MAPIC Preview magazine by ReedMidem MIPIM Asia

October 2010

MAPIC Preview Magazine

www.mapic.com

THE DASH FOR CASH Investment, income streams and innovation page 25

T H E

O F F I C I A L

CITY SPEAK Public-private deals fuel retail growth

page 31

M A P I C

ALSO INSIDE

■ Global report: country-by-

country analysis ■ Opportunities: investment, growth areas, new retail ■ Inside: your exclusive MAPIC Special France supplement

M A G A Z I N E

••• EDITORIAL

Dear Friends, Welcome to MAPIC 2010 where 7,000 international retailers, retail real estate specialists, city administrators and investors from over 60 countries come together at the only event of its kind in the world.

Nathalie Depetro

In a changing world, retail real estate is adapting to a new reality. Shopping malls are paying increasing attention to the retail mix they offer clients and introducing value added leisure services for clients. Sustainability programmes are being introduced, making sound environmental and economic sense. And maximising revenues by introducing temporary units or promotional events is becoming the norm, rather than the exception. This new reality will be reflected and discussed throughout MAPIC and in this magazine. In 2010, we have chosen France as our Country Of Honour and MAPIC 2010 will be inaugurated by France’s Minister of Economic Affairs, Industry and Employment, Christine Lagarde. French retailers have developed a global reach, with luxury brands such as Louis Vuitton, Chanel and Dior now being joined by the grocery heavyweights Carrefour, Auchan and Casino, in markets stretching from Latin America to the Far East. International investors continue to target the French market as do international brands such as Apple, Tommy Hilfiger, H&M or Abercrombie & Fitch. And across the country, city administrators are including retail real estate projects in their urban development strategies. Indeed, MAPIC provides a unique opportunity for cities such as Greater Lyon, Calais, Lille, Marseille or Dunkirk to meet face to face with the retail real estate community. MAPIC 2010 sees the launch of an exciting new initiative, the Retail In The City Summit. Bringing together senior executives from the public and private sectors, the summit will examine how to achieve sustainable urban retail. As you walk through the MAPIC exhibition halls, you will have the opportunity to discover a collection of ambitious shopping mall projects in Brazil, Egypt and Turkey, being presented on the international stage for the first time. The presence of projects from these three countries represents a significant growth in MAPIC’s international footprint. In addition to providing delegates with deal-making and business networking opportunities, MAPIC offers a premium conference programme to discuss the key developments, share best practices or case studies and stimulate debate on the major issues facing retail real estate. I’d like to thank Thomas Meager, Primark’s director of property, Francis McAuley, international director at Debenhams Retail PLC and Chris Igwe, head of retail, senior director european retail leasing, EMEA, CB Richard Ellis (France) for accepting to make keynote addresses this year. Finally, I want to wish you an excellent MAPIC 2010. We appreciate and value your support. Nathalie Depetro MAPIC Director

••• CONTENTS

NEWS

The latest MAPIC 2010 news, focus on the exhibitors and participants attending this year’s event

NEWS ANALYSIS

Spotlight on the major industry sectors The thrill of the new: New retail, new investment and new opportunities

MAPIC CONFERENCE PROGRAMME

NEW AT MAPIC 2010

MAPIC Preview magazine October 2010 Director of Publications: Paul Zilk Editorial Department Editor-in-chief: Mark Faithfull • Associate Editor: Anika Michalowska • Technical Editor in Chief: Herve Traisnel • Deputy Technical Editor in Chief: Frederic Beauseigneur • Graphic Designer: Carole Peres • Sub Editors: Joanna Stephens, Phil Sommerich, Debbie Lincoln • Proof Reader: Debbie Lincoln • Contributors: Brian Baker, Nadia Elghamry, Nicola Harrison, Liz Morrell, Graham Parker, John Ryan. Production Department Content Director: Jean-Marc Andre • Publications Production and Development Manager: Martin Screpel • Publishing Co-ordinators: Amrane Lamiri, Bruno Piauger • Production Assistant: Emilie Lambert, David Le Chapelain • Production Assistant, Cannes Office: Eric Laurent • Printer: Riccobono Imprimeurs • Le Muy (France). Published by Reed MIDEM • BP 572 • 11, rue du Colonel Pierre Avia • 75726 Paris Cedex 15, France • Contents © 2010, Reed MIDEM Market Publications • Publication registered 4th quarter 2010

www.mapic.com

Printed on 100% recycled paper ISSN 1961-022X

Preview of the Awards and an introduction to the fantastic new elements to MAPIC 2010

FEATURES INVESTMENT: MANAGING THE MAGIC MIX

INVESTMENT: COMMERCIALISATION BREAK

SPAIN/PORTUGAL: BACK FROM THE BRINK?

BENELUX: IN PRIME POSITION

GERMANY: LET THE GOOD TIMES ROLL 31

Cities and regions are becoming an increasingly important catalyst for retail regeneration across Europe 35

Some sectors and regions have continued to push forward despite the downturn 38

The European retail market is still alive with new players, many looking to expand across the continent 42

After an almost complete freeze in development, the pipeline has suddenly opened again

Italian retail has maintained steady growth during the downturn and growth looks set to continue

The retail focus has shifted from Dubai as the MENA region realigns with new opportunities USA: IT’S NOW OR NEVER?

ITALY: EUROPE’S STEADY MAN

Russian retail is recovering after the financial crisis, led by its capital city Moscow MENA: SHIFTING SANDS IN THE MIDDLE EAST

UK: DARING TO SCHEME AGAIN

Central and Eastern Europe has some clear star performers, notably the Polish market RUSSIA: MOSCOW COMES OUT OF THE COLD

RETAIL: THE RIGHT ROUTE TO EXPANSION

All the indicators are positive for Germany but the outlook is not quite so straightforward CEE: POLAND SETS THE PACE

RETAIL: STILL A WORLD OF OPPORTUNITY

Prime real estate in the Belgian and Dutch markets remains in demand

Additional income streams may be welcome but commercialisation should be about more than simply bean counting LOCAL GOVERNMENT: JUST ENOUGH FOR THE CITY

Hard hit by the recession, the Iberian Peninsula can see some chinks of light

With low transactional volumes the market has switched its focus to asset management

Could this be a once-in-a-lifetime opportunity to invest in the USA for European retailers?

MAPIC USEFUL TIPS MAPIC COUNTRY OF HONOUR: FRANCE Our special supplement examines the French retail market, investment opportunities and French players abroad

••• NEWS

TURKISH retailers have a dedicated pavilion at MAPIC for the first time. Companies hosted include: Boydak, Çilek, Ay Marka, Eroglu, Orka Tekstil, Ipekyol, Sun Tekstil, Med-Art, Cross Jeans and Sarar. THE 13TH Russian Breakfast at MAPIC takes place from 9.00-12.00 on Thursday, November 18 at the Hotel Majestic. Over 200 key decision-makers will participate in the event which is divided between a market discussion and networking breakfast. Register at HYPERLINK "http://www.imevents.ru" www.imevents.ru REDEVCO has acquired a prime retail property in St Helier, Jersey for €23m. The property comprises two retail units, fully let to Monsoon Accessorize and Next. LASALLE Investment Management has bought seven retail centres in Bavaria, Germany for its LaSalle Ger-

Fund takes majority stakeholding in mfi PERELLA Weinberg Real Estate Fund I will become new majority shareholder in shopping centre developer and operator mfi (management für immobilienone). Perella Weinberg Real Estate Fund I LP, the European real estate investment arm of financial services firm Perella Weinberg Partners, will acquire a majority stake in mfi via a capital increase. Founder and chairman of the mfi supervisory board Roger Weiss will retain a significant stake alongside the new shareholder. The agreement, signed on August 14, is subject to certain conditions, including the approval of the responsible cartel authority. “We are investing in one of the most

Perella Weinberg has pledged to back mfi’s development programme

attractive German companies in this sector and intend to support mfi in the long-term in order to continue its success story,” said Leon Bressler, partner, Perella Weinberg Partners. The current focus of mfi’s development is on eight development

projects with an investment volume of around €1.5bn as well as a number of refurbishments of older shopping centres. “With Perella Weinberg Real Estate Fund I LP mfi gains a long-term investor,” mfi CEO Matthias Boening said.

man Income and Growth Fund for around €30m. The assets are all new developments on long-term leases to retailers including Rewe, Edeka, Lidl and Rossmann.

Drees & Sommer refurbishes Vienna department store Good site Vienna: Gerngross

MAB DEVELOPMENT and Neinver have signed a joint venture to co-operate in the development of factory outlet centres in France and Germany, following a memorandum of understanding agreed at MAPIC 2009.

JV for France and Germany

DREES & Sommer has project managed refurbishment of Gerngross City Center, the largest department store in Vienna. The building, which dates back to the 1960s, now offers 30,000 sq m of floor space for shopping arcades, service facilities, and food and beverage. Owner Deka Immobilien carried out the renovation with the building in full operation. Work started

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in January 2010 and completed in the autumn. The interior design of the store has been upgraded, the atrium totally remodelled, and building services equipment and elevators have also been modernised. The building's thermal insulation has been improved, with measures including the installation of high-quality windows to minimise energy consumption.

FRENCH MINISTER’S VISIT OPENS MAPIC 2010 CHRISTINE Lagarde, France’s Minister of Economy, Industry and Employment, will inaugurate MAPIC 2010. The presence of Lagarde at the 16th edition of the international market for retail real estate will be important both nationally and internationally, according to MAPIC director Nathalie Depetro. “Christine Lagarde’s global renown will give an international echo to debates on core industry issues such as tomorrow’s trade concerns, the impact of new consumption patterns, high growth in emerging countries and the need to build retail activities into a global strategy for sustainable urban planning,” Depetro said.

Lagarde: “Global renown”

••• NEWS

ABERDEEN European Balanced Property Fund has acquired the Arena

Multi focuses on cities and centres

shopping centre and adjacent Stoa shopping gallery in Den Bosch, the Netherlands. The seller was an institutional real estate fund managed by Pramerica. UNIBAIL-Rodamco has sold its 20,000 sq m retail portfolio in Rotterdam to Dutch investor Syntrus Achmea Vastgoed for around €150m. The portfolio consists of 30 assets located in Lijnbaan, Korte Lijnbaan, Karel Doormanstraat and Beursplein areas of Rotterdam. SAVILLS expects to see more property deals in the grocery sector, following Eroski’s transactions. Luis

Turkish delight: Multi has split its Turkish development business

DEVELOPER Multi Corporation has said that it will focus primarily on developing shopping centres and on inner-city regeneration in strategic collaboration with investors.

In March Multi and Corio entered into an agreement for Corio to acquire an operational portfolio, consisting of four shopping centres in Germany, Spain and Portugal for a consideration of €662m, and a

development portfolio consisting of five projects in Germany, requiring an expected investment of approximately €660m. The total investment in the transaction is approximately €1.3bn. In Turkey Multi has already split its development and fund activities. The name Multi TurkMall has been discontinued and the organisation has become Multi Development Turkiye (MDT) and Forum Turkey Fund. MDT co-ordinates development and mall management, led by Hulusi Belgu, while the Forum Turkey Fund is now led by Cem Bodur. Both were appointed in April.

Espadas, head of capital markets, Savills Spain, said: “Sale-and-leaseback transactions involving solid creditworthy tenants are still a favourite among inGood deals for Eroski

vestors.”

QUINTAIN has unveiled detailed designs for London Designer Outlet (LDO), the major retail and leisure element of its Wembley City Scheme. The 30,500 sq m outlet centre will include up to 85 units, 15 restaurants and bars and a nine-screen Cineworld cinema. RESOLUTION PROPERTY has acquired a 50% stake in the Waterfront shopping centre in Bremen, Germany, as part of a €130m joint venture with LNC Property Group.

Resolution: On the Waterfront

ECE enters Spain with Auxideico Gestion ECE PROJEKTMANAGEMENT has entered Spain through the acquisition of shopping centre management company Auxideico Gestion from ING Real Estate Development (ING RED). The financial details of the transaction were not disclosed. Madrid-based Auxideico Gestion has one of the largest manage-

ment portfolios in Spain with14 centres and a total of 500,000 sq m of leasable area, with an average of over 100 shops per centre. Clients include ING Real Estate Investment Management, Deutsche Bank (RREEF), Invesco Real Estate and LaSalle Investment Management.

“After expanding to Eastern Europe for years, this is the first time ECE will be managing a significant portfolio of shopping centres in Western Europe,” said Alexander Otto, CEO, ECE. “With 130 centres under management we will be even better prepared to use synergies in our centre management division.”

Meadowhall celebrates in style SHEFFIELD shopping centre Meadowhall celebrated its 20th anniversary in September and the following month marked the occasion with a festival of fashion. “October Is Fashion Month” began with the 'Charity Chicks' event and throughout the month many of the centre’s top retailers took additional space to promote their brands, including guests such as pop-up retailers Vintage Fashion and Blink & Go. The climax of the event was a fashion show hosted by Wayne Hemmingway. “House of Fraser is spending £5m on refurbishment and we have introduced a patisserie and champagne

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bar, as we focus on taking elements of the scheme more upmarket,”

said senior asset manager at British Land, Claire Barber.

Celebrations at the 20th anniversary of Sheffield’s Meadowhall

••• NEWS CITIES

REIMS Metropolis is to showcase its scheme Pont-de-Vesle, developed by Vinci Immobilier, at MAPIC as part of a larger town planning project it calls Reims 2020. NANTES, St Nazaire and Angers share a MAPIC stand this year under the banner Metropolitan Space Loire Bretagne, which also includes representatives from Brest and Rennes. LILLE’s 42,000 sq m project with developer Vicity, which includes a

Cannes focus on cities and regions RETAIL-led revitalisations of urban centres and concern over the retail future of some secondary high streets, especially in the UK, are highlighted at MAPIC this year. The MAPIC conference programme includes Spotlight On Cities sessions on Wednesday, November 17 (10.30-11.30), and

Thursday, November 18 (10.0011.00 and 16.15-17.15). On Thursday (11.00-11.45) in a conference co-organised with Cushman & Wakefield, restoring the vitality of smaller UK town centres will be discussed. Also on Thursday, between 11.0013.00, MAPIC hosts a new event, an invitation-only summit — Retail

In The City — that will examine the best strategies to work towards sustainable urban retail. Among the French cities and regions attending MAPIC to promote development schemes are Reims, Poitiers, Nantes, St Nazaire and Angers, Bordeaux and Lille. Italian cities and regions will also organise promotional events.

Stoke scheme pushes phase one forward

30,000 sq m shopping centre, re-

LIVERPOOLONE MAKES LIFESTYLE CHOICE

cently received the go-ahead from local authorities. It is part of the Grand Projet Urbain de la Ville de

SHOPPING and leisure destination LiverpoolOne, which celebrated its second anniversary this October, is to add a 6,000 sq m The Home Quarter store, operated by Redbrick. The new store features a mix of homewares and lifestyle brands and includes a champagne bar, cafe and florist. Habitat opened a 2,000 sq m flagship store in the scheme last year. Developer Grosvenor Liverpool Fund’s head of asset management Miles Dunnett, said: “We are 97%let and we have a lot more brands opening before Christmas, including a number of retailers showing their confidence in Liverpool by opening their first stores outside London.”

Lille, one of the biggest city centre projects in France.

Lille gets go-ahead

PROCOS believes that public private finance packages are vital to urban regeneration projects. “Cities alone are not able to put together such ambitious programmes vital for the future of the city,” said Pascal Madry, research manager, Procos. COVENTRY has been given the goahead to begin the first phase of its €1.2bn revamp for the city centre, which could see shopping space double to 200,000 sq m over the next 15 years.

Coventry: retail growth

The UK’s Stoke-on-Trent set to see redevelopment of East West Centre

DEVELOPER Realis Estates and Stoke-on-Trent City Council are preparing a planning application for the bus station that forms phase one of the redevelopment of the East West Centre in Stoke-on-Trent, UK. The parties are working towards a late-November submission. The €417m public, private partnership redevelopment gained outline planning consent in February 2009 and work is due to start on site within the next six months

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and will be complete by late 2014. Duncan Mathieson, managing director, Realis Estates, said: “Our continued progress reiterates our desire to press ahead with a scheme that will enable Stoke-onTrent to take its place as one of the top 30 shopping destinations in the country.” The project will add up to 75 new stores, a multi-screen cinema, a hotel, bus station and 1,000 parking spaces.

LiverpoolOne makes itself at home

Success begins with location In retail business key to success is excellent location. We at Citycon think that in addition to a superb catchment area, successful shopping centre business is based on eﬃcient daily management of shopping centres and constant development. How can we help your business to be more proﬁtable in Finland, Sweden or the Baltic countries? Find out by meeting us at Mapic. We own 33 shopping centres and 49 other retail properties. We are well-established as an active owner and as a long-term developer of communities formed within our shopping centres. We always consider environmental aspects and well-being of the areas surrounding our retail properties.

MEET CITYCON AT MAPIC IN BOOTH NUMBER: R30.33 Contact us at: Citycon Oyj Pohjoisesplanadi 35 AB 00100 Helsinki, Finland Phone +358 207 664 400 Fax +358 207 664 499 info@citycon.ﬁ www.citycon.com Citycon is the market leader in the Finnish shopping center business and have ﬁrm positions in Sweden and the Baltic countries.

••• NEWS RETAILERS

FOREVER 21 has made its debut in Belgium at the rue Neuve in Brussels, a former Mexx store (2,900 sq m), and the Meir in Antwerp (4,400 sq m). Cushman & Wakefield advised the landlords in both deals.

DEICHMANN will open 10 new stores in Romania by the end of the year as it targets growth to 36 stores. In September the retailer added four stores in Iasi, Bistrita-Nasaud, Pitesti and Drobeta-Turnu Severin. It already had stores at Sun Plaza Bucharest, Iulius Mall Timisoara,

Euro growth spurs Primark sales SALES at value fashion giant Primark have continued to surge, driven by a “very stong” performance in continental Europe. Primark said it expects full year like-for-like sales to be up by 6%, bolstered by “continued good growth in the UK”. In its pre-close statement, the high street retailer said that it expects to have opened eight new stores in the second half of the year, three in Spain and five in the UK, bringing its store total to 204 by the end of this year. It has also relocated its stores in Braehead, Scotland and Waterford, Ireland to bigger premises and will have increased sales space by 10% to 650,000 sq m by the end of 2010. Thomas Meager, director of property at Primark, is a keynote

Primark plans new openings to bring its store total to 204 by year end

speaker at MAPIC this year. His session will be at the Champs-Elysees room, Palais des Festivals, 10.15-10.45, Thursday, November

18, and will include a Q&A with MAPIC publications editor-in-chief Mark Faithfull.

Promenada Mall Targu Mures, Reghin and Medias.

French stores boost Kingfisher performance

FRESSNAPF Group is to acquire the shares of its Swiss subsidiary Pet Vision. Fressnapf first opened in Switzerland in 1998 and currently

THE FRENCH arm of European DIY giant Kingfisher has posted a strong performance for 2010 to date and

has pledged two to three new openings a year as it expands its 101-store chain.

has 33 stores in the country.

MEDIA-Saturn Group is launching new product brands, including ok for entry-level pricing and Koenic for premium household and domestic appliances. These will be launched across the group in Germany, Holland, Italy and Austria pre-Christmas. TCHIBO has announced first half sales up 6% on 2009, after realigning its store portfolio and reducing total store numbers from around 1,000 to 850.

Castorama looks to refurbish its portfolio and embrace technology

Castorama has established a strong reputation for private label product, with between 25% and 30% of Castorama’s goods own-label. In addition, the company is conducting what it describes as a “complete revolution” of its merchandising. Two thirds of the portfolio will have been refurbished by the end of 2010. The retailer is also embracing technology. An iPhone app allows customers to scan barcodes to obtain all the information about that product. Also, new software in stores helps customers choose their kitchen based on colour scheme and style, and its multichannel offer is also expanding.

Mango promises rapid expansion in China SPANISH fashion retailer Mango is planning to take on rivals such as Inditex and H&M by opening a store a day worldwide and rapidly ramp-

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ing up its expansion in China. Founder and chairman Isak Andic said that it would also open between 200 and 300 stores a year in

China. Mango currently has more than 1,400 stores in 100 countries. The retailer also plans to double its internet sales this year.

••• NEWS INVESTORS & DEVELOPERS

FORUMINVEST Group has sold majority interests in three Belgium shopping centres in Verviers, Namur and Charleroi to City Malls, a new venture established by Patric Huon, CEO, Foruminvest Belgium, and Brusselslisted real estate company Banimmo. CLEOPATRA Mall is due to open in Cairo in 2012, with Design International as masterplanner and leasing consultant for luxury brands. The 105,000 sq m scheme mixes retail, leisure and entertainment.

Hammerson sells French asset to Korean fund HAMMERSON has exchanged conditional contracts to sell 51% of its interest in O'Parinor shopping centre, Aulnay-sous-Bois, near Paris, to The National Pension Service of Korea, advised by Rockspring Property Investment Managers. Hammerson completed a 24,000 sq m extension and development of the project in 2008 bringing it

to a total of 90,000 sq m. The centre, co-owned with Carrefour and Redevco, was acquired by Hammerson in 2002. Principal occupiers include Fnac, Go Sport and H&M, with the extension accommodating international brands including Esprit, Saturn and Guess. Ealier this year Hammerson

opened The Rock, in Bury, the first major retail scheme to open in the UK in 2010. Hammerson took over after original owner Thornfield Ventures went into administration. Carolyn Kenney, project director at Hammerson, said: “The Rock represents a vibrant retail and leisure destination for Bury and beyond.”

Berlin designer outlet doubles the space Cairo’s Cleopatra Mall

Booming Designer Outlet Berlin

BLUEWATER will increasingly become a day-visit destination, according to general manager Andrew Parkinson. The shopping centre is opening a family golf attraction and is constructing a major event space. “We are looking more long term at opportunities to leverage our brand,” he said.

Bluewater: New arrivals

DECATHLON has opened a 5,300 sq m store in the retail park of the Puerto

HENDERSON Global Investors opened the extension to its Berlin outlet centre in September, which has almost doubled its size. The first phase of Designer Outlet Berlin — operated by McArthurGlen — opened in June 2009, with 8,500 sq m of retail space across 40 units.

The second phase doubled the store number and adds 8,000 sq m GLA to the site. Germany has the lowest rate of designer outlet space in Western Europe and McArthurGlen managing director Gary Bond said that although the country remains very attractive to the

developer/operator, planning permissions remain difficult to achieve. The Berlin scheme is dominated by mid-market fashion brands, plus a number of fashion-forward and premium brands including Bench, Desigual, Diesel, Joop, Fossil and Lacoste.

Venecia scheme, its largest in the region. The development in Zaragoza, Spain is due to complete in 2011. ALLIANZ Real Estate is looking to double its real estate exposure from €17bn to €30bn within four years. The investor is focusing on eurozone markets and examining opportunities in the US.

Profits on the rise for Italian retail property firm LISTED Italian retail property specialist Immobiliare Grande Distribuzione (IGD) SIIQ saw its profits double to €14m in the first half of 2010, largely as a result of lower write-downs on its Italian and Romanian property portfolio. The figure compares to a €7m profit in

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the same period last year. The group's total revenues remained stable in the first six months of the year, at nearly €60m. EBITDA came in at €40m, representing a 7% year-on-year increase, driven by the opening of new shopping centres. The value of its portfolio rose

slightly to €1.8bn, largely due to acquisitions in the second six months of the period. These included openings and acquisitions made in 2009 such as the Tiburtino Shopping Center; Katane Shopping Center; Le Maioliche Shopping Center and I Bricchi Shopping Mall.

specialist public relations for the retail environment

t. +44 (0) 20 7269 9343 e. dominic.morgan@fd.com w. www.fd.com

••• NEWS EMERGING MARKETS

ARGO Real Estate Opportunities Fund has opened the final phase of Riviera Shopping City, Ukraine's largest shopping and entertainment complex. The 80,000 sq m scheme in Odessa includes over 80 shops, a cinema, bowling and karaoke.

Resurgent Sonae Sierra lured by Latin America Uberlandia, scheduled for 2011

CENCOSUD’s 2010 growth plan includes $800m of investment. In Chile, it operates the Jumbo and Santa Isabel supermarket chains, plus Easy DIY stores and Paris department store chain. Cencosud also operates in Argentina, Brazil, Colombia and Peru. PLAZA Centers has agreed 70% of the financing (around €33m) for a 22,000 sq m shopping centre in Kragujevac, Serbia. The scheme is 60% pre-let and construction is expected to commence at the end of

SONAE Sierra announced a net profit of €648,000 at the end of the first half of 2010, an increase of 101%, compared to a negative €94.2m in the same period last year. Direct income from investments was up 6% compared with the first

half of 2009 because of portfolio growth thanks to the opening of Germany’s LOOP5, Brazil’s ManauaraShopping and LeiriaShopping in Portugal this year. In Italy, Sonae Sierra is developing Le Terrazze in La Spezia,

scheduled to open in Q3 2011. In Brazil, the company initiated construction at Uberlandia Shopping, scheduled for 2011, representing an investment of €62m. In June, Sonae Sierra announced its market entry into Colombia, with the creation of Sierra Central, a service provision company for the shopping centre sector, including management and development. Sierra Central is owned 50/50 by Sonae Sierra and Central Control, a Colombian company which provides management services for Jardín Plaza, one of the main shopping centres in Cali.

the year. ARENA Plaza, Hungary’s largest shopping and entertainment centre, changed management to Cushman & Wakefield on July 1 on behalf of UK-based investment fund manager Lanebridge Investment Management.

Hungary’s Arena Plaza

LANDMARK Group has introduced luxury Italian shoe brand Loriblu to

TriGranit signs agreement for Poznan retail hub TRIGRANIT Development Corporation and Polish Public Railways have signed an agreement for the development of Poznan’s new transport complex comprising a railway, fast train and bus station, plus parking for 1,500 cars. Construction of the €160m investment project is scheduled for early next year and the first phase, which features a large retail centre, is to be opened in 2012. “Poland has always been the flagship destination for our property

development activity. We opened our first shopping centre in Katowice five years ago, followed by the Bonarka City Center in Krakow last year,” said Arpad Torok, TriGranit CEO.

“In Poznan we can utilise our experience in transforming train stations gained at WestEnd City Center in Budapest and Emonika City Center in Ljubljana.”

Poznan’s new transport hub

Dubai with its first standalone store at the Mall of the Emirates. Loriblu has 15 stores and 35 concessions around the world and plans four stores in the Middle East. MH ALSHAYA opened Pottery Barn and Pottery Barn Kids stores at The Avenues, Kuwait this summer. At 1,600 sq m and 750 sq m respectively, they are the latest retail fascias to open under the Alshaya franchise.

Foreign investment set to return to Russian market INVESTMENT in the Russian market is likely to return and development will focus on improvement and modernisation, according to Oleg Voytsekhovskiy, managing director, Russian Council of Shopping Centres. “We are still unable to draw final conclusions as to how the investment market is likely to look like in the post-crisis Russian econom-

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ics. Retail property has not been deprived of investment in new projects, and those related to redevelopment and expansion,” said Voytsekhovskiy. “A major part of financing comes from Russian investors. We also believe that in some two or three years both private and institutional foreign investors are likely to return to Russia.”

Russian Council of Shopping Centres’ Oleg Voytsekhovskiy

The international market for retail real estate - 16th edition

Meet & Match

fast and efﬁciently Speed Matching and Spotlight on Cities events: 8 business accelerators - 25 projects and brands pitchings - 15 dynamic cities highlights

“The Speed Matching experience was a fantastic opportunity to network with great companies, landlords, and to connect with potential investors and master franchisees that are interested in bringing a US brand to their country.”

Eddy Jimenez, Vice President of International Development, Kahala Corp. (USA)

Want to meet partners and ﬁnd new locations?

More info on page 19 Programme available on www.mapic.com > Programme > Matchmaking meetings

17-18 -19 NOVEMBER 2010 Palais des Festivals Cannes, France

PROGRAMME OF CONFERENCES & EVENTS Comprehensive programme, concrete solutions More than 60 industry experts will present, including: The MAPIC programme will provide concrete solutions to current challenges. This year, it will include:

Conferences ■

Shopping centre development: which countries offer the best growth opportunities? Prime & secondary locations: where is profitability?

■

Stories from successful cross-border retailers.

■

New concepts and innovative brands.

■

Retail trends and forecasts: what’s in store?

■

Investment: has retail overcome the global crisis?

Matchmaking meetings Speed Matching Save precious time and discover new brands and new shopping centres projects selected by an international jury of experts. Discuss and network efficiently and make the most of the coffee breaks to initiate new partnerships. Spotlight on Cities Gain direct access to cities’ planning strategies and identify the most dynamic urban projects through these short and interactive sessions.

Country of honour: France ■

■

Identify promising business opportunities in one of the EU’s most resilient and stable retail markets. Plan a winning strategy for the French market.

NEW! “Retail in the City” Summit

Chris Igwe, Head of Retail, Senior Director European Retail Leasing, EMEA, CB Richard Ellis (France)

Alain Harfouche, European Development Director & General Manager Spain, L’Occitane en Provence (France)

Francis McAuley, International Director, Debenhams (UK)

Maxime Holder, CEO, Boulangeries PAUL (France)

Thomas Meager, Director of Property, Primark (UK)

Beata Kokeli, Board Member/Chief Commercial Officer, Centrum Development & Investments (Poland)

Glenn Aaronson, CEO, Multi Corporation bv (The Netherlands)

Richard Lloyd-Owen, Partner, Deloitte (UK)

Michael Bjorklund, Property Director, Castorama (Russia)

Pietro Malaspina, President, CNCC (Italy)

Andrew Darrow, Executive Vice-President, Global Business, KidZania (USA)

Dr. Eberhard Stegner, Managing Director, GfK GeoMarketing GmbH (Germany)

Pascal Duhamel, CEO, Carrefour Property (France)

John Strachan, Global Head of Retail, Cushman & Wakefield LLP (UK)

(by invitation only)

This year, MAPIC is launching the « Retail in the City” Summit, an invitation-only event for leaders from private and public sectors. On this occasion, participants will gather around the topic “Working toward sustainable urban retail” to exchange best practices and solutions. The sub-themes have been defined as follows: ■

Roundtable n°1 - Financing infrastructure: the challenge in the post recession years (moderated by RICS)

■

Roundtable n°2 - Commercial mix and territory attractiveness: the role of the public sector (moderated by AMCV-TOCEMA)

■

Roundtable n°3 - Retail and laws to protect the environment (moderated by FORUM for Urban Management)

■

Roundtable n°4 - Social aspects of sustainable urban retail (moderated by OECD)

■

Roundtable n°5 - The role of retail in urban regeneration (moderated by Procos)

■

Roundtable n°6 - Does regulation restrain partnerships? (moderated by Mall & Market)

■

Roundtable n°7 - The city as a shopping destination (moderated by TCM Italia)

Your week in brief Learning sessions

Matchmaking sessions

THURSDAY 18 NOVEMBER

Events

Green topics are marked by the Reed MIDEM Going Green® Logo

10.15 10.45

Keynote address Thomas Meager, Director of Property, Primark (UK) “Primark: a unique in-site into a successful cross-border retailer”

10.00 11.00

Spotlight on Cities

CONFERENCES AGORA

CHAMPS-ELYSÉES ROOM

TUESDAY 16 NOVEMBER 11.00 11.45

Opening cocktail

19.30

WEDNESDAY 17 NOVEMBER The future of retail real estate - what’s in store? Co-org: Deloitte

10.30 11.30

CHAMPS-ELYSÉES ROOM

Spotlight on Cities

11.45 12.45

Speed Matching: 5 Retail concepts

Co-org: Eurelia

Co-org: Russian Council of Shopping Centres

14.15 15.00

Speed Matching: 5 Retail concepts

12.00 13.00

CONFERENCES AGORA

Investment: has retail overcome the global crisis? Is “Green” the next challenge?

Speed Matching: 5 Retail concepts

14.30 15.30

Co-org: Property Investor Europe

Retail in France: a key market with remarkable prospects Co-org: GfKGeoMarketing

14.30 15.30

Speed Matching: 5 Shopping centres

CHAMPS-ELYSÉES ROOM

Keynote address Francis McAuley, International Director, Debenhams (UK)

15.30 16.30

The italian business experience 2010 Co-org: CNCC Italy

CONFERENCES AGORA

Retail development in Poland: is there room for new brands?

15.30 16.15

CONFERENCES AGORA

CHAMPS-ELYSÉES ROOM

15.45 16.30

International businesses in Russia: Been there, done that, know how CHAMPS-ELYSÉES ROOM

CONFERENCES AGORA

CHAMPS-ELYSÉES ROOM

14.45 15.30

* By invitation only

MAJESTIC HOTEL

CONFERENCES AGORA

Between tradition and modernity: the success of French retail overseas

CONFERENCES AGORA

“Retail in the City” Summit NEW! “Working toward sustainable urban retail”*

11.00 13.00

12.00 12.45

Geographical focus Turkey

11.15 12.00

Co-org: Polish Council of Shopping Centres CHAMPS-ELYSÉES ROOM

16.30 17.15

Co-org: RLI

Master Franchise: the best way to enter emerging markets? Co-org: Fédération Française de la Franchise

16.15 17.15

CHAMPS-ELYSÉES ROOM

Spotlight on Cities CONFERENCES AGORA

CONFERENCES AGORA

MAPIC Awards Prize-Giving

21.30 LEVEL 4

16.45 17.30

Retail concepts: the thrill of the new Co-org: RLI

MAPIC Awards party

22.30 LEVEL 4

CHAMPS-ELYSEES ROOM

FRIDAY 19 NOVEMBER

The MAPIC team wishes to thank all keynotes, speakers, moderators, co-organisers and partners involved in the programme of conferences and events. Opening cocktail

Speed Matching: 5 Shopping centres

10.30 11.30

Sponsored by:

MAPIC Awards Prize-Giving Supported by:

Find out more on: www.mapic.com ➥ programme section

11.30 12.15

Co-org: Cushman & Wakefield CHAMPS-ELYSÉES ROOM

MAJESTIC HOTEL

10.30 11.15

Restoring the vitality of smaller UK town centres

••• NEWS AWARDS

Awards 10: New time, New format THE PRESTIGIOUS ANNUAL MAPIC AWARDS HAVE MOVED TO A NEW TIME FOR 2010 AND PROMISE TO BE A GRANDER SPECTACLE THAN EVER

OW IN their 16th year, the MAPIC Awards recognise and reward excellence in retail property. As ever, the finalists in the 2010 event will represent the very best of the real-estate industry.

NEW FOR 2010 NEW TIME, BIGGER EVENT: To make the Awards even more prominent they will be held at a new time of 21.30 on Thursday 18 November in Les Ambassadeurs room, level 4 at the Palais des Festivals, directly followed by the hugely-popular after-Awards party, starting at 22.30 and going on until late!

VIVE LA FRANCE A French retailer will be in the limelight this year. The Grand Jury (see box) will convene in Cannes during MAPIC to decide on each overall category winner. As France is the Country of Honour this year, the Jury will also elect a French retailer who has not only successfully developed his business in France but also internationally, contributing to the global reputation of French retail.

NEW CATEGORIES This year, we have four categories: ■ Best international retailer: Focusing on which retailer has been most successful in international ex-

pansion during the previous year. ■ Best new retail concept: Rewarding the retailer which launched the most original concept – based on originality, format, fit out and merchandising. ■ Best shopping centre: Evaluating completed shopping centres on technical, architectural and environmental merits, originality, infrastructure and occupancy. ■ Most improved city attractiveness: Rewarding a city based on what it has done to improve its attractiveness during the previous year. To see the full list of finalists visit www.mipim.com

The Jury PRESIDENT OF THE JURY John STRACHAN Cushman & Wakefield Head of Retail United Kingdom

Gilles BOISSONET Altarea Cogedim Directeur Général en charge du Commerce France

Alain BOUTIGNY Sites Commerciaux Editor in Chief France

Marcel KOKKEEL

In conversation with John Strachan, president of the jury Why are these awards important? As Europe’s most recognised retail property event, I believe MAPIC’s awards carry real weight. The judging panel consists of a genuinely distinguished panel and the winners really value their awards. That was certainly the case last year with Primark, who were very proud of their achievement. What makes a shortlisted or winning entry? What we are looking for is demonstrable success and for innovation — something that shows someone has thought differently about their business and has taken a new approach. Have the quantity and quality of entries changed? Not surprisingly, the number of entries has increased over the years. The types of entries echo the market. I would surmise that we will have to get used to less new developments but, for example, I am really excited about the towns and cities entries this year. There has been some tremendous local authority and private sector work over the past 12 months right across Europe. What generates the most debate? If I had to choose one issue, it would be scale. How do you compare a small, mixed-use scheme with a massive regional shopping centre? How do you contrast a new, specialist retailer to a retailer which has been operating for 50 years and has a thousand stores? I go back to the issue of success and innovation — at MAPIC there is no bias towards the big schemes and a look at the previous winners supports that.

20 / M A P I C P R E V I E W M AGA Z I N E 2 0 1 0

Multi Corporation B.V Managing Director The Netherlands

Klaus STRIEBICH ECE Projektmanagement Managing Director Leasing Germany

Stefano STROPPIANA Premium Retail CEO and Partner Italy

Andrew WATSON LaSalle Investment Management Head of Core Funds France

2010

••• NEW AT MAPIC

Let’s talk shop FOR THIS YEAR’S MAPIC EVERY DELEGATE WILL HAVE ACCESS TO PREMIUM BUSINESS LOUNGES, WHILE PRE-SHOW AND AT-EVENT NETWORKING TOOLS HAVE BEEN ENHANCED TO HELP VISITORS MAXIMISE BUSINESS EFFICIENCY

his year’s MAPIC features a host of new services designed to ensure every visitor is treated like a VIP. After extensive dialogue with MAPIC participants, the new initiatives take place under the “Let’s talk shop” umbrella, designed to promote a dialogue with clients and to help companies engage in a dialogue with each other.

MAPIC 2010: Improved content Talking shop: This year’s conference sessions include a focus on how new retail trends will impact the future of the retail real estate business, including a major session called The Future Of Retail Real Estate – What’s In Store? co-organised with Deloitte. Cities and PPPs: This new event will also focus on cities and public-private partnerships through a major city summit, bringing together all the parties involved in city planning and retail development from around the world to discuss common opportunities and challenges and to share best practice.

22 / M A P I C P R E V I E W M AGA Z I N E 2 0 1 0

MAPIC 2010: Enhanced pre-show tools

MAPIC 2010: Improved onsite services

The MAPIC Online Community — a complete directory of participating companies, individuals, retail real estate projects — has been enhanced, with added features to help with the vital pre-show organisation. By region: For the first time, companies can research online by country of interest, so for example a French developer can find all the retailers interested in France, even if they are not French. This new feature has been designed to enhance the relevance of research on the search engine, improving networking and business preparation pre-show. Project focus: The MAPIC Online Community also includes an enhanced online project directory where clients can present projects, attach documents, present images, show their location on a Google map and so on.

Business lounges: All clients will receive a special treat onsite at MAPIC 2010! To enhance networking and facilitate meetings, MAPIC has created new Business Lounges for all visitors (one on Level 01 and one in the Riviera), replacing previous clubs, with a range of business services which have been upgraded from last year. Bigger: MAPIC has doubled the networking size of the club areas Privacy: Private spaces (boxes) and reservable tables Service: The number of hostesses will be significantly increased Connectivity: MAPIC will provide free Wi-Fi access Free services: the Business Lounge located on level 01 will include free photocopying, free printing services, free fax facilities, e-mail points and a concierge service to reserve hotels, restaurants, taxis, etc.

To find out more about the great new services at MAPIC visit www.mapic.com

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••• FEATURE

A SS E T M A N AG E M E N T

Managing the magic mix Diagonal, Barcelona: creating a point of difference is crucial for shopping centres

WITH THE DEVELOPMENT PIPELINE DOWN TO A TRICKLE, OWNERS AND INVESTORS ARE FOCUSING ON MANAGING THEIR CURRENT ASSETS, REFLECTS NICOLA HARRISON

HERE has never been a more pressing time for developers to ensure their shopping centres stand out from the crowd. And with investors looking to existing centres to make their money, they are getting picky. Neil Varnham, director at property

fund manager Pradera, has noticed a change in the last 18 months, during the current economic cycle. “Investors have become a lot more engaged,” he says. “They want evidence of a clear strategy. It’s not good enough to send a report once a year any more.” Varnham adds that getting a return on an investment used to be a given. “But

that’s not the case any more,” he says. “Now it’s all down to the nitty-gritty of asset management — maximising occupancy and controlling costs. That’s what will drive performance.” British Land head of retail asset management Ben Grose says investors look at the financials of the centre first

“

Certain retailers can make a

dramatic impact on

”

a shopping centre John Welham, CBRE

M A P I C P R E V I E W M AGA Z I N E 2 0 1 0 /

••• FEATURE

— but they also look at the quality of the asset. “Does it need capital expenditure? Does it need a refurbishment?” asks Grose. “They will also look at where the asset sits within its regional hierarchy.” To ensure a shopping centre comes in at the top of its regional table, creating a point of difference is a must and the first place to start is the retail mix. Dynamic market entrants, such as US retailer Hollister, have helped to create excitement across Europe. The prospect of US fast fashion giant Forever 21 spreading its wings across the continent has many developers clambering over each other to sign it up. And Apple and the hot high-street fashion label Superdry are creating a similar buzz. John Welham, head of European retail investment at property agent CB Richard Ellis (CBRE), adds: “Throughout this difficult period certain retailers have been expanding and some can make a dramatic and instant impact on a shopping centre. They have really helped maintain good turnover levels. Hollister genuinely can increase a centre’s catchment.” He adds that Primark — the retailer’s director of property, Thomas Meager, is delivering the MAPIC 2010 keynote address — has been making “a huge impact” in schemes around Europe, including Diagonal Mar in Barcelona, which “continues to see turnover and footfall growth” on the back of the store opening last year. “But there’s a premium to be paid,” Welham says, pointing out tenant incentives and the softer deals that are

“

If you leave your

centre standing,

you’re not getting rental growth, you’re getting more

”

vacancy

Katherine Croom, Henderson Les Quatres Temps also has a dedicated woman’s floor in pink

often demanded. Katherine Croom, portfolio manager for Henderson’s pan-European retail fund Herald, says developers must maximise the returns on their existing land. The Franconville retail park has reconfigured space to create new units for exciting retailers. “If you leave your centre standing, you’re not getting rental growth, you’re getting more vacancy,” she says. But creating a real point of difference boils down to more than just the tenant mix. Lend Lease Investment Management’s UK CEO, Tony Brown, says schemes have to become more than just a shopping expedition: “Leisure is becoming increasingly important. Shopping centres are now about the ‘experience’. They offer a destination for more than just shopping.” Les Quatres Temps shopping centre in

Franconville has reconfigured space to bring in hot new retailers

26 / M A P I C P R E V I E W M AGA Z I N E 2 0 1 0

Paris has certainly developed a unique selling point, with a dedicated woman’s floor, complete with pink carpets and chandeliers. “It’s massively increased the footfall there,” says Jonathan De Mello, head of CBRE’s retail consultancy. In the UK, British Land-owned Glasgow Fort has tried to meet customers’ needs better by extending opening hours and capturing commuter trade. Grose says that developers need to look at competing schemes: “You have to ask: ‘What don’t they have that I can have in my centre? Greater accessibility, free car parking, more of a pleasant shopping experience?’" Developers must also work harder to communicate with shoppers across media. CBRE’s Welham says customers have to be at the fore: “You can link the internet user back into the shopping centre [by having] an imaginative website and linking in to local community stuff.” For example, the Dutch developer Foruminvest has Forum TV screens in its centres, featuring local news. Pradera’s Varnham observes that the leading centres in Europe focus on “more than just retailing”, citing the way they communicate with shoppers via direct messaging to phones, Blackberrys and laptops. “You can start to target the customer with what they like,” he adds. A convincing sustainability programme can also set a centre apart

from its competitors. Pradera has launched a programme in schemes across southern Europe, including Rome’s Domus shopping centre, whereby solar panels have been erected on top of shopping centres. Henderson’s head of responsible property investment, Andy Schofield, points to the “significant cost savings” that can be made with an effective sustainability strategy. A Henderson study showed that a reduction of 206 tonnes of carbon across three sites in 2009 delivered operational savings of €56,000. “It’s a no brainer,” he adds. Maria Hill, leader of ECE’s sustainability team, stresses that sustainability is an “intensely discussed topic in the investor community and influence on investment strategies is growing”. She adds that, when the upturn comes, sustainability is likely to be seen as another real differentiator, for investors and developers alike.

WANT TO KNOW MORE MAPIC 2010 conference sessions include: Thursday, November 18 Champs Elysees room 14.15-15.00: Investment: has retail overcome the global crisis? Is green the next challenge? Session co-organised by Property Investor Europe

Are you ready for

MAPIC is a tremendous opportunity for your business. Plan your agenda from now with the MAPIC Online Community for a successful market.

Make the most of the MAPIC Online Community Set up meetings with key delegates Identify key conferences and events Prepare your show schedule Promote your company Showcase and identify retail real estate projects

www.mapic.com

••• FEATURE

INVESTMENT OPPORTUNITIES

Commercialisation break

Bluewater: good commercialisation needs to add theatre to the shopping experience

ALTERNATIVE INCOME STREAMS HAVE BECOME A VITAL PART OF THE MIX FOR SOME LANDLORDS. HOWEVER COMMERCIALISATION ONLY WORKS IF IT’S DONE RIGHT, WARNS MARK FAITHFULL 28 / M A P I C P R E V I E W M AGA Z I N E 2 0 1 0

NE OF those industry-created words that remains widely misappropriated, commercialisation has become an important element of both shopping-centre revenue and theatre. More developed in the US than in Europe and, again, broadly more mature on the continent’s West, especially the UK, the term covers everything from

remote-mobile units to major leisure attractions. And its implementation can throw up as many headaches as advantages. The lure is obvious. According to Ross McCall, head of retail commercialisation at agent Cushman & Wakefield (C&W) and formerly head of commercialisation at developer and operator Lend Lease, when done

••• FEATURE

properly commercialisation revenue can reach 6%-8% of base rents on a covered centre, and 2%-4% on an open-air scheme. “In the US, they typically achieve higher returns, while Australia is at a similar level to the UK,” McCall says. “As a generalisation, the rest of Europe tends to be under-commercialised. It’s a massive opportunity.” However, a strategic and sensitive approach is vital. Claude Dion, senior vice-president and chief operating officer of Ivanhoe Cambridge, points out that in the US some retailers have clauses in their contracts to prevent temporary units from obstructing sightlines to their stores. After all, the permanent tenants are the bread and butter of the income stream. McCall says any commercialisation programme should be “seamlessly woven” into the main mall operations. It is, he stresses, vital that any commercialisation project complements the main offer. “If you look at some of the early exponents like Westfield and Lend Lease, they started by using commercialisation as a push for sales,” he says. “But they have pulled back from that and their approach is much more holistic now.” “The promotional industry has come a long way since the days when it consisted of two pasting tables and a cover,” adds Roy Wade, sales director, mall trading, at Promotion Space Group. Wade believes that promotional activity, properly managed, can add “theatre and experiential retail” to shopping centres, but adds that, for a centre to use promotion effectively, it must be sensitive to the environment, and the product already available within the centre and the shopper catchment. “It must be the right event in the right place,” he says. Indeed, as arguably Europe’s leading practitioner, Lend Lease describes commercialisation as “all non-core revenues”, including promotions and brand experiences within the malls, RMUs (retail merchandising units), temporary lets of vacant stores, advertising opportunities and, more recently, technology-based solutions. Lend Lease has also complemented its retail offer with major revenue-producing leisure attractions, while

Buzz: Westfield’s branded “car boot” sale

Adventure Experience recently opened the largest outdoor golf facility in the UK at Bluewater. Pirate Cove features a 5,000 sq m, 36-hole adventure golf course planned around the shores of Bluewater’s Blue Lagoon. Attractions include pedalo hire, remote-control boats and a children’s adventure playground with a zip wire across the lake.

“

The promotional

industry has come a long way

”

Roy Wade, Promotion Space Group

Andrew Parkinson, Bluewater’s general manager, says: “Over the years it’s really been about how we move commercialisation on. It’s no longer about simply maximising income but rather about adding to the overall appeal of Bluewater. Pirate Cove is unlike anything else and it also makes use of the lake at the site.” McCall believes this type of approach reflects the relative maturity of commercialisation in the UK. “There’s now a lot more science behind it,” he says. “We plan activity properly every year, as part of the asset-management process.” As an example, he points to fund manager Hermes, which has agreed to replace and upgrade the RMUs in all of its malls. “That’s a positive sign,” McCall says.

“We’re looking at designs now.” Likewise, Parkinson says that at Bluewater innovative fit outs are planned for its RMUs and carts. “It’s not just extra income but adding to the experience,” he stresses. John Michell, head of shopping-centre management at agent King Sturge, says it’s all about creating the right environment. “A good commercialisation strategy can bring an extra 5%, 6% or 7% for a mall and, typically, €100,000-€150,000 even in a secondary scheme,” he adds. “But it’s not just income — it’s the invisible income of the benefits commercialisation can bring in terms of attracting shoppers, footfall and differentiation.”

Michell believes that there are big opportunities for centres in Central and Eastern Europe, which he feels are typically under-commercialised. “It should be linked closely with the marketing and, if done well, it can bring genuine value and income,” he adds. “But landlords need to avoid obvious problems like power positions for RMUs, sightlines, pedestrian obstruction, competition with tenants, and so on.” As for landlords, Michell warns that “commericalisation cannot be at any cost — especially in the current climate, where extra income sources are incredibly important”. But, he adds: “Done in sympathy, commercialisation can add to the environment and make a shopping centre a more colourful and vibrant destination.”

A well-executed promotion can add to the retail experience

M A P I C P R E V I E W M AGA Z I N E 2 0 1 0 /

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••• FEATURE

LO CA L G OV E R N M E N T

Just enough for the city

Bullring: A successful PPP approach

AS CITIES BECOME PRIMARY ECONOMIC DRIVERS, THEY ARE PLACING RETAIL AS MAIN PARTNERS IN THEIR STRATEGY OF DEVELOPMENT. ANIKA MICHALOWSKA REPORTS

S 80% of the European population and 60% of the world’s population live in an urban area, today’s cities are becoming widely recognised as primary economic drivers. Their role is vital in shaping the economy not only of a region but also a country, and European cities have to face three main challenges: finding adequate resources for residents and businesses, standing out in an in-

creasingly competitive regional, national and international environment, and drawing a sustainable vision. To meet these challenges, new governance approaches and methods have been developed. One such trend is to turn to private funds in order to help the city develop large-scale urban development programmes, which include retail as a major partner. “Cities alone are not able to put together such ambitious programmes

vital for the future of the city,” explains Pascal Madry, research manager, Procos. This is particularly true in the case of rehabilitation of urban industrial wasteland (such as La Louviere in Belgium, Manufaktura in Poland, Lyon Confluence in France) or rejuvenation of city centres (Salzburg in Austria, Otemachi Marunouchi Yurakucho in the heart of Tokyo, Amstelveen and Almere in Holland, Saint-Nazaire and Lyon in

France — the latter a pioneer in the country in town centre management). “In the UK, ATCM listed 400 such schemes in the country,” says Martin Blackwell, acting joint CEO development director, ATCM (the Association of Town Centre Management). TOCEMA (Town Centre Management Europe) created a panEuropean network, which allows regions to exchange information on best practices.

M A P I C P R E V I E W M AGA Z I N E 2 0 1 0 /

••• FEATURE

Co-operation between public and private resources can take various guises, from a flexible approach to town centre management, such as those experienced in Dreux or Dunkirk in France, up to the more formalised public private partnerships that vary between countries. In the UK, for example, in PPPs, land property is transferred to the private sector, such as in the case of the Bullring in Birmingham. In France, local authorities keep the full property holding of the land. In the case of La Louviere, in Belgium, the city insisted on owning the 15 ha piece of land to be rehabilitated on the Boch site. For local authorities in Europe, the use of a PPP is a means to find private funding and expertise for long-term urban infrastructure and utilities. “For the cities, it is a way to finance ‘poor’ functions [such as street furniture, lighting, sport facilities, etc, which by definition are not profitable] by wealth-creating functions [such as retail],” says Pierre Francis, executive director, AMCV (Association du Management de Centre-Ville). “If a developer is to feel there’s a commercial value in investing in high-quality design, they need to feel there’s a market emerging there that will pay a premium for it.” “In the last 20 years, not a single retail project could have emerged if there had not been a true understanding between the local authorities and the project’s developers,” says Marc Vaquier, CEO France of MAB Development. Co-operation between the public and the private sector is a real trend. “There is not a single city today which is not interested in retail as a way to give value to the city. At the same time, retail projects are growing more and more complex. They have to be integrated into the urban and economic environment, be in tune with the needs and expectations of the new consumers, meet the requirements of sustainable developments and guarantee multi-modal access to the city,” says Bernard Deslandes, development manager, Klepierre Segece. In Poland, Manufaktura — one of the largest retail-led regeneration projects in Central Europe (185,000 sq m

Development of Manufaktura acted as a catalyst for regeneration in Lodz, Poland

mixed-use development) — developed by Apsys International, was a pioneer in such an approach. Manufaktura created a new heart for the city and helped put Lodz on the international map by adding new cultural and leisure attractions. In 2009, regulations on public private investments were introduced in Poland (the PPP Act and the Act on Concessions for Construction Works or Services). Since then, more than 30 concessions and public-private partnership projects have been announced. Recent PPP selection procedures include a project for the development of the Railway Station area in Sopot (commercial, retail and service buildings combined with railway station facilities, a two- or three-star hotel, car parking), a 16,000 capacity municipal stadium with commercial space in Radom, plus a 10,000-12,000 capacity stadium in Olsztyn with the possibility of enlargement to 15,000, with a shopping arcade and car parks. A new concept is also emerging, place management, which is developing rapidly in the US. An example is Bryant Park in New York, which brought together private economic players around the park and a BID (Business Improvement District) in order to rehabilitate a run-down area. Germany and Australia are also keen on the concept. AMCV is working on

32 / M A P I C P R E V I E W M AGA Z I N E 2 0 1 0

the concept of ULB (Urban Lifestyle Point), the management of a specific part of a public place in order to bring value. “Co-operation between public and private players is sine qua non for the success of such a challenge,” AMCV’s Francis says. A “culinary masterplan” has been created for Brussels’ slaughterhouse district, an urban, socially-mixed area adjacent to the high-speed Eurostar train service. Phased regeneration will create a neighbourhood with retail, residential, and educational elements, while retaining a slaughterhouse. The initial step is a food/gastronomic hall and Paris-based consultant Back2Basik advised and is project managing the programme to attract and help new retailers. Director Lara Hinton adds: “Our role is thematic, introducing small shop owners who will bring originality and sharp concepts that will animate a dynamic and sustainably managed project.” No matter what the type of co-operation between public and private partners, it is a long-term process. “The city and the private developer must show a real wish to work together for a common goal,” says Jacques Gobert, bourgmestre (mayor) of La Louviere. “It is a type of approach which is in keeping with urban sustainability,” adds Maurice Bansay, CEO of group Apsys.

“

There is not a city

today which is not

interested in retail as a way to give value to the city

”

Bernard Deslandes, Klepierre Segece

WANT TO KNOW MORE? MAPIC 2010 conference sessions include: Wednesday, November 17 • 10.30-11.30: Spotlight on Cities Conferences agora Thursday, November 18 • 10.00-11.00: Spotlight on Cities Conferences agora • 11.00-11.45: Restoring the vitality of smaller UK town centres Session co-organised by Cushman & Wakefield Champs Elysees room • 11.00-13.00: “Retail in the City” Summit Invitation-only event on sustainable urban retail • 16.15-17.15: Spotlight on Cities Conferences agora

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••• FEATURE

NEW OPPORTUNITIES

Still a world of possibility EVEN IN THE TOUGHEST TIMES, OPPORTUNITIES EXIST. MARK FAITHFULL HIGHLIGHTS SOME OF THE LOCATIONS, NICHES AND SECTORS MOVING ON TO THE RETAIL RADAR Brazil: a sporting chance

Boom time for designer outlets across Europe With 44 outlet centres, the UK is Europe’s most developed outlet-centre market, as well as its longest standing, having moved into the sector in 1984. Germany, meanwhile, is commonly considered the least developed European market against the potential of its consumer base.

“

Brazil generally

and Sao Paulo in particular are on

Big ideas: Expansion planned for Parque D Pedro Shopping in Sao Paulo

BRAZIL will host the FIFA World Cup in 2014 and the Olympics in 2016. Both events will generate billions of euros in property funding and investment, while the country’s low debt and strict economic management has given it a new-found popularity among retailers and realestate investors. The burgeoning middle class is creating a particular demand for retail and, although Brazil does have a number of large shopping centres and a sophisticated retail sector, new developments and funds have sprung up. The Brazilian arm of Portuguese shopping-centre specialist Sonae Sierra has confirmed the expansion of one of Brazil’s largest malls, Parque D Pedro Shopping in Campinas, Sao Paulo. The expansion is part of Sonae Sierra Brazil’s pledge to make €116m in investments this year alone. “That value includes the expansion of Shopping Metropole in Sao Bernardo do

Campo [Sao Paulo], and the first construction stages of three new developments located in the states of Parana, Minas Gerais and Goias,” says Joao Pessoa Jorge, CEO of Sonae Sierra Brazil. UK-based Squarestone Brazil, which listed on the London Stock Exchange’s AIM earlier this year, holds a 50% interest in the Golden Square Mall development project, which is set for completion in mid-2011. Neil Varnham, president of the UK shopping-centre organisation BCSC, acts as a consultant for the fund. He is also fund director of London-based Pradera, which itself is “very interested” in Brazil, Varnham says, adding that the country has “lots going for it”. Varnham points to Sao Paulo as the most enticing entry point: “I think Brazil generally and Sao Paulo in particular are on the edge of a lot of property funds’ radars,” he says. “Brazil will attract more US money.”

the edge of a lot of property funds’

”

radars

Neil Varnham, BCSC Real-estate expert Manual Jahn at GfK GeoMarketing predicts that the country’s factory-outlet centre market is now set to catch up, boosted by relaxations in planning. "The high number of planned centres in Germany is a good indicator,” he says. Across Europe, most of the major developers/operators are allied with property funds — Henderson, for example, is the lead fund party for McArthurGlen. Neinver set up the IRUS European Retail Property Fund in 2007 to handle its acquisitions and Carlyle Group holds a number of Freeport-branded outlet centres in one of its specialist funds.

At last year’s MAPIC, a number of the big players signed up to the formation of the European Outlet Retailer and Developers Association (ORDA). Brendon O’Reilly, director of GVA Outlets and a member of the ORDA steering group, says: “There are currently over 150 outlets across Europe, a further 30 in the pipeline for 2010, and the potential for a further 150 in the EU and 150 across Europe as a whole. The outlet sector is an unsung hero.”

CEE and the East The investment upside in Central and Eastern Europe (CEE) has to date largely been focused on Poland and the Czech Republic, with little appetite for the higher risk markets to the east — especially Ukraine. However, King Cross Leopolis, the first shopping and entertainment centre in Lviv in western Ukraine, officially opened earlier this year with 50,000 sq m GLA and 230 shops. It is to King Cross' credit that the scheme

Opening outlets: Room for growth

M A P I C P R E V I E W M AGA Z I N E 2 0 1 0 /

••• FEATURE

WANT TO KNOW MORE?

Thursday, November 18:

MAPIC 2010 conference sessions include:

• 10.15-10.45: Keynote address: Thomas Meager, Director fo Property, Primark. Champs Elysees room

Wednesday, November 17: • 11.45-12.45: Speed Matching – 5 retail concepts Conferences agora • 16.45-17.30: Retail concepts: the thrill of the new. Session co-organised with RLI. Conferences agora

“

Consumers like

value served up

Prime target: Opportunities exist in the CEE region

includes a good sprinkling of franchise stores from among the ranks of the major international players. Of course, King Cross is the primest of the prime relative to its market. Moreover, it has the helpful option to extend by about another half — and that, according to Tomasz Trzoslo, Jones Lang LaSalle’s head of CEE capital markets, is also a good pointer to where investor interest will lie. In the short-term, Trzoslo believes capital is likely to remain tightly focused on prime, with income sustainability and asset fundamentals — location, construction quality, access — key attributes. "Secondary

product will suffer in terms of tenant demand and this will be instrumental in investors' risk assessment, along with the difficulty of obtaining bank financing," he warns.

Value, value, value?

”

with panache

However, a new generation of discount chains has proliferated, with the UK now playing host to Home Bargains, B&M Bargains, TK Maxx

• 12.00-13.00: Speed matching – 5 retail concepts Conferences agora • 14.30-15.30: Speed matching – 5 retail concepts Conferences agora and a resurgent Poundland, to name but a few. But one point on which European consumers do seem to agree is that they like their value served up with panache. Lidl and Aldi, while still successful in the UK, do not appear to be progressing further because they fail to provide theatre and value in one package. Those that can achieve this feat — Primark and New Look being prime examples — seem best placed to leverage the consumer ethos of the next decade.

As the dust settles on the worst of the recession, the position of value is not quite as dominant as was initially predicted. While discount powerhouses such as Lidl and Aldi were expected to mop up market share in countries where penetration was previously low — notably the UK — a longer term shift in consumer-spending trends has not materialised.

Best value: TK Maxx is an offer that provides theatre and value in one package

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••• FEATURE

G R OW T H A N D N E W R E TA I L

The right route to expansion RECESSION-BUSTING CONCEPTS CONTINUE TO GROW ACROSS EUROPE, WITH BOTH LUXURY AND VALUE RETAILERS MAKING BIG PLANS FOR THE CONTINENT. MARK FAITHFULL REPORTS

ESPITE the severity of the recession and the number of retail names that have disappeared over the past two years, expansion and growth continue to be the mantra for a slew of European, Asian and US retail operators. Indeed, while the economy has been blamed for the rise and fall of many store groups, the dynamism of the retail market has long-produced big winners and high-profile casualties at a frightening pace. The expansion trail is dominated by retailers at either end of the price spectrum: luxury — which is making a strong recovery — and value. Hence the top expansionists include names on the one hand like Burberry, Louis Vuitton and Tiffany & Co and, on the other, Primark, New Look, Undiz, Deichman and Fresnapf. One of the biggest issues for retailers is whether to take the wholly owned or the franchise route into a new market. Increasingly, however, a combination of both is not uncommon, or taking a stake in a franchise partner. Recent examples of this mixed trend include the UK retailer Mothercare, which is to take an €8.8m, 25% stake in Headline Group, the operator of its fledgling Mother-

care and Early Learning Centre franchises in Australia and New Zealand; and luxury retailer Burberry, which is to pay €85m to buy 50 stores from Chinese franchisees. Mothercare already holds 30% of its Indian and Chinese franchisees, while Headline has reported sales at the first two Mothercare shops ahead of expectations. Headline also plans to buy Baby on a Budget, a seven-store retailer in Western Australia with sales of €7.7m, for €1.4m. The stores will be rebranded as Mothercare. Newly floated fashion specialist SuperGroup, owner of the Superdry brand, is among those retailers accelerating international franchising. In the summer, SuperGroup struck a deal with Al Khayyat Investments to open 13 Superdry shops in the United Arab Emirates. Al Khayyat, which already has relationships with well-known brands such as Fila, intends to take SuperGroup into other parts of the region. Mid-market retailers are also selectively buying out franchisees — or have the option to do so. Aurora, owner of chains such as Oasis and Karen Millen, recently bought out its Australian, Danish and Swedish part-

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American Apparel: Expansion has been anything but child’s play

ners. Meanwhile, the fast-fashion specialist New Look, which has 52 franchised shops across Russia and South East Asia, aims to grow to about 400 stores over five years. New Look, which retains the right to take control of its franchisees in many instances, has now set its sights on more South East Asian locations as well as North Africa following a global review. North Africa is also a target for Marks & Spencer, which is to open its first store in Egypt within the next year. In conjunction with its Middle East partner Al-Futtaim, the UK department-store chain will open in the Egyptian capital Cairo in Dandy Mega Mall, followed by a second store in Cairo Festival City in spring 2012. The first store will be 2,600 sq m and offer fashion, beauty and homewares. The second outlet will be Marks & Spencer’s flagship and trade over two floors in a total of 4,400 sq m. Spanish retailers such as Desigual

and Mango tend to mix and match, while Primark has opted for a slower growth pattern, opening key stores in selected malls on mainland Europe. Meanwhile, grocery operators such as Carrefour have franchised in the Middle Eastern markets, where full ownership is not allowed because of local laws. By contrast, US retailers entering Europe have tended to retain ownership of their stores. Whole Food Market still only has a single London store, but is looking for further sites; Apple is present in key European cities and has opened a second London store at Covent Garden in a bid to relieve pressure on its Regent Street flagship; and Urban Outfitters is discussing a roll out of smaller stores. Abercrombie & Fitch brand Hollister is also looking to expand, Best Buy has opened its debut European stores and Forever21 has confirmed its first store sites in the UK and Ireland.

••• FEATURE

New Look looks to 400 new stores over five years

However, the possible demise of American Apparel should serve as warning that, even with a strong brand and an aggressive European roll-out strategy, success is far from guaranteed. There are other routes to market entry. Gap, for example, has teamed up with e-commerce expert FiftyOne to introduce international shipping to 55 countries. The strategy will allow cus-

tomers from different continents to purchase products under Gap and its sister brands, which include Old Navy, Banana Republic, Athleta and Piperlime, directly from the retailer's online store. Goods can be purchased in local currencies, with the website automatically providing a guaranteed exchange rate and factoring in international costs, such as tax, duty and delivery charges, at checkout. Shoppers are directed to either Gap's North

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Fresnapf is expanding rapidly across key markets

American website, gap.com, or the brand new European fulfilment site at gap.eu to place their orders. Gap plans to deliver to an additional 10 countries over the next few months, including Germany and Spain. While Gap stores are currently present in 30 countries (six directly and 24 through franchise agreements), its products will now be available online in more than double the number of countries by the end of

this year. Gap's approach to e-commerce puts it in line with Abercrombie & Fitch and the Arcadia Group, both of which ship their goods to substantially more markets than they are present in. Conversely, Inditex and H&M have a different approach to online delivery. Inditex launched an online shopping service for the Zara brand in September, but only in those European markets in which it already has a

••• FEATURE

strong consumer base. Similarly, H&M currently delivers its products to only a handful of its largest markets, including Norway, Sweden, Finland, Denmark, Austria, Germany and the Netherlands. It extended the service to the UK this September. The desire to take more control of distribution is also evident in Burberry’s

“

China offers

retailers huge

opportunity for

”

growth

Joel Stephen, CBRE Chinese deal. The transaction formed part of what Burberry describes as its “strategy of unifying the brand around the world, while increasing exposure to retail and to high-growth luxury markets”. An existing franchisee will retain a 15% economic interest in the Chinese business, but Burberry control is expected to add as much as €25m to group operating profits in the 2011/20012 financial year. Indeed, luxury goods retailers have emerged as the most active and expansive retail sector, responsible for over 23% of new store openings during the

past year, according to the CB Richard Ellis (CBRE) report, How Global Is The Business Of Retail?. On average, luxury retailers operate in over 25 countries and 50 cities worldwide, giving them the largest global presence of all retail sectors. Growth in the global footprint of luxury retailers has mainly been geared towards the emerging markets. China has been a major target, while Hong Kong maintained its position as the most popular global destination for luxury retailers, attracting 91% of the luxury brands surveyed as part of the CBRE study. Hong Kong was closely followed by London, which attracted 87% of luxury retailers, with Dubai in third place, with 85%. Burberry, meanwhile, has opened its first store in Brasilia and is planning to roll out a further four stores in the Brazilian capital this year. Louis Vuitton has recently opened three flagship stores in Shanghai, with other brands such as Tiffany & Co, Hermes and Prada all expanding rapidly across China. Joel Stephen, associate director of CBRE’s Retail Services China, adds:

“China offers retailers a huge opportunity for growth, not only in the major cities, but also in the second- and third-tier cities. And with a signifi-

cant pipeline of shopping-centre development due to open in the next few years, space will soon be available to support retailer expansion plans.”

Expect more Gaps in the internet market

WANT TO KNOW MORE? MAPIC 2010 conference sessions include: Wednesday, November 18: 10.30-11.15 The future of retail real estate – what’s in store? Session co-organised by Deloitte Inditex has launched an online shopping service for Zara in key European markets

Champs Elysees room

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••• FEATURE

THE UNITED KINGDOM

Daring to scheme again THINGS COULD HARDLY HAVE LOOKED BLEAKER AT THE START OF 2010. BUT, WONDERS NADIA ELGHAMRY, HAS ONE SCHEME CHANGED THE FACE OF UK RETAIL DEVELOPMENT?

Catalyst: Recommencement of work at Trinity Leeds has sparked the UK market

T LOOKED grim at the start of the year. Plans for grand retail schemes in the UK lay in tatters as administrators took control and local authorities, desperate to keep their regeneration wagons on the road, fought to hold the pieces together and find new developers. But all it took was one announcement from Land Securities in July that it would become the first since the start of the credit crunch to dust off plans for its 75,000 sq m Trinity Leeds for

everyone to start feeling a bit better. Land Securities was quickly followed by Hammerson. The developer, clearly not keen standing in its rival’s shadow, announced it would be resubmitting its planning application for the 150,000 sq m Eastgate Quarters, also in Leeds, by the end of the year. The price will undoubtedly be a long expected reduction in the size of the development. Details are scarce but the Hammerson hints: “We are looking at the scheme in the current

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market and our retail capacity, and what units fit retailer requirements at the moment.” These will join a handful of developments that are either set to open or have already flung open their doors. Both Land Secs’ 25,000 sq m One New Change on the fringes of the City of London and The Avenue at Spinningfields in Manchester opened this autumn. “Both developments were 100% pre-let before opening — a unique achievement bearing in mind

“

Supermarkets

bring in jobs and footfall, which begets further activity

”

Mark Jackson, SDG

••• FEATURE UK

where the UK was just 18 months ago,” says Nigel Gillingham, partner, head of retail, leasing and development at agent Knight Frank. It is a reflection, Gillingham believes, of just how scarce stock has become this year — something that is set to get worse into 2011 and 2012. This is slowly dawning on retailers. For example, next year Westfield opens its Stratford City scheme, next to the 2012 Olympics Park in East London. With anchors John Lewis, Marks & Spencer and Waitrose firmly in place, other big-name shops are reportedly racing to clinch space. Gillingham points to the fact there have been very few casualties this year and certainly no high-profile ones. He adds: “A lot of the job losses forecast are going to be in the state sector, which won’t necessarily affect any of the planned openings.” That said, retail consultancy FSP says that 35% of retailers are now deemed to be ‘healthy’ compared to 43% of all PLCs. That is down three percentage points on a year ago. With funding scarce and the risks still high, UK developers are playing safe and, for now, are putting their faith in food. Taking a leaf out of the US and continental Europe’s book, supermarkets are becoming the new anchor of choice for shopping centres, as shown by Scarborough Development Group (SDG). The developer says it will look to food retailers to anchor the schemes in the Modus portfolio that it took over in March. SDG’s managing director, Mark Jackson, says

JLP: Anchoring Westfield Stratford

supermarkets are “a banker” and one he is able to sell to local authorities. “[Supermarkets] bring in jobs and footfall, which begets further activity,” he adds.

“

A lot of the job

losses forecast are going to be in the state sector, which won’t necessarily affect planned

”

openings

Nigel Gillingham Knight Frank Both food and homeware offers have shown a surge in interest. For exam-

John Lewis has opened stores in Croydon and Poole, with plans for more

City slicker: One New Change

ple, John Lewis Partnership, despite being linked with some big-name city-centre developments that have subsequently stalled, now seems to have taken matters into its own hands and opened up living stores in Croydon and Poole. It has also announced plans for two more in Swindon and Tunbridge Wells before the end of 2010. Asda, too, has announced that it is going big on homewares, unveiling plans to open 125 new Living stores by 2015. In fashion, US retailers have driven the agenda in the UK. Agents cite deals with the US teen shopping brand Forever 21 in the Bullring Birmingham and the Jervis shopping centre in Dublin as most likely to shake up the market and give UK brands a run for their money. Likewise the preppy fashion chain Superdry says it will open 20 new stores a year, with scope for up to 150 stores in the UK and Ireland. CEO Julian Dunkerton says he is taking advantage of the tough economic

conditions to strike favourable deals with landlords. Empty stock has kept many of these expansion plans on track, however Cushman & Wakefield reported that the vacancy rate across key towns in the UK dropped to 9.8% in August — the latest date for which figures are available — down from 12.59% on the year before. The Midlands had the most empty shops while central London fared the best. As the good units dry up, retailers will undoubtedly turn to developers to provide more. And that decision will rest heavily upon how cash rich the big players are feeling. Hammerson has started to recycle the funds from property sales into new acquisitions, while Land Securities’ forward sale of Park House on London’s Oxford Street has helped boost its coffers. Mike Smith, managing director and head of major corporates real estate at Lloyds Banking Group, believes other REITS will now start to use the strength of their balance sheets to reassure the banks and enable them to start developing once again.

Trinity Leeds was the first post-crisis scheme to move forward

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••• FEATURE

I TA LY

Europe’s steady man DEVELOPMENT PROGRAMMES IN ITALY HAVE CONTINUED DESPITE THE ECONOMY — AND THE NEXT TWO YEARS LOOK LIKELY TO PRODUCE MORE OF THE SAME, SAYS Dressed for success: Gruppo Coin’s thriving OVS chain

N ITALY, prime retail property performance is steady despite unexpected further mid-year declines in retail sales. Non-food in secondary locations has been the worst hit. Mirko Baldini, CB Richard Ellis (CBRE) Italy’s head of capital markets, says: “Generally we expect rents to remain stable going into 2011 in prime shopping property. Vacancy rates continue to be low in well-performing shopping centres and high streets, and demand is high although retailer focus is now on occupancy costs.” Stephen Screene, Cushman & Wakefield’s partner, capital markets Italy, adds that there may be a small increase in rental values in lease

renewals by mid-2011 in the best located and managed shopping centres. But he warns that the management must be very good. “They must get back to the basics to meet retailer requirements,” he stresses. Baldini, meanwhile, believes that investors are looking to Italy. “There is yield stability,” he says. “Yields in 2009 and 2010 averaged 6.25%. Retail has been the best performing asset class in Italy through 2010. However, few shopping centres are on the market because of the difficulty of securing sufficient finance at satisfactory terms.” “We estimate the level of retail investments in 2010 will be close to the €1bn achieved in 2009. And l expect that

44 / M A P I C P R E V I E W M AGA Z I N E 2 0 1 0

2011 will be similar,” Screene says. The two largest shopping-centre transactions of 2010 have both featured Corio. The 96,000 sq m Porta di

“

At regional level,

there is a mood to

limit the expansion of shopping centres

”

Mario Taccini CB Richard Ellis

BRIAN BAKER Roma centre was bought from the Lamaro Group by a 50:50 joint venture between Corio and Allianz Immobilien for €440m. Corio bought the 52,000 sq m Le Vele shopping centre and Millennium Entertainment Centre in Cagliari, Sardinia from Schroder Property Investment Management for €103m. Other transactions include Torre Ingastone in Palermo, Sicily, bought by Immobiliare Grande Distribuzione SIIQ (IGD SIIQ) for €54m; and the Il Ducale shopping gallery in Vigevano, Lombardy. “The most active international investors are those with experience in Italy. Allianz, Corio, Henderson, Eurocommercial and the German funds

••• FEATURE ITALY

are among those most likely to be active in 2011,” Screene says. Development activity has remained fairly buoyant across Italy. Regional developers are also continuing with small- and medium-scale schemes and there has been a steady trickle of openings in 2010. Mario Taccini, CBRE Italy’s managing director of retail, says: “The total amount of GLA in Italy is 13 million sq m. Our company alone is involved with projects that will add another 100,000 sq m to that total, and there are other schemes in progress too. I think more new space will open in 2011 than 2010.” In mid-2010, CBRE research estimated a 2011-2013 pipeline of proposed schemes of as much as 1.2 million sq m, though Taccini warns some may be cancelled or delayed. Italy has 211 sq m per 1,000 people, which is lower than many leading European economies. Moreover, entry barriers are strict. Analysts believe there is no risk of over-supply in the near future. Looking forward, the Mall of Italy shopping and leisure centre at Segrate to east of Milan — one of the largest projects in Europe — is being developed by Premium Retail, part of Gruppo Percassi. It is set to have 250,000 sq m GLA and up to 450 units. Spokeswoman Livia Weyland says it is expected to open in 2014. Larger schemes on site in 2010 have included two led by Conad, one of Italy’s largest retail groups. The first

Porta di Roma was bought in a 50:50 jv

is the 34,000 sq m Torino shopping centre, located adjacent to the new sports stadium where Juventus will play in future, which is slated to open in the summer of 2011. Developed by Conad subsidiary Ebano, the €90m

“

Retail

investments in 2010 will be close to the €1bn achieved in 2009

”

Stephen Screene Cushman & Wakefield

development will be anchored by OBI and a 9,000 sq m E.Leclerc hypermarket. The second is the La

The real deal: Corio made two major purchases, including Le Vele

OVS owner Gruppo Coin has bought Upim

Punta commercial centre in Forli, developed by Punta di Ferro, which has a GLA of close to 21,000 sq m. It is set to open between December 2010 and February 2011, and is also to be anchored by E.Leclerc. Among retailers, Gruppo Coin is now dominant in the fashion sector through its Coin department stores and its OVS fashion and children’s clothing stores. The company bought the Upim chain early in the year and a tranche of 50 children’s clothing outlets from Magnolia in the summer. Many are in prime locations and are being refurbished and rebranded during 2010 and 2011. Taccini expects a reduction in the number of new hypermarket schemes and more emphasis on large superstores. During 2010, Castorama and several other major Italian retailers have continued to take new space, although Carrefour has disposed of its properties in the south of the country.

Nationwide, no regulatory changes loom in 2011 and there is no shortterm prospect of Sunday trading. However, the actions taken by the Italian regions under the approvals system are seen by some as a potential cause of investor concern. “At regional level, there is a mood to limit the expansion of shopping centres,” Taccini says. “In two regions, schemes have been blocked after the political administration changed from left to right.”

WANT TO KNOW MORE MAPIC 2010 conference sessions include: Wednesday, November 17: 15.30-16.30: Italy, development is back Session co-organised with CNCC Italy Conferences agora

E.Leclerc: Building its Italian presence

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shhh… shopping in progress! PIAZZA G. OBERDAN, 3 - 20129 MILAN - ITALY - PHONE +39 02 29536552 - WWW.CNCC.IT

17 - 19 NOVEMBRE 2010 - STAND 11.23

••• FEATURE

S PA I N & P O R T U GA L

Back from the brink? SPAIN AND PORTUGAL HAVE BORNE THE BRUNT OF THE RECESSION. BUT THE WORST MAY JUST BE OVER, EVEN IF FULL RECOVERY WILL STILL TAKE SOME TIME, WRITES BRIAN BAKER

ITH unemployment high and the government making public-sector cuts, economic recovery is expected to be slow in Spain. Retail sales continue to fall. In Portugal, retail sales have recovered somewhat but there are concerns about government debt. Most new supply is curtailed, but openings in Portugal in 2011 will include Multi Development’s Forum Sintra and possibly Forum Setubal. Sonae deferred some centres in its expansion programme, but is on course to add 23% to its GLA between 2008 and the end of 2011. CB Richard Ellis (CBRE) Portugal’s associate retail director, Carlos Recio, says: “Overall, l think new supply will

decrease in 2011 and prime rents will be stable while other rents will decrease. The trend is for the refurbishment of existing shopping centres. Hypermarkets with retail formats will be an area of expansion.” In Spain, Abercrombie & Fitch’s Hollister, Apple and Ardene are all opening stores, while Prada, Gucci, Hackett (London) and Jack Jones are among the new arrivals, in Portugal. Ikea is midway through a programme of opening seven new stores and Primark has also added two more to its tally. Recio says retailers are talking with landlords and developers, but are reluctant to sign. Although some new entrants have been persuaded to commit, most are “analysing and reanalysing”, he says.

Forum Sintra by Multi Development will open next year

Sonae is on target to add 23% to its GLA between 2008 and 2011

Regulations have changed in 2010, with a larger floor-space threshold for fully-detailed permission procedures. Sunday-opening decisions are now to be made by local authorities. No new regulations are likely to impact at national level in Spain in 2011, where predictions are for continued downward pressure on retail performance, albeit with a shallower decline in spending. Cushman & Wakefield Spain’s managing partner, Roger Cooke, says: “Few shopping centres were available on the market in 2010. Some goodclass B centres may change hands in 2011, but major centres will not.” The largest transaction in the first half of 2010 was the sale of 120 million sq m of properties mostly occupied by Eroski to AEW for €150m. Little new space is now likely

to open before 2013 or 2014. Cooke adds: “In prime shopping centres and high streets, retailers continue to sign leases and their view is it will not get worse. We think that by the middle of 2011 prime rents may begin to gently rise again.” Progress is stalled on the commercial centre planned for the new district of Valdebabas to the north east of Madrid. Cooke says it may be reduced from a regional 100,000 sq m scheme to a 60,000-80,000 sq m project, and is unlikely to go ahead until some of the residential elements are built. British Land has confirmed its intention to retain Puerto Venecia in Zaragoza in its portfolio. There may, however, be a change in ownership of the other 50% of the joint-venture vehicle before the planned phase two of the scheme is built.

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••• FEATURE

B E N E LU X

In prime position ROBUST ECONOMIES AND LOW-LEVEL DEVELOPMENT PLANS MEAN THE BENELUX IS WELL PLACED TO RECOVER Economic cycle: The Benelux is primed for growth again

STEADILY, SAYS GRAHAM PARKER

HE mature retail markets of Belgium, the Netherlands and Luxembourg have survived the recession relatively well. Although no economy has emerged unscathed, the Benelux countries have all now returned to economic growth and are enjoying comparative low unemployment. As a result, retail vacancies are decreasing again and rents are beginning to grow. Reflecting this reasonably benign climate, all three markets are proving attractive to new entrants. In Belgium, for instance, Karl van Oosterwijck, head of retail at Cushman & Wakefield, says: “Sustained by affordable prices, the prime retail market has survived the economic crisis relatively unhurt so far. Both the retail turnover and consumer-confidence in-

“

Sustained by

affordable prices, the prime retail market has survived the economic crisis

”

relatively unhurt

Karl Van Oosterwijck, Cushman & Wakefield

dices show signs of an overall, moderate stability in these times.” Van Oosterwijck reports that prime retail rents are stable and unlikely to change for several quarters. And with a national development pipeline of just 80,000 sq m, most of which is concentrated in peripheral retail-park projects, he does not anticipate any threat of oversupply. All these factors are underpinning a resilient investment market. “For the first time in several years, there are a number of shopping-centre schemes on the market in Belgium,” Van Oosterwijck says. And he forecasts: “Some marginal downward shift of yields for prime product is not unlikely in these market conditions.” Similarly in the Netherlands, Jones Lang LaSalle's (JLL) retail director, Richard Dallinga, says: “The demand for units in shopping centres at prime locations has fallen as a result of the economic downturn compared to last year. But demand is expected to recover in due course, driven primarily by financially strong retailers and international retailers looking to enter the Dutch market.” JLL reports that prime markets are outperforming the secondary markets. And in regional terms, it is forecasting that prime retail rents in Amsterdam and The Hague will increase slightly again in the coming year, due to the scarcity of available unit shops in prime locations. And while Rotterdam and Utrecht rents are predicted to end 2010 down slightly year-on-year, they are expected to return to growth in 2011.

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Belgian boost: Forever 21 has signed two leases in the country

CB Richard Ellis research underlines this increased polarisation in the market. The agent calculates that prime pitches in the major Dutch cities enjoy vacancy rates of less than 2%. While this is good news

for investors, it does not make it easy for international brands to enter the market, meaning that a number of those looking to break into the Dutch retail scene may well be frustrated.

NEW/EXPANDING INTERNATIONAL BRANDS BELGIUM

NETHERLANDS

Howards Storage World Forever21 Primark River Island Superdry

Desigual Hollister Monki River Island Saint Tropez Stradivarius Superdry

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••• FEATURE

Kaufhof: Metro Group has reported rising sales amid heightened confidence

GERMANY

Let the good times roll ECONOMIC GROWTH SHOULD SIGNAL THE END TO RETAIL SALES WOES IN GERMANY. BUT, THE PICTURE IS MORE COMPLICATED WARNS JOHN RYAN

F YOU had looked at the numbers emerging from Germany’s Federal Statistical Office (Destatis) this summer, you would have seen — depending on which month you examined — modest increases or decreases against 2009. The point perhaps to be gleaned from this was that sustained growth was just not happening and that the economy, as represented by Germans

heading for the shops, was in a period of stasis. Yet curiously, had you glanced at the same time at the GFK consumer climate survey for June, you might have noticed that popular sentiment about the economy was generally positive, even if this was not translating into increased sales. Fewer people were fearing for their jobs and unemployment was expected to fall. It all

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appeared relatively benign, if less than startling. This impression would seem to be reinforced when you look at a graph produced by Cushman & Wakefield (C&W) showing the growth of shopping-centre space in the country. If C&W’s predictions prove correct, Germany will complete 2010 with a greater shopping centre GLA than it has ever had — a pattern that will be

“

We are focusing

more on growth and

”

expansion again

Dr Eckhard Cordes, Metro Group

••• FEATURE GERMANY

repeated during 2011. Or put another way, there will be just under 14 million sq m of lettable space in German shopping centres when the champagne corks are popped to usher in 2012.

“

National and

international

retailers are still highly interested in top locations where availability remains

”

scarce

Inga Schwarz, Cushman & Wakefield

It is pertinent to remark at this point that the pace of growth in shoppingcentre space peaked during the mid-1990s and that C&W foresees 2011 as recording the slowest rate of increase since the late 1980s. Nonetheless, the figures show that space has more than doubled in a 20-year period — and growth continues. In part, of course, there is the small matter of German reunification to be factored into this particular equation:

Troubled department store Karstadt: escaped insolvency in a late deal

the 1990s growth occurred as developers raced to give cities such as Berlin, Leipzig and Dresden the same retail provision as was to be found in the West. The real question has to be where next and, indeed, whether there might be a surfeit of retail space in Europe’s economic powerhouse? And another problem for shopkeepers and the landlords providing space for them in Germany is the Teutonic ‘save now, pay later’ mentality. This tendency sees a large percentage of the population locking away its wallets as soon as anything like economic uncertainty becomes apparent, with an inevitable impact on high-street sales. This might explain why a seemingly stable economy can still spell problems for German landlords and retailers. Things are not all bad, however. Inga Schwarz, senior research consultant at C&W, says that, for landlords with prime high-street pitches in their portfolios, the retail climate has proved relatively resilient. “National and international retailers are still highly interested in top locations where availability remains scarce,” she points out. That said, this is a selective trend and if, for instance, you wish to set up shop in Munich — Germany’s most expensive city for retailers — then expect to pay more than double what a site would cost in one of the country’s major eastern locations. Schwarz notes that for international retailers, such as Barcelona-based Desigual, Germany remains something of a magnet. However, in the shopping centres, with the exception of Schwerin, Leipzig and Dresden, the action is focused on the West’s big metropolises. And deals are being done. Earlier this year, for example, Corio entered the German market with a bang. The Dutch property group’s €1.3bn acquisition of shopping-centre properties from Multi gave it control of the Forum Duisburg and Centrum Galerie in Dresden, as well as a brace of retail developments and options on future retail developments. Perhaps it should also be noted that there are players in the German mar-

Western focus: Dresden is one of the few eastern cities to see investment

ket that look shaky, yet are big enough to warrant support in order to avoid substantial knock-on effects. Karstadt, the embattled department store group that went into insolvency after the federal government refused to bail it out, is symptomatic of some of the problems facing the German retail property sector. The store continued trading while a deal to offload it to the US billionaire Nicholas Berggruen was finally agreed after delays. Nonetheless, the wellbeing of too many landlords and associated retailers in large schemes were too closely in-

volved in Karstadt’s activities to allow it to disappear completely and it continues to function. It is also worth noting that Dusseldorf-based Metro, the world’s third largest retail group, revealed in August that its sales grew by 2.4% in the first half of 2010. Dr Eckhard Cordes, chairman and CEO of Metro Group, says: “We are focusing more on growth and expansion again — the period of caution is over.” A real positive then, and a possible sign that the good times for retailers and landlords may be about to return to Germany.

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••• FEATURE CENTRAL & EASTERN EUROPE

Best foot forward: Germany’s Deichmann is opening more stores

CENTRAL & EASTERN EUROPE

Poland sets the pace KEY CITIES AND SECTORS ARE RECOVERING STRONGLY IN CENTRAL AND EASTERN EUROPE, ALTHOUGH PROGRESS IS UNEVEN. BUT THE IMPACT OF OVER-DEVELOPMENT IS BEING SHAKEN OFF, SAYS MARK FAITHFULL

ENTRAL and Eastern Europe (CEE) continues to recover slowly from the economic downturn. Poland and the Czech Republic are the region’s two star performers, the healthy state of the former highlighted by the recent purchase of the Galeria Pomorska shopping centre in Bydgoszcz by Resolution Property. Retail investment activity totalled around €630m in the first half of 2010, a 190% increase compared with the same period last year. This was concentrated in Central Europe, with Hungary, Poland, Romania and Russia accounting for 87% of the total,

according to research from CB Richard Ellis (CBRE). For the first time since the second quarter of 2008, prime capital values for retail assets increased year-on-year, with some markets — Poland, Romania and Hungary — showing positive retail sales growth. The retail development pipeline in CEE has declined by 20% in the past six months, while prime shoppingcentre rents have remained stable. Rents increased for the third quarter in a row and are now 10%-15% above the levels recorded in the first quarter of 2009. Jos Tromp, head of CEE research &

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consulting at CBRE, says: “The outperformance of some of the Central European retail markets, especially Poland, has caused renewed interest from specialised shopping-centre investors. Unibail-Rodamco’s recent announcement of the pending purchase of a shopping-centre portfolio in Poland is an example.” Elsewhere, Budapest-based TriGranit Development Corporation and Po l i s h Pu b l i c R a i lw ay s s i g n e d a n a g r e e m e n t i n Ju l y f o r t h e development of Poznan’s new transportation complex. The first phase of this hub is a large retail centre, to be opened in 2012.

“Poland has always been our flagship destination. We opened our first shopping centre in Katowice five years ago, followed by the successful Bonarka City Center in Krakow last year. In Poznan, we can utilise the experience in transforming train stations into new city centres we gained at WestEnd City Center in Budapest and Emonika City Center in Ljubljana,” says TriGranit’s CEO, Arpad Torok. Meanwhile, developer Globe Trade Centre (GTC) has completed the acquisition of a 50% stake in a shopping-centre project in the Wilanow district of Warsaw, owned

••• FEATURE CENTRAL & EASTERN EUROPE

Fashion House: Expanding the outlet sector in the CEE

by Polish listed company Polnord. The two companies agreed the main terms of the transaction, under which they will jointly develop the scheme, in March this year. The project, which is expected to cost €170m, will comprise around 60,000 sq m GLA and construction is due to start within the next 12 months. In late May, Plaza Centers opened Suwalki Plaza, its 30th shopping centre in the CEE and its ninth in Poland. Located in Suwalki’s city centre, it comprises 20,000 sq m GLA spread over three floors and is the first western-style shopping centre in Poland’s north-east region. Sulwalki Plaza, which was circa 80% let on opening, houses over 65 shops, including brands such as H&M, KappAhl, Empik, New Yorker, Deichmann and Douglas. The completion of Suwalki Plaza follows the opening of Zgorzelec Plaza in Poland in March. Ran Shtarkman, president and CEO of Plaza Centers, points out: “The completion of these two projects in Poland this year comes at a time when the local economy is experiencing a strong out-performance compared to its European neighbours.” In addition, the Belgian real-estate developer Liebrecht & Wood has completed the sale of Poland's Fashion House outlet-centre chain to the Polonia Property Fund II, managed by AIB PPM, a subsidiary of AIB Capital Markets. The transaction, which was first announced in September 2007, involved three retail outlets in the Polish cities of Gdansk, Warsaw and Sosnowiec, representing an invest-

ment of nearly €100m. Liebrecht & Wood intends to use the proceeds to finance further investments in Poland, Russia and Romania, notably Morski Park Handlowy in Gdansk, in which

“

Poland has

always been our flagship

”

destination

Arpad Torok, TriGranit it has already invested nearly €50m. The complex, which will provide 50,000 sq m of retail space, includes major tenants such as Carrefour and OBI. The new retail park is planned to open in spring 2011. Liebrecht & Wood also plans to expand the Fashion House chain with three new mall development projects in Moscow, St Petersburg and Bucharest. Recently, Austrian group Immofinanz purchased 85% of the Polus Center Constanta mall project in Romania from TriGranit. The scheme will be the largest regional centre on the Romanian Black Sea coast, offering 50,000 sq m of retail space on completion in the first half of 2011. Manfred Wiltschnigg, executive board member of Immofinanz, which holds a 25% stake in the Hungarian property developer, says: “Polus Center Constanta is an attraction for many

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Velvet revolution: Mango’s Prague flagship

because the city is an important tourist destination and Romania's largest port city." Romania is showing gradual signs of recovery. Retail specialist RED has been working with local retailers and franchisees to help chains fit out stores.The company reports it is moving to smaller scale development with a focus on asset management.

WANT TO KNOW MORE? MAPIC 2010 conference sessions include: Thursday, November 18 15.30-16.15: Retail development in Poland: is there room for new brands? Session co-organised by the Polish Council of Shopping Centres Conferences agora

••• FEATURE

R U SS I A

Moscow comes out of the cold

ENTAL rates for prime premises have started to grow in Russia, with the Moscow market the first to recover. Several operators are planning to construct factory outlets in the Moscow region. Leasing started in the summer for Fashion House Outlet Centre Moscow. The 28,765 sq m GLA scheme will include 192 outlet units, a food court and cafes, 1,865 parking spaces and a children's play area. Construction at the site on Leningradskoye Shosse, near Sheremetevo airport, will begin in April 2011, with the opening planned for the following November. The €110m project, which will be managed and operated by outlet specialist GVA Outlets, is funded by the Liebrecht & wooD Investment Fund. Fashion House Development holds another land plot in the St Petersburg region. In January, AFI Development,

which in the summer listed on the UK market, announced that it had reached a preliminary understanding to complete the public infrastructure works immediately adjacent to its Mall of Russia project. It also reported that leasing was progressing, with over 40% of GLA fully pre-let and an additional 30%-35% covered by non-binding letters of intent and memoranda of understanding. Engineering works on AFI Development’s Tverskaya underground shopping mall are also proceeding, with completion of the project expected in 2011. CEO Alexander Khaldey says of these initiatives: "We believe this is the right moment to move forward with a number of our important projects." S Holding Company, meanwhile, has acquired a land plot in Moscow and plans to start construction in December, while AST Company is to build a shopping centre on a 36 ha land plot.

Projects on the move: SC Viva recently opened

MOSCOW IS LEADING A RECOVERY IN THE RUSSIAN MARKET, WITH VOIDS COMING DOWN AS RENTS GO UP. MARK FAITHFULL REPORTS

Mall of Russia: Back under construction

The 130,000 sq m GLA Vegas shopping and entertainment centre developed by Crocus International, and the 32,000 sq m GLA SC Viva, by Perga Development and Management and Accent Russia Opportunity Fund, also opened recently. The latter includes a Media Markt. Indeed, Cushman & Wakefield says that vacancy rates have decreased to about 2% for quality shopping centres and that, as a result, landlords are upping rents for vacant space by up to 50%. But Oleg Voytsekhovskiy, managing director of the Russian Council of Shopping Centers, adds that new development is not the only priority for Russia. “Building new shopping centres in new sites is not always the best solution,” he says. “Lots of commercial space was built in previous years and it is not rare for the best locations

to be occupied by schemes that could hardly be described as shopping centres. The time has come to improve the situation. And here our motto shall be modernisation — even if it means bringing an old shopping centre down — expansion and redevelopment.”

WANT TO KNOW MORE? MAPIC 2010 conference sessions include: Thursday, November 18: 12.00-12.45: International businesses in Russia: been there, done that, know how Session co-organised by Russian Council of Shopping Centers Champs Elysees room

M A P I C P R E V I E W M AGA Z I N E 2 0 1 0 /

••• FEATURE

MENA

Shifting sands in the Middle East ONCE UNSTOPPABLE DUBAI IS FAR FROM THE ONLY GAME IN TOWN NOW, WITH OTHER MENA COUNTRIES PUSHING TO CENTRE STAGE, SAYS GRAHAM PARKER

ITH the Middle East and North Africa such a diverse region, it should be no surprise that it presents a wide range of opportunities — and challenges — for developers and retailers alike. While the economic crisis has hit confidence in some of the more developed markets, others are emerging relatively unscathed and

are now surging ahead. And retailers continue to display confidence in the region's long-term prospects. A recent report by global management consulting firm AT Kearney concluded that the MENA region “exhibits the most exciting retail growth prospects today”. Eight countries in the region were listed among the consultant's top 21 target locations for international

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brands. Kuwait was ranked second worldwide, with Saudi Arabia fourth and the United Arab Emirates seventh. Tunisia, Egypt, Morocco, Turkey and Algeria also ranked high. From a property development point of view, Simon Thomson of Retail International also highlights opportunities in the Levant and the Maghreb. “While the UAE continues to provide the bulk of future supply

over the next five years, it is followed closely by the North African countries,” he says. Thomson points to Egypt as a focus for major growth over the next few years, and adds: “Libya and Syria are continuing to relax controls, marking these two relatively undeveloped markets as exciting opportunities for developers and retailers. Tunisia and Morocco also present interesting

••• FEATURE MENA

Marks & Spencer will open its first store in Egypt later this year

markets for developers and international brands.” To underline this new confidence in Libya, Mediterranean Investments Holding is about to begin work on the 200,000 sq m mixed-use Medina Tower project that will include 8,200 sq m of retail in the country's first shopping mall. The Turkish developer Turkmall has three projects in the pipeline for Libya. In Tripoli, Forum Andalus will combine retail and leisure with a 25storey hotel, while Forum Oyia will be a more conventional 80,000 sq m mall anchored by a hypermarket, furniture store and a 4,650 sq m aquarium. In Benghazi, the Lake Forum project will combine retail and leisure attractions. Marks & Spencer, Bhs and Monsoon are among the international brands that have already entered Libya through the franchise route, and now UK-based department store chain Debenhams is reported to be in talks with franchise partners about setting up shop in both Libya and Morocco. Marks & Spencer has also confirmed that it is to open its first store in Egypt later this year, with a 2,600 sq m development through a franchise partnership with the Al Futtaim Group at the Dandy Mega Hall shopping centre in Cairo, plus a two-storey, 4,400 sq m flagship store in Cairo Festival City shopping mall in spring 2012. Spinneys Group, the supermarket operator with a string of stores across Lebanon and Egypt, has also said that it is close to signing a deal

In vogue: Fashion Dome is underlining premium retail in Dubai

Cairo Festival City is one scheme helping to put Egypt on the retail map

to open two full-size hypermarkets in Libya, potentially anchoring the Turkmall projects.

“

Libya and Syria

are … exciting

opportunities for developers and

”

retailers

Simon Thomson Retail International But it is Dubai that still dominates perceptions of the region's retail provision. The Gulf state that attracted shoppers from across the world suffered a spectacular fall from grace as the global financial crisis unfurled through 2008 and 2009. Its impact is still being felt, according to new research from Jones Lang LaSalle (JLL). The agent calculates that at the midpoint of 2010 average retail rents were down 39% year on year, with a 10% fall during the second quarter of 2010 alone. Retail vacancies had risen to between 8 and 10%, on JLL's calculations. JLL says Dubai's stock of retail space currently stands at just over 2.4 million sq m and no major new mall supply is expected until 2013 with the opening of the first phase of Mall of Arabia at Dubailand. On the positive side, JLL forecasts that sales revenues in Dubai will resume growth in 2010, with an uplift of between 3% and 5% during the year. But it warns that this will be

driven “primarily by retail goods sold in department stores and midmarket value chains rather than luxury brands”. However, some developers are still showing faith in the luxury market. At Mall of the Emirates, Majid Al Futtaim Properties is about to open the latest phase of development, The Fashion Dome. It has attracted an impressive line-up of high-fashion brands including Christian Louboutin, Cartier, Paul Smith, Galliano, Versace, See by Chloe, Diane von Furstenberg, Sephora and the largest D&G boutique in the region. And some of the mall's existing brands, such as Louis Vuitton, Christian Dior and Gucci, are expanding into bigger units within the Fashion Dome. Meanwhile, Landmark Group, one of the region's largest retail groups, has entered the hotel market with Citymax Hotels, targeting the mid-market. The first Citymax Hotel opened in Al Barsha in May, while properties in Bur Dubai and Sharjah will follow later in 2010. Each Citymax Hotel will be located with easy access to malls and other prominent locations in Dubai and Sharjah. "The success of Landmark Group is mainly hinged on delivering exceptional value to our customers — it is the same principle that will distinguish Citymax Hotels as the first choice among its contemporaries," says Micky Jagtiani, chairman of Landmark Group. Landmark operates brands such as Home Centre, Babyshop, Splash, Emax and Centrepoint in its portfolio. Earlier this year the group announced plans to invest about €120m in expansions over the next three years.

M A P I C P R E V I E W M AGA Z I N E 2 0 1 0 /

••• FEATURE

THE USA

It’s now or never?

DESPITE UNCERTAIN RETAIL SALES, THE US RETAIL REAL-ESTATE MARKET MIGHT JUST BE OFFERING EUROPEAN RETAILERS A ONE-OFF OPPORTUNITY SAYS LIZ MORRELL

LTHOUGH the US may officially be out of recession, it seems the country’s consumers don’t yet agree. “The consumer in general is in pretty good shape. The unemployment rate among the people who shop is around 4.5% rather than the general 10%, and their incomes are rising. Consumer’s balance sheets look better than in a long time, but people are scared and that’s what’s holding back a robust recovery on the consumer side,” says Michael Kercheval, president and CEO of the International Council of Shopping Centers (ICSC). A spokesman for the National Retail Federation agrees: “It’s not as bad as it was, but it’s still not all that great. Even

US retail stalwarts like Macy’s are performing strongly

though we are out of recession, it appears that consumers aren’t believing that. The two factors of the housing market being in flux and unemployment has crippled consumer confidence. Right now, consumer spending is not there beyond necessity.” Frank Badillo, senior economist and vice-president at Kantar Retail, says that he believes retail sales will grow about 3.5% in the second half of this year and reach between 4.0%-4.5% for 2011. “One key challenge to growth through the end of the year and into 2011 will be the impact of the homegoods channels and categories, which are losing the spending boost they received from the government appliance-rebate programme and

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mortgage tax credit,” he says. This, he adds, has now ended and, coupled with suspected tax changes later this year, is causing some caution. Shopping-centre development in 2010 has focused on the completion of development projects that were already under way rather than new builds. This August saw the re-opening of the 55,000 sq m, Macerich-owned Santa Monica Place in California, anchored by department stores Nordstrom and Bloomingdales, a redevelopment that was supposed to have completed in 2008. As well as being one of the only shopping-centre opening this year, “it is also the most exciting experience I have seen in an ‘urban’ regional-mall

setting in years”, says Richard Hodos, executive vice-president of the New York tri-state region retail services team at CB Richard Ellis (CBRE). Dana Telsey, CEO and chief research officer of Telsey Advisory Group,

“

The most active

retailers are the

value or discount

”

retailers

Frank Badillo Kantar Retail

••• FEATURE USA

“They have been raising capital like crazy, either through share issues or selling interest in high-value properties,” she says. And if the owners cannot find further properties to buy, it is likely the cash will be invested into the renovation and redevelopment of existing properties.

Forever 21 is still focused on expansion internationally and at home

believes Santa Monica Place is performing well. “My sense is that retailers did their budgets for the first three days in one day,” she says. Next year will see further remodelling work, particularly in the outlet market, which is seeing the expansion of the Houston Premium Outlets centre, due November, and Las Vegas Outlet Center, due next March. New development, however, is unlikely. ICSC’s Kercheval believes 2011 and 2012 will experience the lowest amount of new space in the history of the US shopping-centre market, beating last year’s record low. “Development has not picked up dramatically from recession levels,” agrees Kantar Retail’s Badillo. “Until uncertainty about the outlook subsides, development will likely rebound in a slow and uneven manner.” But things seem to be picking up. Last year’s pattern of store closings out-

numbering openings has reversed and retailer demand is building. “There have been discussions about development opportunities,” says Kristin Mueller, executive vice-president and

“

This may be your

one opportunity to break into the

”

US market

Michael Kercheval ICSC

director of business development at agent Jones Lang Lasalle in the US. According to Mueller, this is proved by the fund-raising activities of the main shopping-centre fund-holders.

Kohl’s expands as shoppers trade down from traditional department stores

Despite the uncertainty of the US retail market, the major players are performing strongly, with the likes of Saks, Neiman Marcus, Nordstrom and Macy’s all reporting healthy business, thanks to good inventory control. Value retailers are also blooming. “Target continues to dominate, with customers trading down from the traditional department stores,” says CBRE’s Hodos. For the same reason Kohl’s is also expanding. “The most active retailers are the value or discount retailers that have benefited most from the recession environment, such as dollar stores and other smallformat value retailers,” says Kantar Retail’s Badillo. “Retailers in other discount channels, such as supercentres, warehouse clubs and discount department stores, are also resuming expansion, but at a much more cautious pace than pre-recession.” Fashion retailers are also focused on expansion, with Forever 21 and Victoria’s Secret expanding internationally as well as at home. The stalwart Gap, meanwhile, is also back on the expansion trail. “Forever 21 is expanding rapidly, as it has taken on many large format stores [many of which were former Mervyns locations], including a flagship store

Kohl’s has expanded thanks to the value-focus of US consumers

[formerly Virgin] in Times Square in New York and a 5,000 sq m store in Union Square in San Francisco,” says CBRE’s Hodos. He adds that the Spanish retailer Desigual has also taken a former French Connection store in the same area, while Inditex is also looking for further openings. “These retailers are looking to take advantage of the lower price of real estate and lock into great locations,” adds ICSC’s Kercheval. And he advises others to do the same: “If you are a European retailer looking to get into the US, then you need to high-tail it over now and find some good deals because this may be your one opportunity to break into the US market. The developers want you — and you can probably afford it.”

Urban outfit: Santa Monica Place represents a new generation centre

M A P I C P R E V I E W M AGA Z I N E 2 0 1 0 /

Please, note in your diary Tuesday, November 16 ■ OPENING COCKTAIL

at 19.30 Majestic hotel (Badge requested) Cocktail in partnership with

Thursday, November 18 ■ MAPIC AWARDS

PRIZE-GIVING at 21.30 Salon Ambassadeurs, level 4 Palais des Festivals Supported by

■ MAPIC AWARDS

NIGHT PARTY at 22.30 Salon Ambassadeurs, level 4 Palais des Festivals

Consult the complete programme of conferences and events at www.mapic.com

USEFUL TIPS Dear participant, Your experience at MAPIC is important to us. The entire MAPIC team is committed to ensuring your market runs as smoothly and efficiently as possible, so that you can focus on achieving your objectives. This document is intended to assist your preparation for the event. The following information will enable you to arrive with a full meeting schedule in place and an in-depth understanding of the market.

1 • PREPARING FOR MY MARKET MAKE APPOINTMENTS AND CONTACTS BEFORE ARRIVAL To benefit fully from MAPIC experience, we encourage you to: Connect to the MAPIC Online Community, the most effective way to prepare for MAPIC! MAPIC is a tremendous opportunity for your business. Anticipating and preparing it online on www.mapic.com using the Online Community is definitely the key: • Identify and contact the people you want to meet among thousands of retail real estate professionals • Increase your visibility by completing your company and personal profiles • Showcase and identify retail real estate projects • Schedule and plan meetings ahead of time • Select the conferences and events you want to attend

CANNES INFORMATION The Palais des Festivals is situated on the beach front along the famous Croisette. It is clearly signposted throughout Cannes. The exact address is: Palais des Festivals Esplanade Georges Pompidou 06400 Cannes.

• Opening Cocktail Tuesday, November 16, 19.30 Majestic Hotel (please note that your badge will be requested to enter).

Cocktail in partnership with

To gain access to MAPIC, you will need your badge You can collect your badge with your bag at the Registration Hall before or after you have checked in to your hotel or upon your arrival at the Palais des Festivals before you start your meetings. The Registration Hall is located on the Croisette side of the Palais des Festivals to the left of the main entrance.

• Mapic Awards Prize-giving: Thursday, November 18, 21.30 Salon Ambassadeurs, level 4 Palais des Festivals Supported by

Exhibitors Access • Wednesday, November 17: 8.30 – 19.00 • Thursday, November 18: 8.30 – 19.00 • Friday, November 19: 8.30 – 18.00 Participants Access • Wednesday, November 17: 9.00 – 19.00 • Thursday, November 18: 9.00 – 19.00 • Friday, November 19: 9.00 – 18.00

CLUBS Business Lounge Croisette (Level 01) & Business Lounge Riviera (Riviera Hall)

Press Club (Level 01) For journalists: includes computers, Wi-Fi, internet connection, a printer and the assistance of a permanent member of staff and a “Press Agora”, a fullyequipped venue to house client press events within the Press Club.

Registration Opening Hours • Tuesday, November 16: 9.00 – 20.00 • Wednesday, November 17: 8.30 – 19.00 • Thursday, November 18: 9.00 – 19.00 • Friday, November 19: 9.00 – 16.00

Maps are available throughout the market to help you find the exhibitor you are looking for. Hostesses can also assist you.

To enhance networking and facilitate meetings, MAPIC has created new Business Lounges for all visitors (one on Level 01 and one in the Riviera), replacing previous clubs, with a range of business services which have been upgraded from last year. Bigger: MAPIC has doubled the networking size of the club areas Privacy: Private spaces (boxes) and reservable tables Service: The number of hostesses will be significantly increased Connectivity: MAPIC will provide free WiFi access Free services: the Business Lounge located on level 01 will include free photocopying, free printing services, free fax facilities, e-mail points and a concierge service to reserve hotels, restaurants, taxis, etc.

Country Dialing code: +33 Time zone: GMT + 1 Electricity: 220 volts AC, 50 Hz, round two-pin plugs are standard Measure System: Metric Currency: Euro

Market Opening Hours

2 • ARRIVING IN CANNES: MAPIC opening hours & events

Don’t forget to make a note of:

• Mapic Awards Night Party: Thursday, November 18, 22.30 Salon Ambassadeurs, level Palais des Festivals

3 • THE EXHIBITION HALLS & CLUBS

REGUS Member Business Lounge (Level 01)

The Palais des Festivals is composed of two buildings with access either from the Croisette or from the beach front. Exhibition halls are located in each building: • Principal building (Level 01, 0) – direct access from the Croisette • Riviera Hall – direct access from the beach front The two buildings are connected via mechanical escalator.

The Regus Member Business Lounge offers complementary and personalised business services: • Private Lounge area • International press • PC/internet access • Refreshments • Specialised staff Members only

For more information about transports, services... Please visit: www.mapic.com

M A P I C P R E V I E W M AGA Z I N E 2 0 1 0 /

••• USEFUL TIPS

62 / M A P I C P R E V I E W M AGA Z I N E 2 0 1 0

itâ&#x20AC;&#x2122;s a great story an architectural design by davide padoa of design international

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cairo showroom now open, located directly on al mehwar leasing agency:

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architecture: