How much does it cost to develop a shopping mall?

Shopping centers and malls bring a lot of jobs, entertainment, and resources to an area. Malls range from large indoor two-story malls and small three-store strip malls to incredibly large supercenters with amusement park rides inside. The store types and sizes and whether they include anchor stores also varies. This results in a wide range of associated costs.

The national cost average is $25M to $180M, with most people paying around $75M for a 250,000 sq.ft. two-story regional mall containing 3 anchor stores. At the lowest cost, you can build a 10,000 sq.ft. neighborhood mall with one anchor for $2.5M. At the high end, a deluxe supercenter mall with 500,000 sq.ft., 3 levels, a movie theater, restaurants, and 4 anchor stores costs $225M.

Shopping Mall Costs

2022 Notice: The Effect of the Pandemic on the Construction Industry

The construction industry was seriously impacted by the pandemic in 2020 like many other industries and professions. This impact is still felt in 2022, with rising construction costs and fluctuating material prices. Malls, which use large amounts of concrete, glass, and plastics that are experiencing supply issues and volatile pricing, are significantly impacted in the coming year.

This is coupled with labor shortages, making construction times longer than normal. While indoor shopping has seen a decline over the last two years, the mall industry is expected to change. Open-air malls are becoming increasingly popular, as is an uptick in indoor shopping. This can lead to longer wait times as more malls and open-air shopping centers are being constructed or older malls are renovated.

If you are planning on building a new mall in 2022, you may want to sign a contract sooner than later. This helps lock in prices before they can rise again and get your start date set before delays can occur.

Shopping Mall Cost by Type

Shopping malls come in many shapes, sizes, layouts, and configurations. Generally, they fall loosely into a range of categories. There can be overlap, flexibility, and size ranges within these categories. Some strip malls and neighborhood shopping centers can be hundreds of thousands of square feet, while some indoor enclosed malls may be much smaller. They can be fully enclosed or open-air, have anchor stores or not, and have varying numbers of floors, anchors, and features. These variations can help account for differences in cost, either through size or the amount of construction and finishing necessary, and by the different features it may have. The more features and anchor stores, the larger the parking lot and the more luxurious the area becomes. This also increases the total project costs. Below are the average costs to build each type, based on the most common sizes for each type and the average cost to build:

Build a Strip Mall

The cost to build a strip mall falls between $1.75M and $3.5M. They are simple outdoor malls in either a straight line of stores or a U-shape with an average size that falls between 7,000 and 20,000 sq.ft. They may or may not have an anchor or a large store designed to attract customers who will then move on to the other stores in the strip. They can be as small as 3 stores, or as large as 12 or more stores. They cost $200 to $300 a square foot to build, depending on whether they have anchors and what type.

Neighborhood Shopping Center

The cost of a neighborhood shopping center averages between $2.5M and $10M, depending on the size and location. A neighborhood center is designed to serve the needs of a specific area. It usually contains a supermarket or grocery store as an anchor, with several smaller stores, restaurants, or other mixed-use buildings. Each store is entered from the outside, like in a strip mall. They cost $250 to $300 a square foot to build, depending on what anchors the shopping center has. Some newer neighborhood shopping centers are grouping their stores in a circle to create an open-air style mall.

Theme Mall

The cost of theme malls is between $2.5M and $20M, depending on the type, style, and size. They are usually made of shops or services that all center on a single theme, such as antique malls where all the shops sell vintage or antique goods. They can be stand-alone buildings or made as a strip mall. This is another style that is also being converted to open-air, which is gaining popularity. They cost between $250 and $300 a square foot.

Community Shopping Center

Community shopping centers cost between $5M and $25M to build. A community shopping center is a larger version of a neighborhood shopping center or a large strip mall. They usually have at least one anchor, two anchors being common, such as a supermarket and a gym or movie theater. They can be arranged in a straight line or a U, depending on placement. They cost between $250 and $300 a square foot to build, depending on the location and what features the shopping center has.

Outlet Mall

The cost to build outlet or factory outlet malls is $6M to $30M, depending on the location, size, and layout. They are a group of stores selling brands at a discount. They are usually located far from populated areas, where real estate and renting is cheaper. They can be arranged like a traditional mall, an open-air mall without a roof overhead, or like a large strip mall. They cost between $250 and $300 a square foot to build, depending on the layout and if they have an anchor store.

Power Center

The cost of a power center averages $10M to $35M, depending on the size and types of anchors in the design. A power center is a type of strip mall made up of mostly large anchor-style stores. These include grocery stores, furniture outlets, discount clothing stores, fitness centers, and other large establishments. There may be a few smaller retailers mixed in. While these are generally considered a subtype of strip malls, they are much larger, use more space, and require considerably more parking. They cost $250 to $300 a square foot to build, depending on the anchor stores.

Lifestyle Shopping Center

The cost to build a lifestyle shopping center ranges from $10M to $50M, depending on the type, layout and location. Lifestyle shopping centers are a relatively new type of mall. They may include luxury apartments or condos as part of the structure and high-end retail, restaurants, entertainment, and outdoor dining. The shopping is usually indoors like a typical mall, and they can be of any size. The living areas may be located above the shopping and dining areas or to one side with a private entrance to the mall area. They have an average cost to build of $350 to $400 a square foot.

Regional Mall

The cost of a regional mall is $35M to $150M, depending on the size, location, and type and number of anchor stores. They are the shopping center most often categorized as a “mall.” This is an indoor shopping environment with a minimum of 2 to 3 large anchors and at least one restaurant. They are often two stories, although some are one story, with a more sprawling layout. They often include a mixture of mid-range and high-end retailers and cost $300 to $400 a square foot to build. Newer regional malls use the same general layout but with an open-air environment rather than a full roof.

Super Regional Mall

Super regional malls cost between $100M and $250M to build, depending on the size, location, layout, and anchors. They are exceptionally large malls that can be considered a destination. They have several anchors and restaurants, sometimes attached housing, and multiple types of entertainment. They are twice the size of regional malls and may be even larger. They cost $400 to $500 a square foot to build and often include luxury stores and features, including the use of luxury building materials.

Shopping Mall Space Requirements

The exact space requirements for your shopping mall vary tremendously based on the mall’s size, whether you have a cinema or restaurant, the number and size of these establishments, and the type. You also must consider how much parking you need in addition to the area for the building. For example, restaurants and cinemas require roughly 2 to 3 times the amount of parking that the rest of the mall needs. So, a strip mall without these anchors uses less space than a strip mall that includes them, even if the rest of the mall is equal in size.

You need approximately one acre of parking for every 15,000 sq.ft. of retail space. This varies, and parking garages cut down on the amount of space. Adding a parking garage or underground parking structure increases your project costs. For this reason, many malls include parking garages and outdoor parking to maximize space without making costs too high. Some cities and towns may also have stipulations or ordinances you must follow, so it is always best to check with the city planning board about the type and size you want to construct.

Mall Construction Cost Breakdown

No matter which type of mall you build, there are many variables. From the professionals and materials to the types of signage and accessories the mall needs, each project is unique.

It can be helpful to break the building into different categories. For example, the actual building is one part, but there are also innumerable finishing costs, soft costs, and contractor fees that make up the total figures. While every project is unique, it is possible to break down some of the more common costs to see where your money is going during the project.

For an average mall project, the general breakdown of the construction falls into these categories. Architect costs and builder fees can be in addition to your total cost.

In addition to your total cost breakdown, you will likely have numerous professionals involved. Many of these professionals work under your general contractor, but you can hire them yourself separately, potentially saving costs. Every project can be different, affecting your final rates. Below is the cost breakdown you can expect for the labor.

Building the mall is only one part of the costs. The finishing or outfitting costs also have a significant impact on your total costs. These things are some of the most variable, including the displays, fixtures, and signs that are selected for the stores and anchors inside the mall. Other things like roofing and HVAC also vary depending on the type and location. The following is a general breakdown of some costs you may encounter during the outfitting phase.

Average Number of Stores in a Mall

The number of stores your mall has directly relates to the type. For example, strip malls can have from 3 to 12 stores, while a power strip mall can have 6 to 24 much larger stores. A regional mall can have anywhere from 20 to 80 stores in the enclosed space on average. A super regional mall has a minimum of 75 stores and usually has more. It is not uncommon to see super regional malls with more than 100 stores. Luxury high-end malls usually have between 25 and 50 stores, while lifestyle malls easily have 25 or more stores with multiple restaurants.

The number of stores your mall has is directly influenced by the space size and store types. The more anchors you have, the less space you can dedicate to smaller stores.

​Outlet vs Mall

The words outlet and mall have different meanings and connotations to many people. The word “mall” has many variations, from small strip malls to large luxury apartments connected to indoor shopping and dining areas. A mall can also have various outlets, in which case it becomes a factory outlet mall or an outlet mall.

Outlets are discount stores for specific brands. They become an outlet mall when grouped in a single building. They may be grouped facing inward like a traditional mall without a fully enclosed ceiling, or they may be grouped more like a strip mall.

On the other hand, you can also have stand-alone outlet stores. This can be a store located in a strip-mall, standard mall, or a building. Because many people who shop at outlets like the discounts, it is common to find several outlets in an outlet mall. This lets shoppers move from one outlet to another without driving.

The biggest difference between an outlet and a standard mall is the store types you find inside. In a standard mall, you can find a mix of stores and restaurants of all kinds, including the occasional outlet. In an outlet, however, you find only outlet or discount stores from various brands.

Mall Rent Rates

Many investors build malls for the income they generate. Malls rent out storefront spaces to different retailers, bringing in money for the building owner. The benefit for the different stores is the foot traffic that a mall can bring, while the benefit for the store owner is the revenue.

The cost to rent a space in a mall varies depending on your location, whether you are renting a normal storefront or an anchor, and the type. Rates are usually charged by the square foot and range from $5 a square foot in a strip mall to $40 a square foot in a high-end mall.

The more foot traffic a mall sees, the higher the rental rates generally are. You may see different rates within one mall, depending on the location and how many people pass during an average day.

Enhancement and Improvement Costs

Parking Garage

Given the amount of parking that a mall needs, a parking garage can be a good addition. Parking garages fit more cars, which fits your mall or shopping center into a smaller footprint. This can be beneficial if you are short on space. The average cost to build a parking garage is $7.5M to $12M.

Demolition

There are times when you have an existing building on the land you plan to build on. This may be an older mall, a group of stores, or office buildings. If this is the case, you need to add demolition costs to your project. Demolition costs $4 to $8 a square foot for commercial spaces, depending on the building location and materials you are demoing.

Additional Considerations and Costs

• Financing. It is very common for people building malls and other large commercial buildings to seek financing. There are types of financial assistance just for shopping centers and malls that assist in the build, from bank loans to venture capitalists.
• Permits. Large projects like shopping malls need several permits for construction. Your architect or contractor can assist with this, and they include permit costs in their estimates. Permit plans must be submitted before construction can begin.
• Demographics. Before building a mall, determine who your target demographic is to give you an idea of your potential new customers. This includes the age of your shoppers, their budgets, and lifestyles. This determines the project scale and layout and the best mall type to build.
• Design and layout. The architectural design and layout of your mall play a big role in performance. Consider the placement of your stores and anchors, planning and flow of the foot traffic, space utilization, and sustainability of your materials and design.
• Amenities. With the advent of the digital age, most malls today need to offer more than shopping to stay relevant. Entertainment, restaurants, and services are necessary parts of today’s mall to remain profitable. Consider your demographics to know what best to include.
• Mixed use. Adding temporary, mixed-use spaces to your mall helps you remain flexible to changing trends, without needing to renovate areas constantly. Many malls leave spaces in the center of the mall for this purpose.

References

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