Extensive mix of tenants appeals to young shoppers The random tenant mix and seeming lack of order in a local boutique mall may confuse first-time visitors, but landlords recognise this retail model fills a clear market niche and can also offer a good return on investment. 'Most of these malls are catering for young shoppers, and such a set-up provides a fast turnaround on trade mix and merchandise items,' said Kevin Lam, an associate director of retail services at DTZ. 'On the tenant side, these are also good places for young entrepreneurs to introduce new designs or products to the local market as it involves comparatively low capital investment.' He said the most suitable premises were multi-storey developments in prime locations, with floor plates of around 4,000 to 5,000 sqft or less. Landlords could easily subdivide these into smaller units of 100 to 300 sqft and offer lease terms which were normally one to two years but could be shorter. This made it possible to achieve a relatively high rental per sqft or unit, and allowed for a high turnover of trade mix combinations. The usual aim, though, was to target tenants - and shoppers - who fell within a clearly defined range. For example, the Island Beverley in Causeway Bay aimed for young female consumers. Outlets offered ladies' fashion and accessories, cosmetics, shoes and handbags, with local designs, and imports from Japan and South Korea. In contrast, Trendy Zone in Mong Kok targeted teenagers with gift and premium items, collectables and fashion. 'Some landlords choose to sell on a strata-title [unit by unit] basis when the arcade is fully leased at a reasonable return,' Mr Lam added. He noted that the management of such malls was not always straightforward. More resources might be required for rental collection and smaller tenants had a habit of falling behind with their repayments. 'The other risk is the tenants' reliability,' he said. 'They are usually individual, inexperienced start-up business owners who may easily go bust when the economy is in a downturn.'