that there is growing concern over the oversupply of retail space in the market.
Earlier this year, a report by property consultant CH Williams Talhar & Wong Sdn Bhd noted that retail space is expected to increase by 6.4mil sq ft this year. That works out to be roughly five malls the size of KLCC.
And in an effort to build shopping havens that will lure multitudes of shoppers, developers have been building malls bigger and better.
But in a market that has an abundance of retail space and at a time time when bigger malls are considered better, smaller retail spaces or neighbourhood malls are finding their niche in serving smaller groups of people.
“Neighbourhood malls are still very important. However, it is vital for such malls to focus and be in tune with its local area’s needs,” said Charles Wong, executive director of Tetap Tiara Sdn Bhd, the developer of Jaya One.
Wong added that neighbourhood malls play a significant role in supporting urbanisation as more and more urban townships are being developed.
According to Ismail Ani Arope, director of Jaya Section Fourteen Sdn Bhd, the developer behind Jaya Shopping Mall, neighbourhood malls are meant for the populace within a 5km radius.
“Just as there are people who love swanky, huge retail centres, neighbourhood malls serve people who are in the immediate area or are averse to the bigger malls. Neighbourhood malls have their loyalists. There is a trend towards neighbourhood retail for practical reasons,” Ismail said.
Some examples of neighbourhood malls in the Klang Valley include Jaya One, Jaya Shopping Centre, Bangsar Village, Citta Mall and The Atria Mall, which is under construction in Damansara Jaya.
Despite concerns of an oversupply of retail space, these smaller malls are rather well occupied.
Jaya Shopping Centre has a net lettable area of 270,000sq ft and Ismail expects the mall to achieve 80% occupancy by end-July.
Jaya One, on the other hand, is almost fully occupied. Total net lettable space for the mall is about 220,000sq ft with an average rent ranging from RM4.50 per sq ft to RM15 per sq ft, depending on the size and location.
The School, which is the retail component of Phase 2 in the Jaya One development, saw a 30% occupancy rate in the first quarter of the year and is expected to reach 70% by August, said Wong.
Neighbourhood malls in the Klang Valley have done well to generate interest within their immediate areas and beyond with a good mix of tenants and events.
Jaya One has been attracting an average of 900,000 visitors a year since 2008 and Wong expects this number to double when its new phase is launched at the end of the year.
Even the newly opened Jaya Shopping Centre is enjoying decent numbers with about 4,000 people a day during weekdays and double the number on weekends.
“The reopening of Jaya Shopping Centre has attracted people who have fond memories of the original Jaya. And we have a constant stream of people coming in, thanks to the offices, schools and businesses and of course homes in the vicinity.
“I know several who come to Jaya at least twice a day!” exclaims Ismail.
But just because neighbourhood malls have a ready pool of visitors in those living nearby, it does not mean that these malls can rest on their laurels.
Wong noted that in this day and age, neighbourhood malls have to work harder in developing their game to constantly engage shoppers. This, he said, basically translates to more personalisation and customisation.
“Due to the competitive nature of the retail landscape, it is evident that shopping malls have to go beyond the basic infrastructure of air-conditioning, elevators, escalators and basic security.
“The brand positioning of a typical neighbourhood shopping mall will have to be well-defined in a shopper’s mind from day one.
“Anchor tenants are no longer key traffic drivers. Instead, a large collection of smaller tenants that share similar retail offerings will help define the shopping mall’s key offerings,” Wong said.
In fact, given time and a good mall-management strategy, Wong believes that most neighbourhood malls have the potential to grow to play a larger role.
But for now, Jaya One is focused on realigning its offerings in Phase 1 and Phase 2 to remain relevant to its target market as well as its commercial tenants.
“It is a symbiotic approach, which requires daily effort to steer the development towards creating an ecosystem that will naturally weave Jaya One into the fabric of the local community,” said Wong.
Ismail believes there is still room to grow the neighbourhood retail space and Jaya Section Fourteen is looking to build more neighbourhood malls, with the possibility of going outside the Klang Valley.
“Yes, we are in investment mode and have an appetite for neighbourhood malls.
“But our immediate plan for Jaya Shopping Centre now is to ensure its success in terms of leasing and ensuring the existing tenants are happy.
“With the retail sector, the efforts to reach out and engage with the public have to be continuous,” he said.