Malls have become an integral part of modern consumer culture, providing a one-stop destination for shopping, entertainment, and dining. But have you ever wondered what is the source of revenue for malls.? How do they make money? In this blog post, we will explore the diverse revenue streams that malls utilize to sustain their operations and remain profitable in a highly competitive retail landscape.
1. Rental Income From Retailers
The primary source of revenue for malls is the rental income that they earn from retailers. Tenants, including major anchor stores, specialty shops, boutiques, and restaurants, lease retail spaces within the mall to showcase their products and services. The rental charges are typically based on factors like the location of the unit within the mall, foot traffic, store size, and the tenant’s bargaining power and are usually charged per square foot.
Anchor stores, such as department stores or supermarket chains, often pay lower rents due to their ability to attract significant foot traffic to the mall. Smaller retailers and niche brands may pay higher rental fees for prime locations, such as near mall entrances, units in front of elevators, or highly visible areas.
2. Common Area Maintenance Fees
In addition to the base rent, all the tenants are required to pay Common Area Maintenance fees. This goes towards contributing to the maintenance, cleaning, and security of the common areas within the mall, including hallways, parking lots, restrooms, and other shared spaces. Common Area Maintenance fees are typically calculated as a percentage of the tenant’s total rent and vary depending on the size and location of the store. This is the second major source of revenue for malls in Pakistan.
3. Revenue From Dining And Entertainment Options
Malls have evolved beyond mere shopping centers and have transformed into experiential destinations for most. Almost every mall in Pakistan now offers a wide range of dining options, including food courts, restaurants, and cafes. And even entertainment facilities like movie theaters, bowling alleys, or arcades where shoppers can unwind after a tiring shopping spree.
4. Advertising And Promotional Opportunities
Malls provide various advertising and promotional opportunities for retailers and external brands, such as banners, billboards, and streamers. These may include in-mall advertisements, sponsored events, product launches, or experiential marketing campaigns. Mall management charges a fee for these advertising services, and the revenue generated contributes to the overall income of the Mall. Some malls also collaborate with celebrities to host promotional events or seasonal activities, attracting more visitors and generating increased revenue. One example of these malls in Pakistan is Lucky One Mall, which recently collaborated with Adnan Siddiqui to attract a larger audience.
5. Parking And Transportation
Parking fees are charged as an additional source of revenue for malls by some smaller shopping centers. The charges can vary from mall to mall. Some malls also have ride-sharing services or public transportation systems such as shuttles for their customers; a small fee is charged per person.
FAQs
As an individual, you can generate income from a mall by investing in a commercial unit, either by purchasing it and then selling it or by leasing it out to major brands. The Hash Mall provides you with a monthly return as soon as you make a purchase.
The exact amount of money you can make varies from mall to mall; however, The Hash Mall pays between 0.5-0.9% in rental yields.
Conclusion
To keep malls financially stable and make money, they have to carry out several different income-generating activities. The main way malls make money is by renting out commercial spaces to retailers. But malls have also changed to fit what people want and now offer different services. They have added fun things to do, like entertainment options, and have started offering their spaces for advertising activities to major brands. By doing all this, malls can still get people to come, help the economy grow, and stay important in the ever-changing retail world.
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