One of the major retail trends in Bangkok that has interested me over the past few years is the growing number of community malls. Therefore, with many new players entering the market recently, I have started to ask myself, “Are community malls still a good opportunity for new-to-market investors?”

What is a community mall? There is no single definition of a community mall in Bangkok. Basically, it is a mall situated in a residential area. However, in Bangkok, there are small community malls in suburban sub-markets that serve the need of a particular residential community until a larger-scale community mall in the Central Business District targeting white-collar workers opens. To distinguish a community mall from other shopping centres, we have to look at the size and design.

As the lifestyle of Bangkok people has changed, centres that offer convenient dining, shopping and the chance to relax have become more popular. With high traffic congestion in the city, community malls that provide sufficient parking space and easy access have become more attractive to consumers. From a total leasable area of 530,971 sqm in 4Q07 to 988,631 sqm in 3Q14, community mall space has risen dramatically and now accounts for 18.8% of the overall retail market leasable area. This figure is expected to grow to 21.8% by end-2016.

Since community malls generally focus on small groups of customers, many large retail developers decided not to enter this market, preferring to invest in larger-scale projects. Hence, there are a limited number of players in the community malls market: Siam Future Development, the largest with 17 malls across Bangkok; K.E. Land, a developer that made a successful breakthrough with The Crystal in 2007; and Toyota TBN, a Toyota service provider and landlord that utilised adjoining vacant land and turned it into a successful community mall, The Paseo, in 2008.

Although many of the recent new-to-market players fail to capture demand, this does not mean that the opportunity window has closed. The success of a community mall depends on many factors. For example, some strategically located projects by new-to-market developers have been performing well, such as Seenspace 13, a small community mall with the unique selling point of turning its common space on the ground floor into tables for restaurants and bars at night; the mall had a 4.0% vacancy rate in 3Q14. Another successful project is Rain Hill, a green concept community mall with a well-planned tenant mix targeting white-collar workers in the Central Business District and a 4.3% vacancy rate. Thus, besides the basic retail factors of good location and experienced management, unique selling points are critically important, as they differentiate the malls from other shopping centres. With the widespread expansion of residential areas in the suburbs along with the upcoming subways and sky-trains, there is still room for newcomers; however, with their relatively smaller scale, new community malls will have to be more innovative in both design and tenant mix if they are to be successful.

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