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How Much Does It Cost to Start a Shopping Mall Business?

Shopping Mall Business

You should plan to spend as from $15 million if you want to start a moderate-sized shopping mall. For larger, high-end malls with extensive retail space, dining options, and entertainment facilities, costs can easily exceed $100 million. This investment includes expenses for land, construction, design, and initial marketing.

If you are considering starting a shopping mall, a dedicated facility designed to offer diverse retail, dining, and entertainment experiences, then you must be well-prepared financially.

A shopping mall is a large-scale project requiring significant investment in land acquisition, construction, and ongoing operational costs.

Adequate financial planning and resources are essential to ensure successful development and sustainable profitability in this capital-intensive business. Starting a shopping mall is a capital-intensive venture, but the total cost will be based on certain factors.

Estimated Cost Breakdown for Opening and Operating a Shopping Mall

1. Land Acquisition: $1.5M – $3M
  • Closing Cost of Land Acquisition (Legal fees, title insurance, and transfer taxes): $200K – $500K
2. Design and Architecture: $500K – $800K
  • Architectural Fees (Design, plans, and consultations): $300K – $500K
  • Engineering Cost (Structural, mechanical, and electrical engineering): $100K – $200K
  • Landscaping and Outdoor Design: $50K – $100K
3. Construction Cost: $8M – $10M
  • Site Preparation (Clearing, Grading, and Demolishing existing structures): $500K – $1M
  • Foundation and Structural Work (Excavation, foundation, framing): $2M – $3M
  • Building Construction (Walls, roof, and exterior work): $4M – $5M
  • Utilities Installation (Plumbing, electrical, HVAC, and fire protection systems): $1M – $1.5M
  • Interior Build-Out (Partitioning, flooring, ceilings, and common areas): $1M – $2M
4. Interior Fixtures and Fittings: $1M – $1.5M
  • Mall Entrances and Common Areas: $300K – $500K
  • Retail Space Build-Out: $400K – $700K
  • Signage and Wayfinding: $100K – $300K
5. Permits and Legal Fees: $250K – $400K
  • Building Permits: $150K – $250K
  • Legal Fees (consultations, contracts, and compliance issues): $100K – $150K
6. Marketing and Pre-Opening Expenses: $250K – $400K
  • Marketing Campaign (Advertising, promotions, and public relations.): $150K – $250K
  • Pre-Opening Events (Grand opening events, promotional activities): $50K – $100K
7. Contingency Fund: $500K – $1M
  • Unexpected Costs: $500K – $1M
8. Operational Setup: $250K – $500K
  • Initial Staffing and training: $100K – $200K
  • Security Systems (Surveillance cameras, alarms, and security personnel): $50K – $100K
  • Administrative Setup (Office equipment, software, and operational systems): $50K – $100K.
9. Financing Costs: $500K – $750K
  • Interest Payments on loans during construction: $300K – $500K
  • Loan Fees and Charges (Origination fees, appraisal fees, and other loan-related expenses): $200K – $250K

Total Estimated Cost = $15,000,000 – $19,000,000

7 Factors That Influence the Cost of Opening a Shopping Mall

  1. Purchasing, or Lease of Property

Please note that if you opt for rent or lease, you are going to spend far less when compared to someone who opts for an outright purchase or mortgage for the property.

Of course, the size, location, and available facility in the property will determine the amount you will spend in this regard. Please note that you should budget about $15 million or more if you want to lease a decent facility that has the capacity and space to accommodate the number of shops you want in your shopping mall.

  1. The Required Renovations and Modifications

If you are fortunate to get a property that requires little renovations and modifications, then you will only spend less, but if you are not too lucky to get a property that looks like what you want, then you must be ready to create a robust budget for renovations and modifications of the property.

The truth is that no matter the type of property you acquire or lease for your shopping mall, you will need to invest in making sure the facility meets the specific requirements of a shopping mall. This includes extensive modifications to accommodate retail spaces, dining areas, entertainment venues, and common areas.

In addition to that, the facility must adhere to safety regulations, accessibility standards, and aesthetic design requirements to attract tenants and customers.

  1. The Cost of Securing the Needed Licenses and Permits

The licenses and permits required to start a shopping mall can vary depending on the location and the specific regulations in your area or state.

However, if you are looking to start a shopping mall in the United States of America, then you must be prepared to get a general business license that allows you to operate a shopping mall in your area. This license is typically obtained from the local city or county government.

Aside from general business licenses, you should also make plans to get licenses and permits such as zoning and facility use, fire, health, and safety permits, and state or provincial licensing and permits that are unique to your state or province.

  1. The Cost of Staffing

The fact that you cannot operate a shopping mall alone means that you will need employees to work with. In essence, if you want to start your shopping mall, then you must create a budget for employees who will occupy various positions in your organization.

You should consider the cost of hiring facility managers, security personnel, marketing experts, maintenance teams, and customer service representatives.

Please note that the number of employees you are expected to hire for your shopping mall will depend on the size of the facility and the additional services you are offering.

  1. The Cost of Furnishings and Supplies

Trust me, furnishing a shopping mall is not cheap; hence, you must create a robust budget for this aspect of the business. In essence, if you are planning to start a shopping mall, you should furnish it with high-quality, durable materials that can withstand heavy foot traffic and enhance the shopping experience.

This includes comfortable seating areas, stylish and functional décor, effective signage, and modern amenities. In addition, investing in attractive flooring, lighting fixtures, and landscaping can create a welcoming environment for visitors.

Proper budgeting for furnishings and supplies ensures that your mall not only looks appealing but also operates efficiently and meets the expectations of both tenants and customers.

  1. The Cost of Insurance Policy Covers

In the United States of America, it is considered illegal to operate a business without having some of the basic insurance policy coverage in place. In essence, it is important to have the required insurance coverage to protect your shopping mall from potential liabilities.

You should make plans to purchase general liability insurance, professional liability insurance, property insurance, workers’ compensation insurance, and fire insurance.

Please note that the cost of insurance for a shopping mall will depend on various factors such as the size of the facility and your service offerings.

  1. Your Ongoing Costs

In other to effectively run a shopping mall, you must have a budget for ongoing costs. When we talk about ongoing costs for a shopping mall, we are talking about the money you spend daily to keep the shopping mall in operation.

For a shopping mall, your ongoing costs may cover utilities (electricity, water, gas), property maintenance, cleaning supplies, insurance premiums, marketing and advertising expenses, repairs and renovations, and of course, administrative expenses (office supplies, software subscriptions).

Note your budget for your ongoing costs will be dependent on the size of your shopping mall, and the cost of living in the location where you have your shopping mall.