Mall Trading Hours – Some Difficult Questions

By on Oct 1, 2014

Landlords of active shopping malls are increasingly having to fend their malls against new developments eating into their revenues. New entrants are always entering the market in order to create the required conditions for revenue diversification for their owners, and order to stave off the ravages of tough trading conditions.

One way of arriving at an ideal revenue profile for most malls is to get the tenants to trade extra hours. Most leases entered into allow for this flexibility for mall owners, and many of them are invoking this option. The benefits are easy to see: increased shopper dwell-time which eventually leads to higher turnover rentals better property returns. The downside is increased utility and operating costs and higher exposure to mall robberies.

However, is that benefit that easy to account for? Is the marginal utility generated from the additional hour on Friday from 5pm to 6pm justifiable. Or indeed the increased hours from 2pm to 5pm over the weekend? Some malls have put forward the argument that whilst the South African shopper is not yet aware of the trends towards longer trading hours for malls, this is changing. The jury is still out on this as the targeted hours are in direct competition with commuting and leisure hours for the majority of shoppers. And, not much is being done by the malls to promote their increased trading hours on popular media.

That tenants are resisting this trend by the tenants is not surprising. The increased hours translate into direct costs for them such as double shifts  for staff, union resistance, higher turnover rental and mall operational cost and utilities. For them the argument could be put forward that the extra hour demanded by landlords does not necessarily translate into profits.

What can landlords and tenants do to find a happy medium for the benefit of the shopper?

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