The redevelopment of shopping centres and the rise of mixed-use developments in Brazil

Maria Flavia Candido Seabra

Machado Meyer Sendacz e Opice Advogados, São Paulo

mseabra@machadomeyer.com.br

Raphaella Gonçalves Oliveira Alves

Machado Meyer Sendacz e Opice Advogados, Belo Horizonte

ralves@machadomeyer.com.br

The shopping centre – the ultimate symbol of 20th century consumer culture – currently exists in a paradox. To survive, it must cease to be just a place for shopping.

Historically conceived of as real estate assets exclusively devoted to retail, shopping centres thrived in the context of expanding consumption and accelerated urbanisation. However, the demographic, technological and behavioural transformations of recent decades have prompted a reassessment of this traditional model. The consolidation of e-commerce and the pursuit of integrated experiences combining housing, work and leisure, among other services, are redefining the role of shopping centres in cities.

In response, leading real estate operators have redeveloped existing assets by implementing mixed-use projects. This phenomenon transcends a mere architectural trend and represents a reinvention of the real estate business model. It entails a new conception of how retail-anchored assets can generate sustainable long-term value. Brazil follows this global trend but faces structuring and investment challenges, common characteristics of a market still growing in this format.  

The transformation of the shopping centre as a real estate asset

In recent years, the shopping centre has ceased to be simply a retail destination, developing into a hub for services and social interaction. This transformation reflects changes in consumer behaviour and in urban planning priorities that are reshaping the retail real estate landscape on a global scale.

The very composition of these real estate developments itself is undergoing significant change. The expansion of sectors such as healthcare, education and specialised services reduce these centres’ dependence on traditional retail. In this context, developers and investors increasingly recognise the redevelopment of shopping centres as a long-term strategy for creating real estate value.

Rather than pursuing traditional horizontal expansion based exclusively on new commercial areas, the focus shifts to exploiting the buildable potential of adjacent land and underutilised areas, transforming single-use assets into genuinely multifunctional urban structures.

The growth of mixed-use projects

The ‘mixed-use’ concept is not new in the international real estate market. Projects integrating residential, office, hotel and commercial uses are already well established in markets such as the United States, the United Kingdom and in many Asian countries, where they have become an alternative for urban intensification.

In the US, the movement gained particular relevance due to the decline of so-called 'enclosed malls', a predominant model during the second half of the 20th century that has lost market momentum, especially after the Covid-19 pandemic.^[1]

The trend can be observed in several North American developments that replace the traditional shopping centre model with true town centres, conceived as multifunctional urban centres oriented toward the user experience. The objective ceases to be exclusively commercial and incorporates typical attributes of contemporary urban life, such as walkability, social interaction, a diverse offering of services and integration between different economic activities. A 2024 study by JLL indicates that mixed-use complexes are gaining traction, particularly on sites with expanded buildable potential capable of generating direct revenue and increasing visitor circulation.^[2]

In the UK, urban regeneration projects have used the conversion of obsolete shopping centres into mixed-use developments as an instrument for the economic revitalisation of central areas. In many cases, the strategy is associated with the expansion of housing supply and the recovery of public spaces, aligning real estate development objectives with urban policies.

In some Asian countries, especially Singapore and Hong Kong, the integration of diverse uses has been a structuring element of urban planning for decades. Large complexes connect public transportation stations, offices, residences, hotels and commercial areas within a single real estate structure, maximising the efficiency of land use and reducing the need for motorised travel. These models offer valuable references for emerging markets seeking to optimise scarce urban land.

In Brazil, the adoption of this strategy has gained strength more recently, driven by the lack of well-located land, the pursuit of greater efficiency in land use, and urban planning guidelines aimed at smart densification. The convergence of these factors has created favourable conditions for the development of mixed-use projects on an unprecedented scale in the Brazilian market.

Although regulatory contexts are distinct, the perception that large-scale real estate assets should be conceived as multifunctional urban spaces, rather than isolated, single-use structures, is near universal.

The Brazilian legal framework as a trigger for urban redevelopment

From a regulatory standpoint, the development of mixed-use projects in shopping centres finds support in important instruments of Brazilian urban law, although their practical application is not always straightforward.

The Federal Constitution of 1988 enshrined the principle of the social function of urban property, subsequently regulated by Law No 10,257/2001, known as the City Statute (Estatuto da Cidade). The legislation established guidelines aimed at promoting sustainable urban development, the rational use of land and the ordering of the social functions of the city.

Among the instruments provided by the City Statute, two deserve special attention in large-scale real estate redevelopment projects. The onerous grant of building rights (outorga onerosa do direito de construir) allows municipalities to authorise construction above the basic floor area ratio upon financial compensation by the developer, thereby enabling the vertical development of underutilised land. The Joint Urban Operation (Operação Urbana Consorciada) enables coordination between the public sector and the private sector to promote structural urban transformations in specific areas of the city, creating opportunities for larger-scale projects.

The Brazilian regulatory environment, therefore, demonstrates convergence with international urban planning trends, encouraging more efficient land use and creating legal conditions for the transformation of shopping centres into mixed-use real estate development platforms. For international investors, this framework provides reasonable legal certainty for long-term capital allocation, although the fragmentation of municipal competencies and the bureaucracy of approval processes remain significant challenges.

The urban planning perspective: Shopping centres as urban infrastructure

From an urban planning perspective, mixed-use projects engage directly with contemporary concepts of sustainable urban development that have gained prominence in the planning debate worldwide.

Urban studies consistently indicate that denser cities with greater integration between housing, work and services show stronger indicators of mobility, economic efficiency and quality of life. The proximity between different urban functions reduces commuting, encourages the sustainable use of public facilities and strengthens the economic vitality of urban regions.

These findings underpin the ‘15-minute city’ concept, formulated by Professor Carlos Moreno of the Sorbonne University in Paris, according to which essential urban services should be accessible within 15 minutes on foot, by bicycle or by public transportation.

Shopping centres have particularly favourable characteristics for this transformation. As a rule, they are located in consolidated urban areas endowed with infrastructure, accessibility and a supply of services. Moreover, they often possess extensive land with remaining buildable potential. This combination renders shopping centres natural candidates for the implementation of mixed-use projects.

It is no coincidence that some operators in the sector have adopted the expression ‘mini-cities’ to describe developments that combine housing, work, healthcare, hospitality, entertainment and retail in a single integrated structure. The terminology reflects the ambition to create self-contained urban environments in which residents can carry out their daily activities without the need for significant travel.

This is precisely the strategy adopted by Allos, one of the largest shopping centre operators in Brazil. Through its real estate development programme, the company promotes the vertical development of land adjacent to its shopping centres for the construction of residential towers, hotels, hospitals and offices integrated with the commercial centres. The project is ambitious. The company recently announced partnerships for the development of 72 towers in the land of 13 shopping centres across nine Brazilian states.^[3]

The strategy aims to increase primary visitor density and create a new source of revenue for the group without the need for equity investments. It focuses on cities such as Londrina,^[4] with a ‘sustainable life center’ concept in Shopping Catuaí, and Campinas,^[5] where up to 17 towers will be built on the mall’s parking lot, creating a true multipurpose centre at Parque Dom Pedro Shopping.

The Allos case evidences a paradigm shift in the perception of real estate assets: the shopping centre ceases to be only a destination and becomes the structuring nucleus of a new urban centrality. This conceptual transformation deserves the attention of investors, urban planners and public policymakers.

The growing interest of institutional investors: Why mixed-use attracts capital

For institutional investors, mixed-use projects present particularly attractive characteristics that deserve careful consideration in the construction of real estate portfolios.

The first attraction is revenue diversification. With mixed-use projects, cash flow ceases to depend exclusively on retail performance, incorporating revenues from residential developments (through sales or leasing), corporate leases, hotel operations and healthcare facilities. This diversification reduces vulnerability to specific sectoral downturns and creates more stable and predictable income profiles.

The second attraction is resilience. During periods of contraction in a given economic moment, other uses can partially offset the reduction in demand, functioning as an investment protection mechanism.

The third is the capture of real estate value. The transformation of large, underutilised land into higher-density developments tends to generate significant appreciation, especially in consolidated urban regions where comparable land for new developments is increasingly scarce and expensive.

For investors, therefore, participation in mixed-use redevelopment projects offers a path to value creation that would otherwise require the acquisition of new land and undertaking full-cycle development, an increasingly costly and complex alternative in Brazil's major cities.

Conclusion

The redevelopment of shopping centres through mixed-use projects represents one of the most relevant transformations in the contemporary Brazilian real estate market. The movement goes beyond the adaptation to changes in consumer behaviour and constitutes a redefinition of the very concept of the shopping centre as a real estate asset.

The traditional model, centred exclusively on retail, gives way to structures capable of integrating multiple uses and generating value continuously throughout the day and throughout the asset’s useful life. The future of shopping centres, therefore, seems less associated with the construction of new ‘retail boxes’ and more connected to the creation of integrated communities, where living, working, consuming and accessing services become part of the same urban experience.

It is an evolution that goes beyond retail and positions shopping centres as protagonists of the next generation of real estate development in Brazilian cities. For investors seeking diversified and resilient returns in emerging markets, the message is clear: the shopping centre of the future will not be only a place to shop, it will be a place to live.

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