Retail developers are looking to the skies when it comes to adding value to their properties, with a growing number of apartments appearing on shopping centres’ expansion plans.
Bayleys commercial, retail and operations director Lloyd Budd says combining shopping malls with residential areas is a growing international trend.
“There are endless examples throughout Asia and there are some pretty iconic developments around the world.”
The Dubai Mall has successfully managed to integrate shopping and accommodation by expanding the mall to include a hotel, apartments and access to office complexes via a sky bridge.
Auckland-based developer Stanley Tan bought Pakuranga Plaza shopping centre in 2014 for $96 million. He acquired the shopping centre with a concept to expand it and create a ‘town centre’ there.
More than 900 dwellings are included in the plan, with a mixture of one, two, and three-bedroom apartments. A 10-storey hotel building is also planned for the site, which has a scheduled completion date of 2030.
In May, the Milford Centre got the green light from Auckland Council for redevelopment plans, which include 167 apartments and an expansion of the existing mall.
Also in Auckland, Kiwi Property’s $280 million plan to extend Sylvia Park is still on the table, despite most of it yet to be confirmed. The expansion concept includes new retail space and an office building above part of the existing shopping centre.
Budd says shopping centres expanding into the residential or office spaces makes sense.
“Generally shopping centres only work over a few levels, so they have a large floor plan but are not high-rise.
“They are also often well-connected to infrastructure and have good parking and transport, so it makes sense to build residential above.”
While the trend is only just starting to take off in New Zealand, it has become standard operating procedure across the ditch.
A growing number of retail developers in Australia are looking at diversifying their sites, not just with residential developments but also hotels and office space. One Sydney-based developer is looking at the potential of building a retirement village above shopping centre – a “vertical village.”
Developing residential dwellings in shopping centres is a win-win for everybody, Budd says.
“Developers like it because they’re making more value out of their land. The government and councils should like it because it creates more housing supply. It’s good for customers who have everything on their doorstep and retailers like it because they get a boost in trade,” Budd says.
Shopping centres, which fit apartments retrospectively, do have the added concern of the safety of the shoppers and potential loss of sales during construction.
But Budd says these are issues that can be easily controlled by the right contractors and careful planning, so no customer base is lost.
“There is a lot to consider, but there are a lot of positives too.”
For councils, a major benefit of building housing above shopping malls is that they are generally well connected to transport and amenities, both of which have to been considered when building new housing.