As cities grow denser, consumer habits evolve and real estate costs soar, a new format is emerging— the compact mall. Till now the cities bragged the size of their shopping malls, but today mini malls are emerging as hot favorites of customers as well as developers.
Unlike mega malls that require big land investment and high operating costs, compact malls are located in high-density neighborhoods, they typically span 50,000–200,000 sq. ft and offering a curated mix of essential retail, F&B, and convenience-led services.
These new-generation malls are not standalone shopping spots, but rather act as an anchor for entire urban micro-markets and adjacent residential zones, driving higher rental yields, better resale value and stronger investor interest.
It is all about efficiency and accessibility.
People no longer want to drive an hour and spend half a day in a mall just to pick up groceries or have a meal. Shoppers prefer retail that’s in the neighborhood, not more than 10–15-minute drive and provides a high-quality supermarket for daily groceries, a few F&B brands for eating out, salons, a play zone, a small multiplex, plus essential services like pharmacies.
Pankaj Jain, Founder and CMD, SPJ Group, says, “Neighbourhood malls are redefining the urban retail landscape by combining convenience with community. He notes that design and layout play an integral role in a retail project's success: "Developers are realising that the format must look and feel different from the boxy malls of the 2000s. Curated is the keyword. People don’t want 200 stores. They want a clean, walkable space where the mix of tenants feels right. With evolving lifestyles and a growing preference for hyperlocal experiences, we are seeing increasing fondness for these formats as they deliver both footfall consistency and a sense of belonging for residents. For developers, this is not just about building retail spaces, but about creating vibrant social hubs that enhance liveability. In our project design, we are particular in designing them for everyday use, but with enough character to become the go-to social spot. That’s how you build loyalty."
As per Ajendra Singh, VP, Sales and Marketing, Spectrum@Metro, says, "For developers, the case is practical as much as it is strategic. Smaller malls don’t tie up capital for years, and leasing cycles are quicker. More importantly, they tap into a ready-made catchment of residents. People want F&B and essential retail right next door. For us, it creates value on both sides, our housing projects get a retail anchor, while the mall itself finds tenants faster and delivers steady yields.”
Across India, the local malls are becoming a compelling catalyst for neighborhoods to become more liveable and desirable. As per JLL, local retailers commanded 85% of Q2 leasing activity, demonstrating the strength of India’s homegrown retail ecosystem.
So, while the big malls will continue to rule, pulling in the weekend footfalls, it is the small and smart neighborhood malls that will see steady footfalls from local catchments and generate sustainable rental income.
