How to increase property value with non-GLA income
Category Commercial and Industrial News
In a world of unprecedented challenges, property developers and retail property owners have brought an "out of the box" slant to their thinking. They are increasingly looking at ways to monetise space that cannot be leased to shops. Join 3Cube Property Solutions as we explore non-GLA income and how it can benefit the bottom line.
First things first: what is non-GLA income
Law Insider provides a concise definition of non-GLA income: "This shall include all income generated in respect of non-gross lettable areas in the property, such as exhibition areas, promotion areas and/or advertising board space within the property." In other words, non-GLA income is about creating unconventional revenue streams, predominantly within retail spaces. From kiosks and promotional courts to digital advertising screens, filming spaces and technology activations, there are many ways to capitalise on open areas within malls.
Some background into the idea of non-GLA capitalization
Tough economic times and changing consumer environments have meant that retail property owners and property managers are feeling the pinch in recent years - especially since COVID and the growing trend towards online shopping. Finding themselves unable to increase rentals as much as they need to, retail property owners have turned to finding alternative income streams - and capitalising on their non-GLA space has proven to be a vital and diverse undertaking.
Perhaps the most long-standing example of capitalising on non-GLA space has been using open court spaces in malls to host promotional events. From art exhibitions and book sales to health screenings and race registrations, such spaces have been used for a myriad of purposes. More recently, however, non-GLA space has been used in a broader spectrum of ways.
Research has shown that there is no one-size-fits-all solution on how best to capitalise on non-GLA space. Each retail space must be evaluated on its merits when deciding what is possible. Let's take a look at a few of the possibilities.
The innovative ways that mall managers can put non-GLA space to use
There are many ways in which astute property developers and mall owners can put their non-GLA space to work. Possibly the most common use is to erect kiosks and booths in non-GLA areas that can be leased out to small businesses and promoters. Placing a large screen in your non-GLA space also creates a plethora of marketing opportunities. Such screens could be used to showcase anything for a trailer for the latest Hollywood blockbuster to an in-store promotion being offered by one of your tenants.
The possibilities created non-GLA space do not end at the mall's revolving doors. Available space in car parks and other outdoor areas can be utilised by car wash services or companies looking to purchase used cars, to provide just a couple of examples. Outdoor spaces are also being revamped to become padel courts in keeping with the latest fitness trend.
What new revenue streams mean - both for malls and for small businesses
There are three factors which make non-GLA space significant for mall owners and property developers. For starters, there is the obvious point of additional revenue generation. By renting out kiosks and promotional areas (whether on a long-term or short-term basis), they can monetise additional floor space. Secondly, non-GLA space creates a platform that can be used for various charitable initiatives - which in turn can help to fulfil corporate social investment (CSI) mandates. Lastly, the presence of activations, promotions and other activities that may be hosted in these central areas creates interest and potential foot traffic for the mall as a whole.
From a small business's perspective, non-GLA space allows them to get their foot in the proverbial doorway of the retail world. The cost of renting a kiosk is typically a fraction of the cost of renting a small shop, and the terms of the arrangement can often be flexible and short-term - which has led to the rise of pop-up shops.
Additional revenue streams mean additional value, which is the goal for every stakeholder. If you're on the lookout for a retail property in which you can bring your non-GLA revenue ideas to life, get in touch with 3Cube Property Solutions.
Author: 3Cube Property Solutions
