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As one of the world’s leading retail capital cities, Dubai has become a prime destination for the world’s residents, tourists and business travellers. With retailers such as retail and lifestyle centres, community malls and mixed-use developments, it offers great investment opportunities.
Nonetheless, finding the appropriate space within a shopping mall requires a lot more than simply signing on the lease. Many factors are considered, such as walk counts, target group, distribution of tenants, commercial terms, and growth prospects. Knowing the leasing process helps a brand make the right choice of location and increases its redefinition of success.
This manual introduces the basic issues for mall leases in Dubai and will tell you how a professional advisory service can assist retailers.
Despite the difficulties faced in 2009, the retail industry in Dubai is still well supported by the good underlying fundamentals of consumer spending, inbound tourism, population growth and government economic reforms. Its geographic position between Europe, Asia and Africa has made the city attractive to both international brands and regional operators.
Dubai’s retail sector is diverse, with new retail developments ranging from destination shopping malls and entertainment-led developments to neighbourhood retail centres meant for convenience shopping within local communities.
With the mounting competition, location decision is now one of the key decisions that any business faces when entering or expanding into the UAE market.
Mall operators strive to attract customers with a diverse tenant mix that will increase the duration of stay and the amount of spend.
The tenant mix is all the retailers, restaurants, entertainment outlets and the service operators within the shopping centre. If several complementary types are present together, they will generate more customers for each other.
For instance, fashion retailers may be reinvested in proximity to a lifestyle store, café or beauty salon, all of which target the same consumer. It is certainly a significant factor considered in the decision to lease a retail location, as it complements the remaining tenants.
A properly trained development consultant would give you the advisory information about the proper application of the tenants mix strategy and its effects on business performance.
Prior to signing a retail lease, businesses should fully understand the conditions and clauses within the lease.
The period of lease defines the period that the retailer will occupy the premises. Companies should be attentive to this period, as they will have to adapt their plans of development and investments.
Rental agreements are generally set at a pre-determined level, which takes into consideration the turnover rate or a mix of the two. Having the pre-estimated costs under each condition is very important for the budgeting process.
Tenants may also be liable for service charges in addition to rental payments, which would include maintaining, security, cleaning and managing communal areas.
Design & Fitting-out Costs Retailers often need to incur excess expenditure upfront for shop design and fit-out before operation starts. Lease agreements usually set out design criteria and approval procedures.
Diversification. Firms need to scrutinise pricing schedules and exit choices to preserve adaptability in an ever-changing business environment.
The retail leasing process includes negotiation, market analysis, financial evaluation and planning. For new entrants, especially to the UAE market, professional assistance could be very useful.
Shopping centre leasing consultants in Dubai help retailers find the right location, assist them in a lease agreement, and provide the right opportunity to choose and explore the mall leasing market.
In addition, we find that a lot of consultants have a very deep knowledge of the shopping centre industry, which enables retailers to make better decisions but at the same time to avoid costly mistakes. They also have a strong industry network, related to increasing shopping centre performance, tenancy demand, and retail trends.
The success of shopping malls relies upon their development strategy, in addition to the performance of the individual retailers. An excellent shopping mall is, for instance, usually supported by good planning, value-added asset management, strategic leasing, and continuous operational improvements.
A well-experienced retail development consultant assists developers and property owners in developing retail locations that effectively attract customers, provide value to tenants, and produce a cash-generating return on investment.
Typically, the activities include market analysis, viability assessments, leasing strategy, tenant mix planning and operational consulting services.
While Dubai benefits from a developed shopping mall market, there are more issues that affect the leasing of retail in the ‘City of Gold’.
In the face of new retail developments emerging, retailers have to distinguish themselves to bring customers in.
The advent of e-commerce and the integration of online and offline channels (omni-channel shopping) have changed the way consumers behave, and their expectations are different.
For many retailers, managing occupancy cost while generating sales continues to be an important consideration.
Brand management-International brands coming into Dubai may have encountered some difficulties with positioning, localisation and customer engagement.
Reconciling these can pose difficulties-that is, imposing different access modes to the relevant markets. This can, however, be achieved through planning, etc. Market comprehension and strategic decisions.
Shopping malls leasing in Dubai offers a unique business opportunity for malls looking to expand or new retailers entering one of the most vibrant commercial markets of the region.
Successful leasing depends upon a strategic location choice, extensive market research, efficient lease negotiations and matching long-term business expectations.
Whether it’s expert retail leasing, market analysis or development advisory support, McArthur + Company will efficiently source new, strategic growth opportunities for retailers.
Author’s Bio
The author is a market and retail property content specialist in retail real estate and commercial property with extensive experience in shopping centre development, shopping centre leasing strategy, market analysis and retail asset management. She also writes insightful content that assists retailers, developers and investors to navigate through the ever-changing retail market environment.
1. What is shopping mall leasing?
Shopping mall leasing is the act of renting or leasing retail space in a shopping centre to set up a shop. The terms of the lease agreement are limited to the agreement between the retailer and the landlord.
2. Why is location important when leasing retail space?
Location impacts customer access, visibility, right time/audience, traffic generation, branding, and others.
3. How can Shopping centre leasing consultants in Dubai help retailers?
They provide support in market assessment, site selection, lease negotiations and identifying opportunities for the business.
4. What does a retail consultant do?
A retail development consultant offers strategic insight into retail planning, market feasibility, how the leasing tenants will be generated and managed and how the operation will perform.
5. What factors influence shopping mall rental costs?
The rent can be calculated according to the region, number of visitors, type of mall, type of tenant, the size of the unit, and supply and demand.
6. How much time does the retail leasing process usually take?
The time taken will usually depend on negotiations, approvals, documentation requirements and fit-out planning, but it generally occurs over several weeks to several months.
