Consolidation of Strata-Titled Shopping Malls

Vanessa Dietl

ERES from European Real Estate Society (ERES)

Abstract: Brick-and-mortar retail faces significant challenges due to increasing online competition and changing consumer behaviors, leading to 'dying city centers' and 'ghost malls'. Therefore, optimizing retail agglomerations has become crucial for ensuring customer satisfaction and meeting economic return expectations. This is particularly problematic for fragmented ownership retail, as is commonly found in Asia. Unlike European shopping malls, which are usually centrally owned and strategically planned by a single entity, 'strata-titled malls' sell individual retail units to investors early in the planning phase to finance construction. Such decentralized center structures complicate unified strategic management and often lead to misaligned tenant mixes. The neglect of positive spatial externalities from neighboring stores, such as visual connectivity, negatively impacts foot traffic and the mall’s attractiveness. This case study examines the strata-titled Far East Plaza Mall in Singapore to investigate how gradual centralization through strategic acquisitions of individual retail spaces and clustering can mitigate fragmented structures and realize synergy potentials. Using a Spatial Autoregressive Regression (SAR) model and clustering algorithms, 394 resale transactions from 1995 to 2022 are analyzed to uncover spatial correlations and spillover effects. The aim is to illustrate that clustering behavior indicates the consolidation intentions of investors and to evaluate the impact of spatial proximity to other stores on resale activity and prices. The results reveal significant spatial autocorrelation, showing that most resales occurred within clusters. Furthermore, resale prices within the clusters progressively increased over time, demonstrating a stronger growth compared to prices outside, indicating that initial owners recognized consolidation intentions and capitalized on the resulting value creation of their units. The findings further suggest that consolidating ownership improves tenant strategies, visual connectivity, and neighborhood synergies, leading to significant value creation opportunities and enabling faster adjustments to market changes. The study not only provides practical recommendations for asset managers to revitalize underperforming malls in Asia and beyond but also offers globally relevant strategies transferable to decentralized city centers for the sustainable improvement of brick-and-mortar retail.

Keywords: Ownership Consolidation; Resale Dynamics; Spatial Autocorrelation; Spatial Clustering (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2025-01-01
New Economics Papers: this item is included in nep-ure
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