There are hundreds of thousands of malls worldwide, with at least 116,000 of those spread across the US. Malls are constructed worldwide to provide entertainment, resources, and employment to the local area.
The average cost of building a mall is $24.9 million, with prices averaging from $25 million to $180 million. The Mall of America’s largest mall cost a whopping $650 million to build.
For high-end deluxe supercenters, you can spend $225 million. You can have three levels, four anchor stores, restaurants, and a movie theater. However, you can build a neighborhood mall with $2.5 million. $2.5 million will get you approximately 10,000 square feet of mall space.
Malls range from small three-store strip malls and large indoor double-story malls to large supercenters with amusement parks. The cost of building a mall depends on the size and amenities included. For example, malls with multiple anchor stores may cost more to build.
The cost of building a mall typically varies depending on location, size, amenities, construction techniques, site conditions, and tenants. Building a mall is a complex process that requires the expensive expertise of the developer, the general contractor, architects, and subcontractors. Additionally, malls require the highest quality of building materials and techniques.
This article will discuss the different types of malls and associated costs.
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Different types of malls
Shopping malls are categorized primarily based on size, shape, configuration, and layout. Some common malls are strip malls, regional, super-regional, vertical, and outlet malls.
Strip malls and neighborhood shopping centers can be hundreds of thousands of square feet, while some may be smaller. Some malls are open-air while others are fully enclosed. Others have anchor stores, while some do not.
Malls generally have varying features, anchors, and levels. The variations are reflected in cost differences as the amount of construction will vary. The average cost of building different types of malls can be estimated based on the type and common sizes.
Strip malls are outdoor malls built in either a U-shape or straight. They typically cover 7000-20000 square feet. Some strip malls may have an anchor store that draws potential shoppers to the building. Strip shops can have as few as three stores or 12 stores. Each square foot typically costs $200-$300 to build.
Strip malls may have multiple floors, but they are usually one-storied. The storefronts are usually made of glass, with separate entries. Their design makes them suitable for restaurants and private practice medical offices.
Strip malls are popular because they bring entrepreneurs and aspiring shoppers together. Strip malls make it easy to do business and offer extra visibility. The average cost to build a strip mall is $2.5 million, ranging from $1.75 million to $3.5 million.
They generally feature businesses like grocery stores, bookstores, restaurants, coffee shops, nail salons, barber shops, and coffee shops. These businesses are typical in strip malls because people have to walk into them, and online stores have not replaced them.
Rent is also cheaper in strip malls than in larger shopping centers. They are a great investment idea for suburban neighborhoods and growing towns.
Smaller strip malls cost less to build because of their simple design. They do not require interconnecting walkways because stores are built in a street line. There is no need for parking structures as they utilize on-street parking.
The cost of building a strip mall is fairly dependent on the kind of tenants you want to attract. The minimum cost per square foot of $200 is a starting point. However, there are other costs to consider when planning to build a strip mall.
The cost of permits and licenses for medium standard strip malls is approximately $12,000. A good location will cost $1.75 million. The design will cost $25,000. Insurance and liability protection costs come at $30,000. Post-construction expenses may cost up to $2,500.
Finishing equipment such as ventilation and signage costs about $42,000. Finally, you will spend $12,000 on CCTVs purchase and installation, $2,600 on a website and order processing software, and $53,000 on marketing and promotion.
The estimated cost of building a regional mall is estimated at $35-$150m. The average cost per square foot is $300-$400.These costs vary based on location, size, and anchor stores. Regional malls are the most popular shopping centers, featuring at least two large anchor stores and a restaurant. Most regional malls have two floors, but some may have just one.
Mid and high-end retailers are typical tenants of regional malls because of their indoor shopping environment. However, some newer regional malls may feature an open-air environment that is different from the typical full-roof design.
Super regional malls
The average cost of building a super-regional mall in the US is $100m to $250m. The cost per square foot ranges between $400 and $500 based on location, size, layout, and anchors. They typically include luxury stores and features.
Super-regional malls can be large enough to be considered a destination. They are double the size of regional malls. They usually feature multiple types of entertainment. Some may feature housing.
Vertical malls are relatively taller and narrower than other types of malls. They are built on limited space, with stores across multiple floors. The floors are typically accessed using elevators or escalators. Vertical malls are popular in populated cities with high land prices.
The Mafco Company developed the concept of vertical malls in 1960. They feature office spaces, hotels, retail stores, and sometimes luxury condominiums. They are ideal for locations where the geography does not allow exterior building or where there are legal restrictions.
Vertical malls may not be the best to build because the concept works against the natural tendency of shoppers to move horizontally. The construction costs of vertical malls range between $250 to $300 per square foot.
Outlet malls, also known as factory outlet malls, cost between $6M and $30 to build. The cost per square foot ranges from $250 to $300. Outlet malls are a group of stores that sell brands at a discount.
Outlet malls are built like large strip malls, open-air malls, or traditional malls. They are typically constructed away from populated areas to take advantage of lower real estate costs.
Mall construction cost breakdown
While the average cost of building a mall in the US is $24.9 million, the exact cost of a specific mall project will depend on many variables. The labor and materials used both affect the cost of building a mall.
It is important to break the building costs into different categories to make reliable estimations. There are numerous soft costs, finishing costs, and labor costs to consider in addition to the actual construction. Construction costs are classified into design, equipment, builders, and materials.
Like any other major construction project, building a mall requires the knowledge and expertise of a qualified architect. As mall construction is more complex, having an architect is important to maximize the use of space, select materials and finishes, and manage the construction process. The design of a mall can account for up to 17% of total construction costs.
Hiring a qualified architect in the US costs between $25,000 and $75,000. Custom designs only can easily cost $150,000, depending on the size and layout. Architects not only design the building but also create schematics and floor plans, assist in developing project budgets, and draft plans for the proposed work.
The role of an architect also includes interfacing with structural engineers and finalizing all the drawings, materials, and finishes. They may also serve as the cost estimators and project managers and consult about the selection of contractors. Therefore, this part of the construction can cost around $4.23 million.
Equipment costs comprise 8% of mall construction costs, an average of $1.5- $2 million. Equipment costs include cranes, cherry pickers, excavators, and other industrial equipment.
Contractors charge approximately $3.49 million for a mall construction project, taking up 14% of the average budget. The contractor may also require an additional $3 million for indirect fees and mark-ups. Building costs are necessary because the contractor oversees the procurement of materials and services, hiring builders and other staff, acquiring permits, utilities, and final cleanup.
The cost of builders averages approximately $442 per square foot, ranging from $325 to $450. These costs, however, may only apply to “unionized” labor.
The average cost of materials for a mall construction project is $11.9 million. This cost is equivalent to about 40% of the budget. Material costs include the costs of steel, concrete foundation, interior wall materials, framing, brick, lighting, security systems, plumbing, electrical fittings, HVAC, and other additional materials.
A mall construction project involves numerous professionals providing various services. Most of these professionals will work under the general contractor, but hiring them yourself can help cut costs. Each project is different, but the national average for labor costs is $10 million.
Building a mall can take months or over a year, depending on the size, affecting the cost of labor. Labor costs include hiring painters, electricians, excavators, carpenters, masons, structural engineers, and plumbers.
Painting is critical in mall construction because paint provides a good appearance and protects the building from weather and pest damage. Paint maintains the structural integrity of the finished building.
Professional painters in the US charge $40 to $60 an hour, but costs can be as low as $38 for apprentices. Property owners can expect to pay up to $84 an hour for a painter. The total cost will depend on the number of painters and the hours required to complete the job.
The average cost of hiring an electrician is $40 to $120 per hour. Hiring an electrician for a mall job can be between $300 and $9,000.
Hiring excavators cost an average of $60 - $80 per hour. However, it may be difficult to find contractors to work at an hourly rate as excavation is typically priced per cubic yard or project. A simple excavation job can cost $100 per hour but expect to pay up to $500 per hour for hard-to-reach areas.
Carpenters average costs $60 - $100 per hour, depending on the materials, trim work, and travel requirements. You can hire a carpenter for smaller projects for $300-$500. On the higher end, hiring a carpenter will cost you between $600 and $4,429.
Hiring a mason for a mall construction project costs $20 - $50 per hour or $10 to $15 per square foot. The costs will vary depending on location and type of materials. For example, natural stone will cost you $15-$30 per square foot in labor, but you can pay $10-$15 hourly when working with a stone veneer.
Structural engineers are crucial in building a mall because they determine the structure's ability to handle the building's weight. The national average cost of hiring a structural engineer is $500-$2000 for simple projects. Costs can go up to $20,000 depending on the job’s complexity.
Plumbing is an essential aspect of malls because malls are utilized by hundreds or thousands of people daily. Homeowners in the US typically pay an average of $90 an hour for plumbing work, but you can expect to pay at least $200 an hour for a mall project.
Malls require a lot of parking space due to the large volume of visitors. A parking garage is a must-have because it fits more cars. It is particularly beneficial in malls with limited site space. The average cost of building a parking garage in a mall is $7.5 million but can be as high as $12 million for a traditional mall. The cost will shoot up further for larger malls.
The number and size of anchors in a mall influence the amount of space you require and the total cost. For example, malls with a cinema or restaurant require square footage. Additionally, these establishments increase the need for parking spaces. A mall with anchors such as restaurants and cinemas typically requires at least twice as much parking space.
The general formula requires one acre of parking for every 15,000 square feet of retail space. You may choose outdoor parking over underground parking to cut costs because underground parking is more expensive to develop. However, the choice will also depend on the space available.
Having enough parking spaces is critical in a mall. A parking garage is built on several levels making it more space-efficient than a surface lot. The average cost of building a 150,000 square-foot parking garage in the US is $7.5-$12 million.
Most property developers pay approximately $9.75 million for a multi-level parking garage. This price is significantly higher than the average of $150,000 for a 30,000 square-foot surface parking lot.
Note that costs can be as high as $20 million for a 250,000 square-foot parking garage on two underground levels. Underground parking garages come with elevators hence the high costs.
Parking garages can be either traditional or precast, but precast materials are more common today. Precast materials, including pillars, forms, and brick, are less expensive and more time-efficient. Precast garages take less time to build than traditional concrete ones. This method, therefore, helps reduce project timelines.
The average cost of building a traditional garage is $31,500-$42,000, while precast garages range from $19,500 to $26,000. The car space is usually 300-400 square feet, but 340 square feet is most common.
The national average cost of constructing a parking lot is between $50 and $80 per square foot. Most people pay $65 per square foot. Prices vary depending on location and are typically higher in cities. Property developers can expect to pay between $14,000 and $30,000 per parking garage level.
It is important to factor demolition costs into the budget if there are existing buildings or parts of buildings to demolish. Commercial demolition costs an average of $4 to $8 per square foot. This cost is dependent on location and type of materials.
Constructing a mall requires several permits and approvals. The costs of permits can significantly affect your budget if not accounted for during planning. The contractor and architect can help with permit costs by including them in their estimates.
The permits for commercial buildings, including malls, are typically based on the size of the building. Prices range from $0.15 to $0.64 per square foot. Permits may cost up to 5% of the total project cost. The permit fees for a 50,000 square-foot building can be as high as $42,000 and as low as $7,500.
Other considerations and costs
Strip malls are generally cheaper to design and build but do not offer an indoor shopping experience. You want to consider what types of businesses you are planning to attract before settling on a type of mall to build.
The national average cost estimate does not include permits and taxes. A mall construction project requires several permits that must be paid for before construction can begin. Contractors can help you acquire permits, but you may need to make the payments separate from the contract.
The cost of finishing the parking lot is not included in the mall construction estimates. It is important to work with the contractor or architect to determine the exact costs.
Finally, contractor fees should only take up to 14% of the budget. Contractors can create unnecessary mark-ups and indirect fees, adding another $3 million to the final cost.
The US is home to over 116,000 malls with varying costs depending on size, location, design, layout, and anchors. The national average cost of building a traditional mall is $24.9 million. Property owners can expect to spend between $2.5 million and $180 million. $2.5 million will only get you 10,000 square feet of mall space.
There are different types of malls, including strip malls, regional malls, super-regional malls, vertical malls, and outlet malls. Strip malls are generally cheaper but do not offer the indoor shopping experience most consumers prefer.
The estimated cost of building a 250,000 square-foot regional mall with two levels and three anchor stores is $75 million. However, for a deluxe 500,000 square-foot supercenter spanning three levels, you will need up to $225 million. This cost covers the development of at least four anchor stores, several restaurants, and a movie theater.
The cost of building a mall depends on many things, and it is better to break it into the design, equipment, builders, and material costs. The quality of equipment, materials, and labor used in mall construction is typically high and costly. However, property owners can save significantly by hiring the right professionals and being thorough during construction planning.
The estimated national average cost of $24.9 million to $180 million does not cover permit fees and additional costs such as parking garage and demolition costs. Contractors typically help estimate these additional costs, but the property owner may need to pay for permits separately.
What is the future of shopping malls?
The future of shopping malls lies in innovation and technology. 2022 is a digital age where most Americans prefer the convenience of online shopping provided by online retailers and e-commerce platforms. The current generation is tech-savvy, and mall operators must embrace technology to keep up.
How do malls make money?
Malls generate income through rent. The anchor stores in malls attract people who then circulate to other businesses. Businesses pay for rental space and rely on foot traffic to get customers. Shopping malls are a good investment because they offer big returns and safety.
How long does it take to build a shopping mall?
The time to build a mall depends on the size and construction technique. The mall type also influences how long it takes to complete. The average time from initial concept to completion is 2-5 years. However, the timelines can be longer due to supply shortages and labor delays.