Malls, Plazas Finding Value in Their Parking Lots

Are rumours of the deaths of shopping malls and plazas greatly exaggerated? It is no secret that shopping mall traffic is not what it used to be. While they have been around for decades, shopping trends have been drastically altered, especially in the aftermath of the pandemic. This has forced commercial property managers, retailers, and other players to adapt to this environment and be more innovative, such as making a trip to the nearest shopping centre an impressive experience.

Indeed, with the increasing use of online shopping platforms and the ease and convenience of home delivery, customers visiting malls and plazas today are looking for something other than the traditional shopping experience. They want much more. Likewise, malls must embrace change in their operations if they wish to retain their presence within this new market dynamic.

Based on some of the data, shopping malls are being rewarded with modest upticks in foot traffic as many major urban centres are reporting higher volumes of shoppers over the last 18 months.

That said, it might not be time to be stagnant. A common solution being discussed is transforming parking lots in malls and plazas into valuable real estate opportunities. Industry experts are assessing how to generate additional revenue from these parking lots. So far, they have come up with a broad array of ideas.

How to Find Value in Parking Lots

In the last couple of years, many strategies have been floated to allow malls and plazas to find and extract value in their parking lots.

As Canada endures housing affordability challenges amid shrinking inventories, developers are mulling over the concept of producing large-scale developments on surface parking lots. Suffice it to say industry leaders are reimagining shopping malls and taking a look at parking lots to determine if there is an opportunity for mixed-use developments in and around existing malls.

Cadillac Fairview, for example, is launching construction at Fairview Mall in Toronto over the next couple of years. The company aims to construct a blend of commercial and residential buildings with open spaces on the parking lots surrounding the shopping centre.

Another obvious strategy has been to monetize the parking spaces by charging parking fees as a flat rate or an hourly charge. A growing number of companies that have incorporated this tactic do not charge paid customers but individuals who may be visiting a friend nearby or are hopping across the street to meet a family member for a cup of coffee. Meanwhile, specific fees can vary depending on the size of the mall or plaza, location, and market conditions. But, in general, malls can employ this strategy to generate income. Customers could also be offered the option of advanced reservations for specific parking spots for a higher fee or to gain access to premium services, such as valet parking.

Another value-generating strategy for malls and plaza parking lots could be sponsorships and advertisements. By collaborating with local businesses, malls could display banners or digital screens within the parking area. This could be an ongoing stream of income. Moreover, malls can utilize their parking lots by transforming them for events, community gatherings, carnivals and fairs, markets and food festivals, drive-in theatres, and concerts. Specific days could be allocated to these events, and revenues could benefit customers, mall owners, and tenants.

Could shopping malls and plazas use their parking lots to offer valuable services and conveniences? You might have noticed that as more consumers purchase electric vehicles, more companies are providing designated parking spots with charging stations. This could attract customers who are eco-conscious and environmentally concerned. By reducing energy consumption, mall administrators could also make their parking lots more sustainable. This could be achieved through solar panels on roofs, bike racks, car spaces, and rainwater harvesting systems. These measures could help malls and plazas connect with people who would appreciate these services.

As an entire population segment wants everything to be offered to them on their phones and smartwatches, malls could incorporate technology to improve the parking experience for these customers by allowing them to reserve parking through a mobile app, make payments through online payment systems, and extend real-time parking availability indicators.

Finally, safety and security are other valuable services visitors to malls and plazas would appreciate. A parking lot with proper security measures, excellent surveillance systems, adequate lighting, and security patrols would add value to visitors and make the mall a more attractive destination by creating a sense of trust. This will not only please the tech-savvy customer but can also help optimize space allocation, avoid traffic blocks in the parking lot, and proactively allow customers to know the status in terms of space and availability to avoid wasting time and effort searching for parking.

Empty Lots Become Valuable Resources

By implementing these strategies, malls can generate additional revenue, provide more value and convenience to customers, remedy some of the housing affordability issues, and improve the overall experience for visitors. Indeed, better utilization of parking lots can improve customer satisfaction. The added advantage is better safety and security, community engagement, smoother traffic, and better implementation of eco-friendly and sustainable services.

Are parking lots the future of commercial and residential real estate?

Source: CBC