Mapic 2014 preview magazine by RX REAL ESTATE SHOWS

The official mapic magazine

OCTOBER 2014

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www.mapic.com The official MAPIC magazine

PREVIEW MAPIC @ 20 Two decades of innovation

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Connect to the right shoppers Enjoy a sense of well-being in an entertaining and stimulating atmosphere. Discover a wide and ever-changing range of brands, products, and services; an inexhaustible source of desire, delight and inspiration. Come and live a unique shopping experience in Klépierre’s centers.

October 2014

www.klepierre.com

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Europe’s future EMEA markets

Stores and stripes US retail sales on the rebound

SEE PAGE 47

SEE PAGE 83

Also inside:

• Twenty years of MAPIC • The Digital Summit • Retail expansion plans • MAPIC Awards • Asia pushes for growth • Franchising • Investment and development

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SAVE THE DATE

FOR UPCOMING MIPIM EVENTS 2-3 DECEMBER, 2014 GRAND HYATT, HONG KONG The 2-day global leaders summit to revisit fundamentals & perspectives on property, investment & retail in Asia Pacific.

10-13 MARCH, 2015 PALAIS DES FESTIVALS, CANNES, FRANCE The worldâ&#x20AC;&#x2122;s leading property market offering unrivalled access to the greatest number of development projects and sources of capital worldwide.

20-21 MAY, 2015 THE PRINCE PARK TOWER HOTEL, TOKYO, JAPAN The new forum for property innovation gathering Japanese & global leaders.

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Editorial WELCOME to this MAPIC 2014 Preview magazine — your appetiser to what promises to be a memorable 20th edition of the leading international retail property market. It is thrilling to be part of an industry that never stands still. From inner-city retail changes, to the spread of outof-town shopping malls, the online retail boom, the growth of entertainment services and food malls within shopping centres and the internalisation of the market as global brands seek global outlets, retail and its related real estate is simply a fascinating sector. Over the years, both of us have been amazed by the industry’s capacity to innovate, reinvent, adapt and continually think about what is best for the customer. We have witnessed dramatic growth in retail outlets in major territories that include Russia, Turkey, China and the wider Asian market. The rise of these ‘new’ territories, coupled with the surge in online retail — with its impact on new real estate projects and the way retailers do their business — is an indication that the industry doesn’t stand still. Neither does MAPIC. Indeed, our task over the years has been to anticipate, reflect and serve your business needs in a changing commercial environment. MAPIC is similar to a giant shopping mall. It brings together a multitude of international brands, developers, commercial centres and innovators, all determined to showcase what they have to offer to delegates drawn from 67 countries. And just like any shopping mall, our commitment to you is to provide the right elements that will benefit your business. Expressions such as ‘footfall’ or ‘location, location, location,’ are as much a part of our vocabulary as they are of yours. To those of you who have supported MAPIC over the years, we say THANK YOU. To those of you who are joining us in 2014, we hope that this is the start of a long and fruitful relationship that will last for the next 20 years and beyond. To ALL of you…have a great MAPIC.

Nathalie DEPETRO Director of MAPIC

Sara ROZENFARB Sales Director MAPIC

preview magazine I October 2014 I www.mapic.com

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Join us on our stand at MAPIC at Palais -1, N61.

Contents 10

News

Intu Costa del Sol; Czech momentum in CEE; Expansion for McArthurGlen; Westfield gears up for Milan; New brands for Mall of Scandinavia; Reshaped industry through major mergers; Ivanhoe Cambridge focuses on super-regionals; Luxury scheme in Qatar; Third Digital Summit; Turkish brands in new pavilion; MAPIC marks 20 with host of events; Acadia realigns US portoflio

Also inside : 89 Tips & services

MAPIC Awards

PROGRAMME OF CONFERENCES & EVENTS

19-21 NOVEMBER 2014 PALAIS DES FESTIVALS CANNES, FRANCE

AS OF 2 OCTOBE R 2014, MAY BE SUBJECT TO CHANGE

WEDNESDAY 19 NOVEMBER BACK TO THE FUTURE :WHAT’S IN STORE FOR THE FUTURE OF RETAIL

“20 YEARS BACK - 20 YEARS FORWARD” MASTERMINDS CONFERENCE THE SHOPPING CENTRES’ PERSPECTIVES Oxford room at 15.30, Palais -1

THE OMNI-CHANNEL REVOLUTION IN RETAIL: STRATEGIES TO DRIVE GROWTH THROUGH MULTIPLE CHANNELS

MEET SOME OF THEM

10 categories are up for grabs at a gala event in Cannes this year

SESSIONS’ HIGHLIGHTS: SAVE THE DATE!

Oxford room at 10.00, Palais -1

MAPIC’s conference programme welcomes over 100 retail property experts to the stage to share essential insight into retail real estate opportunities, concepts, strategies and trends.

AREAS NOT TO MISS MAPIC INNOVATION FORUM Riviera 8 Technology and consumer habits evolve at a fast pace dictating how retail companies should define new business models. The MAPIC Innovation Forum highlights a wide range of solutions and concepts to be ahead of competition. Located within highly premium exhibition hall, it is an open conference room dedicated to innovation and new trends in the retail & real estate industry along with a dedicated networking and meeting area. More information on the programme on the website.

Oxford room, 16.30, Palais -1

THURSDAY 20 NOVEMBER “20 YEARS BACK - 20 YEARS FORWARD” MASTERMINDS CONFERENCE THE RETAILERS’ PERSPECTIVES Alain AFFLELOU

Diego BARONCHELLI

President of the Supervisory Board, Alain Afflelou (France)

Senior Director Retail, The North Face and Property Director O&AS VF, The North Face / VFC (Switzerland)

Mario BAUER

Alexandre LOPES DIAS

CEO, Vapiano Franchising International (Luxemburg)

Oxford room at 11.00, Palais -1

Retail Director, General Shopping Brasil SA (Brazil)

RETAILTAINMENT AREA

Ian DUDLEY

Group Property Director, Karen Millen and Aurora (UK)

Sandeep MATHRANI CEO, General Growth Properties Inc. (USA)

Fatima OUALI

Kevin MCKENZIE

Chief Global Digital Officer, Westfield Labs (USA)

Ryan PATEL

International Project Manager, Universcience (France)

CEO, Klépierre (France)

Christophe PEETERS

Vice president, Global Business & Real Estate development, Pinkberry (USA)

Riviera 7

Laurent MOREL

Deputy Mayor City of Ghent (Belgium)

Guillaume RIO

Technology Trends Manager, Echangeur by LaSer (France)

MATCHMAKING EVENTS: SOURCE NEW PROJECTS AND CONCEPTS, MAKE FAST CONNEXIONS! MAPIC PITCHING SESSIONS Spark deals, foster partnerships and explore opportunities as top retailers and property developers (selected by our jury) present their exciting new projects and ideas during a series of unique 7-minute presentations, each followed by an informal networking coffee break. Palais -1, Wednesday 11.00-13.00 & Thursday, 14.00-16.00

Emile RUEMPOL

Sohail SHAIKH

Director of International Development, Mothercare PLC (UK)

Bulat SHAKIROV

CEO, Praktika Development, RCSC Board Member (Russia)

Mehmet ŞIMŞEK

MAPIC SPEED MATCHINGS

Minister of Finance, (Turkey)

Pre-registration required

Director Business Development, Real Estate & Construction, HEMA (The Netherlands)

Klaus STRIEBICH

Managing Director Leasing, ECE Projektmanagement GmBH & Co. KG (Germany)

Alexey VANCHUGOV Partner, Accent Real Estate Investment, Accent Group (Russia)

Ben VAN BERKEL Co-founder/Principal Architect, UNStudio (The Netherlands)

Henrike WALDBURG Head of Investment Management Shopping Centre, Union Investment Real Estate GmbH (Germany)

In a dedicated retailtainment zone, entertainment experts will showcase their projects and demonstrate how entertainment has become an essential and attractive component for shopping areas. With 30-minute speaking opportunities, they will present how their business is key to the real estate industry. More information on the programme on the website.

Join your future partners in one place, at one time and launch new opportunities from a handshake with the right peer. From table to table during 45 minutes, help accelerate deals with 10 potential partners during effi cient 3-minute face-to-face speed meetings: - Investors meet developers - Master Franchisees meet retailers - City centres & shopping centres owners and managers meet retailers.

FOR THE UPDATES, PLEASE VISIT WWW.MAPIC.COM

Madison room – Riviera 8

MAPIC DIGITAL SUMMIT

Conferences

By invitation only Ma jestic Hotel Third Digital Summit to explore future of omni-channel retailing and the changing consumer 3rd edition of Digital Summit on the eve of the main event. This initiative once again brings together experts from a broad range of disciplines to debate the core issues affecting digital and bricks-andmortar retail. They will debate how new consumers’ usage & habits will impact the physical store and how to capture the unpredictable and more demanding consumer. In partnership with CBRE, Echangeur by Laser Convergences-CVL and Powering.

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Features MAPIC 20:20

AROUND THE WORLD WITH MAPIC

The retail and real estate 39 that shaped the world

We look at some of the key EMEA markets present at MAPIC and some of the major players in Cannes, as Europe’s markets move into expansion mode and new regions recover and grow.

We look at some of the highlights of retail innovation and retail development over the past 20 years and cast our eye forward to what the future may bring for the international retail sector

All the world’s a store

EMEA in focus

MAPIC has changed dramatically over the past 20 years, reflecting and influencing the shape of the industry

Asia in focus China has become the dominant retail market in the Asian region but it is not the only market offering huge retail potential in the East

The Americas in focus The US has begun to thrive once more but different regions are moving at different speeds. We consider the dynamics of one of the great global markets and look at how its neighbours are faring

preview magazine I October 2014 I www.mapic.com

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MAPIC Steering Committee

Mr Clem Constantine

Mr Christian Dubois

Former Director of Property MARKS & SPENCER

Managing Director – Head of Retail Services CUSHMAN & WAKEFIELD

Mr Robert de Barr

Mr Pierre Combet

Mr Jean-Paul Fréret

Director DE BARR ASSOCIATES

CEO RETAILP

Development Director-France CARREFOUR

Mrs Melissa Gliatta

Mr Alain Boutigny Director & Editor-in-Chief SITES COMMERCIAUX

Mr Peter Wilhelm CEO WILHELM & CO

Mr Brian Tucker Head of Retail DEKA IMMOBILIEN

To ensure that MAPIC’s content remains relevant and contemporary and serves the retail and real estate sectors best, our Steering Committee helps guide the central themes of each year’s event in Cannes. This year their work has been focused specifically on the 20th anniversary celebrations and innovations and Reed MIDEM would like to thank our international panel, who represent a hugely diverse range of skills and geographies within the industry, for their tireless work, dedication and expert guidance in making MAPIC the world’s premier retail property event.

Mr Christian Recalcati

Mr Chris Igwe Head of Retail CBRE

Mr Henrie W. Kötter Managing Director CENTER MANAGEMENT ECE

Mrs Mayté Legeay

Mr James Napoli

CEO LARRY SMITH

Executive Vice-President THOR EQUITIES

Country Manager

President AMALFI ADVISORS

NEINVER

Mr Enis Öncüoglu

Mr Alik Mutsoev

General Director ÖNCÜOGLU ARCHITECTURE

Member of the Board REGIONS GROUP

preview magazine I October 2014 I www.mapic.com

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IMAGINING YOURSELF IN SOHO, NOHO, WASHINGTON D.C., CHICAGO, SAVANNAH, OR GREENWICH? ACADIA HAS THE DEPTH OF EXPERIENCE THAT CAN TAKE YOU THERE.

RETAIL LEASING CONTACT: MEGHAN KRUGER mkruger@acadiarealty.com 914.288.3340 GENERAL ACADIA INFORMATION: www.acadiarealty.com 914.288.8100

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RELATED CONFERENCE DURING MAPIC Secrets Of The Visitor Attraction World: How To Lengthen Stay And Increase Spending Co-organised with BRC Imagination Arts Thursday November 20 - 15.30-16.15 Champs-Elysees Room, Palais -1, Palais des Festivals

NEWS IN BRIEF

Q CHILEANS FOCUS ON DOMESTIC GROWTH CHILEAN retailer Cencosud posted a healthy increase in sales during the second quarter of 2014, despite decelerating economic growth in some of its main markets. Net revenues increased 5.4% from a year earlier to 2.586 trillion pesos ($4.42bn), boosted by operations in Brazil, Chile, Colombia and Peru. Meanwhile, Chilean developer Grupo Patio will be showcasing its 40 neighbourhood shopping centres at MAPIC as it strives to become the country’s largest such operator. The company was founded in 2004 and, three years’ later, joined forces with US investment fund KIMCO. Capital Advisors signed a commercial alliance with the company in 2010. Last year, the company was named Grupo Patio.

Q FOR YOUR LEISURE AND PLEASURE ADDING to the leisure offer at MAPIC this year will be experiences specialist Theleisureway. The company works with mall clients to help visitors to connect emotionally with centres via leisure activities as well as recreational areas, meeting points, and relaxation spaces and places. In Cannes, Theleisureway will be showcasing its range of services.

Q DESIGN YOUR OWN SCHEME IN CANNES WONDERING produces 3D simulations of architectural designs involving realtime video and 3D visualisations. The company’s products give shape, texture, light and movement to floor plans in an interactive and innovative way by developing films and 3D animations. At MAPIC, Wondering will present an interactive 3D app. Visitors to the company’s stand will be able to design their own projects using the programs.

Wondering CEO Raquel Fortes

News Intu and Eurofund embark on mixed-use scheme in Malaga UK-BASED developer Intu and Eurofund have created a joint venture to develop a large mixed-use scheme in Malaga, Spain, which will include retail, hotels and leisure. Infrastructure build could begin in early 2015, with completion targeted for the end of 2017. Leasing agent is Cushman & Wakefield. The move follows the successful joint venture between Eurofund, British Land and Orion Capital Managers to develop Puerto Venecia in Zaragoza and is one of three proposed schemes that the partnership hopes to develop. The other two projects are located in Valencia and Vigo. Eurofund chief executive Ian Sandford said that Intu Cota del Sol would take the concept of Puerto Venecia but develop it further. “This is about creating a location that is not just about retail or leisure, but where people can come and have a big day out,” he said. “So at Malaga, we will have a mini-theme park, a surf lake, Snowflex artificial ski slopes, a gourmet market, flagship stores and lots of food and beverage all in one location.” Intu regional director Martin Breeden said that the company had chosen Spain for its first international investment — at Parque

Retail resort scheme Intu Costa del Sol Principado in Oviedo — and for further development because it felt that the country offered the best combination of value and consumer spend. “We have a very positive view on the longterm prospects for Spain and we feel that developing key sites in the country is the right way forward,” he said. “Intu Costa del Sol will be a retail resort, serving the local population and the huge numbers of international visitors who come to southern Spain every year.”

Klepierre invites shoppers to play THE VAL d’Europe shopping centre near Disneyland Paris was the debut location last month for the new Let’s Play campaign, which will be rolled out across a further 11 Klepierre shopping centres next year. Each of the centres will feature an annual run of promotional events focused on the concept of Let’s Play, which are designed to be locally relevant and to enhance the brand position of each of the malls. At Val d’Europe, this has been realised through the story of Alice In Shopping Wonderland. The move builds on Klepierre’s Club Store concept, under which malls offer a variety of premium services, including visitor lounges, which the company says have proven hugely popular with shoppers. The campaign was conceived by the Sid Lee Paris agency, which received 15 Lions at this year’s Cannes Lions International Festival of Creativity. preview magazine I October 2014 I www.mapic.com

Val d’Europe saw the debut of the Let’s Play concept

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News NEWS IN BRIEF

Q REALITY BITES FOR AISOLVE AiSolve was founded in 2007 by a multidisciplinary team of engineers specialising in augmented reality, artificial intelligence and computer games. AiSolve is now presenting at MAPIC for the first time to introduce: Envision, an immersive real-time visualisation driven by 3D gaming; Ads Reality, a mobile product recognition app and Interactive Environs, which brings adverts to ‘life’ using bespoke oversized displays or shop window solutions.

Q ALTAREA BOOSTS RETAIL PIPELINE ALTAREA’s retail project pipeline amounts to €1.8bn at a net initial yield of 8.8%, according to the French developer’s half-year results. The last six months have seen two iconic events for the group: the opening of the Qwartz shopping centre in the North West of Paris, and the contract to modernise the Paris Montparnasse train station, which is the fourth largest in France.

Q NEW FOR OLD IN SWEDEN CITYCON has signed a joint-venture agreement with NCC Property Development to develop the 25,000 sq m Molndals Galleria on the site of an existing retail property. The 70-store mall will be a modern gallery focusing on daily necessities and anchored by a grocery store. Construction is expected to start during 2015 opening in early 2018.

Strong Czech presence signals gathering momentum in CEE AN INCREASE in retail activity in Central and Eastern Europe has boosted the Czech Republic market, with a number of companies with key schemes in the country attending MAPIC. Among these are the 31,000 sq m The Prague Outlet, which will open in 2015 adjacent to Prague’s Vaclav Havel International Airport and close to the city centre. New investor Dreitone, which recently renamed the centre as The Prague Outlet, plans to open the project in three phases of 12,000 sq m and 80 stores, 8,000 sq m and 50 stores, and 6,000 sq m and 40 stores respectively. Another active player in the market is Otvicebased Saller Group, which has become one of the top five investors in the country. “At MAPIC we will present the expansion of our shopping centre Galeria Kosice, based in the second largest city of Slovakia,” said manager Jiri Suremka. “At this point, there is about 6 million sq m of prime retail space in the Czech Republic and one third of this area is split between the top five players. The top 10 owners control about half of the market,” said Michal Sotak, head of research at Cushman & Wakefield in the Czech Republic and Slovakia.

Galeria Kosice is to be expanded

The country’s retail logistics sector is also booming. In August, PointPark Properties (P3), a joint-venture subsidiary of Ivanhoe Cambridge, bought 627,000 sq m of logistics warehouses and associated development land for €523m from two funds advised by Tristan Capital Partners and VGP. Ian Worboys, P3 CEO, said: “The Czech Republic is a strategic market for us because it sits at the crossroads of the main transport routes between Western, Central and Eastern Europe.”

Record expansion for McArthurGlen DESIGNER outlet specialist McArthurGlen has either under way or in planning approximately 250,000 sq m of new outlet retail space, reflecting a total development spend of nearly €1.5bn and the most extensive development pipeline in the history of the group. New centres announced since MAPIC 2013 are McArthurGlen Designer Outlet Remscheid in the German state of North Rhine-Westphalia

McArthurGlen’s Provence scheme

Q BRIGHT IDEAS FROM LUG LUG Light Factory, a leading Polish manufacturer of professional luminaires and lighting systems, will be showcasing its products at MAPIC. Celebrating 25 years, the company’s products are suitable for a wide range of retail applications. preview magazine I October 2014 I www.mapic.com

and the company’s first two designer outlets in Istanbul — one on the European side of the Bosphorus, near to the new international airport, and one in an affluent suburb on the Asian side of Turkey’s largest city. The announcement follows Simon Property Group’s 2013 decision to become a jointventure partner with Kaempfer Partners in McArthurGlen Designer Outlets. Gary Bond, McArthurGlen’s managing director of development, said: “Becoming a joint venture with Simon has given us a new level of financial strength. This is helping us grow at a time when outlet retailing is in full expansion and our focus is on Europe.” McArthurGlen will also open McArthurGlen Designer Outlet Vancouver Airport next spring. Construction is also due to start next year on centres in Provence and Ghent, as well as the new Turkish centres.

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NEW YORK

LOS ANGELES

REAL ESTATE LEADER ALONG LUXURY RETAIL CORRIDORS IN GLOBAL GATEWAY CITIES ACROSS

EUROPE, LATIN AMERICA & THE UNITED STATES

PARIS

MIAMI

CANNES

MEXICO

VISIT US AT MAPIC STAND P-1.K2 FOR APPOINTMENTS, CONTACT:

+1 212 353 5691 • mapic@thorequities.com OFFICES NEW YORK THOR CORPORATE HEADQUARTERS 25 W. 39TH STREET, NEW YORK, NY 10018 +1 212 529 5055 LONDON 67-68 JERMYN STREET, ST. JAMES’S LONDON SW1Y 6NY +44 207 321 6360 MEXICO CITY REFORMA 2620 P16 11950, MEXICO D.F. +52 55 4170 1400

CHICAGO

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LONDON

9/23/2014 1:17:36 PM

News Westfield raises stake in Italian mall as expansion gathers pace

Westfield predicts Milan could rival its London malls AUSTRALIAN developer Westfield Corp has raised its stake in a €1.4bn shopping mall in Italy, and will seek other opportunities in mainland Europe as it focuses on expansion outside its traditional markets. Westf ield has been rampi ng up its

international expansion plans since June, when it spun its portfolio of Australian and New Zealand malls into a separate company, called Scentre Group. Westfield Milan could have the same sales capacity as Westfield London, which in 2013

New brands for Mall of Scandinavia IN A SIGNIFICANT raft of new lettings, a number of major brands have signed at UnibailRodamco’s Mall of Scandinavia ahead of the project’s opening in autumn next year. Several brands of Inditex, Disney and the Ahlens department store have signed up to the scheme alongside Filmstaden Scandinavia, O’Leary’s and Vapiano, in order to strengthen the leisure offer within the centre. Inditex has selected a number of locations totalling more than 4,800 sq m. Meanwhile, Ahlens’ 6,000 sq m new city department store concept in Mall of Scandinavia is the first in a shopping centre. It will feature Ahlens Wellness, consisting of 300 sq m of training, yoga and running facilities for the active woman. Disney’s planned store will also be the first of its kind in a shopping centre in Sweden, as well as the US media giant’s first ever store in the Swedish capital. Other confirmed names include Sweden’s

first commercial IMAX cinema, Filmstaden Scandinavia, operated by SF Bio, and a new letting to create one of the world’s largest O’Lear y’s restaurants. Filmstaden Scandinavia, which will feature 15 screens, has taken circa 9,000 sq m. The venue will also offer a bowling alley, pool tables, games and simulators. Lars-Ake Tollemark, Unibail-Rodamco’s managing director Nordic, said: “The addition of these major fashion and leisure brands provides our customers with an attractive and diverse range of retail options. This reinforces our firm belief that Mall of Scandinavia will be the quintessential headquarters for the very best in global shopping.” David Turner, director of European retail For TIAA Henderson Real Estate, described the scheme as the project that would set the benchmark for Sweden when he spoke at the MAPIC UK breakfast last summer. He also preview magazine I October 2014 I www.mapic.com

generated annual sales of £982m, according to the company. The move has also freed up funds to expand into new territories. Westfield took an initial 50% interest in the proposed Milan mall in 2011 through the formation of a joint venture with local developer Grupo Stilo. It has now raised its holding to 75% for an undisclosed sum. Westfield had originally forecast that the mall would cost €1bn-€1.25bn to build, but has since updated its estimate to €1.4bn. Westfield chairman Frank Lowy said: “We are very pleased with the performance of both Westfield Corp and Scentre Group since the announcement and completion of the restructure. With the new entities’ combined market capitalisation of approximately A$35bn, the restructure has created A$4.5bn of value for the shareholders of the former Westfield Group and Westfield Retail Trust.” Construction in Milan will start in either 2015 or 2016, Westfield said, and will take roughly three years to complete. Co-CEO Steven Lowy added: “We have picked up Milan and we have a very serious base in Europe out of our London office. It’s nice that Europe is stabilising, but [our expansion] is not really predicated on that. The fundamentals in that part of the world are incredibly strong, driven by the wealth of the market and the lack of supply in the market.”

Unibail-Rodamco’s Mall of Scandinavia

said that Mall of Scandinavia and Steen & Strom’s Emporia in Malmo would have a galvanising effect on Sweden, which has “a fair amount of tired stock”. Mall of Scandinavia, he added, was an opportunity for investors.

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CONNECTED TO RETAIL FTI Consulting is the official communications partner to MAPIC

FTI Consulting, providing specialist consultancy for the retail and retail property sectors. Delivering financial and corporate communications expertise across the whole breadth of retail through highly motivated professionals with an international footprint. www.fticonsulting.com

CRITICAL THINKING AT THE CRITICAL TIMEâ&#x201E;˘

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Our properties are where acclaimed retailers reflect the refined tastes of their shoppers and the reputations of the cities they call home. Imagine your store at one of GGPâ&#x20AC;&#x2122;s many iconic and international shopping, dining and entertainment destinations.

We invite you to meet with us at Mapic to explore opportunities to join our family of retailers in centers which include:

Ala Moana Center (Honolulu) Glendale Galleria (Los Angeles) Fashion Show (Las Vegas) The Grand Canal Shoppes (Las Vegas) Oakbrook Center (Chicago) Tysons Galleria (Washington, DC) Village of Merrick Park (Miami) The Shops at La Cantera (San Antonio)

Contact lizette.driscoll@ggp.com to schedule your appointment.

120 MALLS | 40 STATES | ggp.com

News Industry giants and giant deals reshape Europe’s retail-scape MAPIC will play host to a reshaping European market this year, with a huge merger, the re-emergence of Carrefour as a panEuropean property force and the world’s three largest retail real es¬tate groups all arriving in Cannes heralding large investments (also see Bulking up or Niching Down, page 57). French developer and landlord Klepierre and Dutch peer Corio this summer announced plans to merge in a share deal in which Klepierre will absorb Corio to become one of the largest European shopping centre groups. The deal was supported by the main shareholders in Klepierre, which are BNP Paribas and US giant Simon Property Group. It is also supported by Corio’s main shareholder, ABP pension fund. Under the terms of the deal, David Simon will remain the chairman of the enlarged Klepierre, which represents a combined asset portfolio of €21bn, putting the company within range of the €25.6bn value of Europe’s biggest retail property group, Unibail-Rodamco. Laurent Morel, chairman of Klepierre’s executive board, said: “The reshaping of our portfolio resulting from the planned disposal of these galleries accelerates our ambition to address the challenges of the evolving retail environment more effectively. This will also allow us to better leverage our retail asset management expertise.” Also this summer Carmila, the shoppingmall operator owned by French grocery giant Carrefour and investors including Pacific Investment Management, agreed to pay €931m to acquire six shopping malls in France from Unibail-Rodamco. The shopping centres in Anglet-Bayonne, Paris, Calais,

Toulouse and Orleans all contain Carrefour stores. Separately, the board of directors of Coop Alsace also approved the sale of 129 stores to Carrefour. Unibail-Rodamco CEO Christophe Cuvillier said of the transaction with Carrefour: “Carmila is the natural owner of these shopping centres, anchored by large Carrefour hypermarkets. Carmila will be able to generate significant synergies and returns consistent with the requirements of its shareholders.” Carmila is also acquiring three malls in Spain from Carrefour for €182m in a separate transaction. Carmila bought €2bn worth of malls in France, Spain and Italy from Klepierre in April. Carrefour, meanwhile, said it would pool the Klepierre malls with 45 Carrefour shopping malls in France worth a combined €700m to create a leading European shopping-malls group. The new company — with over 800,000 sq m of retail space and assets of €2.7bn — comprises €1.8bn of equity, of which some 42% is owned by Carrefour and the remainder by shareholders, including Colony Capital, insurer Axa and Credit Agricole Assurances. It is also backed by €900m of debt. Georges Plassat, who joined the group as CEO in 2012, has implemented a ‘back to basics’ approach, selling several operations in emerging markets and investing in store refurbishments in Carrefour’s domestic market. Carrefour re-established its real estate division with the 2012 creation of Carrefour Property, which manages France, Italy and Spain. It also operates Carrefour Property International in seven other markets with around 1,500 sites. Carmila owns 121 Carrefour-anchored malls

CentrO, located in Oberhausen preview magazine I October 2014 I www.mapic.com

Carrefour has become a major European property player again

Klepierre is focusing on core schemes in target French regions in partnership with Carrefour Property in France, Spain and Italy. Unibail-Rodamco sold the malls to Carmila because it plans to focus on larger shopping centres as it continues its expansion with the acquisition of a stake in CentrO. Located in Oberhausen in the heart of the densely populated Ruhr region, the 232,000 sq m GLA shopping-centre complex is one of Germany’s largest malls. The transactions significantly rebalance Klepierre’s shopping-centre portfolio in favour of its key strategic regions. In France, 94% of Klepierre’s post-transaction portfolio is now located in the company’s identified core regions of Ile de France, ToulouseMontpellier, Lyon and Bordeaux. As a result of the transaction, Klepierre now operates 129 assets (compared with 256 previously).

Retailers at MAPIC 2014 After several years adjusting to a slower development pipeline, retailers will converge on Cannes from around the world focused on site selection. Top of their agenda will be understanding development plans and geographies and growth through a mix of own-stores, concessions, online and franchise. Unique to MAPIC, they will also bring consumer influences, as portfolios and store roles are realigned for an omni-channel era.

More than 2400 retailers from more than 40 countries and 400 new brands expected! More than 40 franchise partners expected g almost twice more than last year

News NEWS IN BRIEF

Q DON’T MISS THE SWISS SWISS Circle will be at MAPIC with The Swiss Meeting Point, which has been created together with the Swiss Council of Shopping Centres and Immobilien Business. The company describes MAPIC as the most important gettogether of the retail branch and a ‘must’ for Swiss retail experts.

Q KAZAKHSTAN’S MEGA IMPACT MEGA Shopping and Entertainment Centers will be at MAPIC to showcase schemes in the four biggest cities of Kazakhstan: capital Astana, financial centre Almaty, Shymkent, the biggest city in the south of the country, and Aktobe, the largest city in Kazakhstan’s oil and gas region. French company Design Architectural designed the schemes, which meet the highest functional and aesthetic requirements.

Q GTC RAISES FUNDS FOR GROWTH

GTC: Poland and CEE acquisitions GLOBE Trade Centre (GTC) has recommended to its shareholders an issue of up to 140 million new shares. The capital is intended to be used to finance the acquisition of high-yielding properties in Poland and CEE, in which GTC will unlock value-added potential through its regional platform and assetmanagement skills, as well as in selected development projects. “GTC has completed its restructuring phase and achieved good and stable operating results. Now, it is in good shape to take advantage of the attractive investment opportunities that we have identified to stimulate company growth,” said Thomas Kurzmann, GTC’s CEO.

Sands Retail opens ‘milestone’ third phase of Macau centre SANDS Retail, the leasing and retail assetmanagement platform of Las Vegas Sands Corp and Sands China, officially opened Shoppes at Cotai Central Phase 3 in Macau on August 29. The move represents a significant expansion that will increase the size of the mall in operation by 70%, raising its total retail area to nearly 40,000 sq m. Within Phase 3, 36 new retailers have already opened for business, with a further 15 restaurants and kiosks to open by the end of the year. The $60m investment paves the way for an expanded tenant mix that spans home decor, variety stores, designer children’s wear, fashion sportswear, travel accessories and an even wider variety of men’s and women’s fashion,

lifestyle and cosmetics brands. Altogether, the mall houses 140 brands, including the first store in Macau for many retailers and the first in Asia for some. “I’m delighted that we have reached the milestone of the official opening of Shoppes at Cotai Central Phase 3,” said David Sylvester, Sands Corp’s senior vice-president of retail, Las Vegas. “Our three themed malls in Macau have achieved strong double-digit growth over the last few years, and we have announced strong results for the first half of this year as well. This sustained growth totally vindicates our strategy of continuing to expand and develop our offering in Macau, and we will keep looking for new opportunities.”

Joint projects drive TK expansion process is currently under way and expected TK DEVELOPMENT is using joint ventures to be completed this soon, with construction to with investment partners to push forward with start immediately afterwards. a number of projects, notably in Poland and Meanwhile, discussions are being held with Sweden. PFA regarding the sale of a share of the proIn Jelenia Gora in Poland, TK Development is ject at its current stage of development. If developing a shopping centre of about 24,400 agreement is reached, PFA will participate sq m. The project is being executed as a joint in completing the project. This is in line with venture with Heitman, in which the group has an TK Development’s business model, which inownership interest of 30%. Lease agreements cludes entering into partnerships for major for half the premises have been concluded. development projects. Construction started in May, and the opening is scheduled for the third quarter 2015. TK Development will receive fee income from the jointly owned company for developing, letting and managing the scheme. In Esbjerg, TK Development owns a plot earmarked for the construction of a new shopping centre of about 29,800 sq m at Esbjerg station. A building permit has been granted for the Broen centre. Before construction can start, however, the project must undergo a validation and approval procedure to ensure safe railway operations, etc. This The Broen centre at Esbjerg Station preview magazine I October 2014 I www.mapic.com

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News Q THE WAY TO GAIN IN SPAIN WITH Spanish retail investment showing a marked upturn in 2014, the Spanish Association of Shopping Centers (AECC) is looking forward to a busy MAPIC. In Cannes, the AECC will serve as the meeting point for the Spanish contingent. The organisation, which was founded in 1980, brings together investors, developers, retailers, consultants, independent practitioners, service providers, institutions and analysts that are focused on Spain.

Q RABAT ON THE MAP ITALIAN developer Polyworld will be showcasing La Marina in Rabat at MAPIC. Founded in 2013, the company is as an offshoot of Gruppo Policentro and combines the experience and real estate expertise of three international professionals: Rahhal Boulgoute, Lino Lemi and Gianluca Zanella. Polyworld operates across the commercial, industrial, residential, hotel and tourism, services, urban development and infrastructure sectors.

Q TOP FLIGHT IDEA AERODIUM will be presenting one of the more unusual entertainment offers at MAPIC. The company specialises in vertical wind tunnels simulating freefall and skydiving — and has a specialist unit suitable for use in shopping centres as part of the leisure offer.

Q EFRE LOOKS EAST WITH 120 premium-brand stores, restaurants, cafes and other leisure services, the Zsar Outlet Village aims to attract millions of affluent customers from both Russia and Finland. Developed by East Finland Real Estate (EFRE), the centre is situated next to the EU-Russian border in south-eastern Finland. It is only 200 km from the fourth largest city in Europe — St Petersburg — and 170 km from the Finnish capital, Helsinki. On completion in 2018, the Zsar Outlet Village will include 20,000 sq m of leasable area. The first phase of 12,000 sq m project is slated to open in 2016.

Super-regional centres remain focus for Ivanhoe Cambridge IVANHOE Cambridge completed a major divestment at the end of August as the Canadian-based cross-border investor affirmed its strategic move towards super-regional shopping centres. REIT Cominar acquired a portfolio of shopping centres and office buildings from Ivanhoe Cambridge for an estimated $1.63bn. The deal includes 11 shopping centres, three office buildings and one industrial property, all located in Quebec and Ontario. After the transaction, Ivanhoe Cambridge will own approximately 8.5% of Cominar’s units, making it the REIT’s largest unit holder. “This is an excellent transaction with a winwin result for both parties,” said Ivanhoe Cambridge’s chairman and CEO, Daniel Fournier. “It allows us to encourage the expansion of Cominar by selling them quality assets that became available for strategic reasons. It also allows us to reinvest a substantial amount in Cominar’s equity capital, which attests to our confidence in and to our support of Cominar, a recognised leader in the Canadian real estate industry.”

Canadian deal as Ivanhoe Cambridge refocuses Fournier added: “This transaction allows us to reach a key milestone in the implementation of our business plan for the commercial sector, which calls for more strategic focus. As we have chosen to focus on super-regional shopping centres, Cominar possesses the right expertise to ensure the future success of the properties that we are selling to them.”

Luxury scheme takes shape in Qatar DETAILS have been unveiled of the luxury lifestyle and leisure destination Place Vendome, under development in Qatar’s Lusail City on a construction area of nearly 800,000 sq m. Development of the ‘one-stop family destination by the sea’, which is just 11 km from Doha, is being carried out by United Developers. The mixed-use project, which is slated to open in the third quarter of 2017, will host two fivestar hotels, serviced apartments, up to 400 retail outlets and a central entertainment area featuring permanent attractions, technologically advanced installations and special events. In addition, the retail portion of the development will boast an exclusive section dedicated to luxury. “Place Vendome will be the new central attraction for residents and visitors seeking a combination of varied entertainment and retail choices in one location. Rising in parallel with the infrastructure in Lusail City, this project will be served by new roads, public transportation,

Place Vendome

parks and marinas by completion,” said Sean Kelly, project director for Place Vendome. He added: “Project funding is in place and the necessary approvals have been secured to pave the way for continued progress on the development. Drawing inspiration from the Parisian district of the same name, Place Vendome will be reminiscent of the famous high-end shopping street in Paris, rue de la Paix.”

preview magazine I October 2014 I www.mapic.com

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Italian Style 19-21 November 2014

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News Q ITALIAN DEAL KICK STARTS IMMOCHAN EXPANSION GROUPE Auchan’s real estate subsidiary Immochan has transferred a portfolio of three Italian shopping malls, currently held by 100% Immochan subsidiary Gallerie Commerciali Italia, to a real estate investment fund named Antirion Retail/Comparto Gallerie Commerciali. The portfolio, which is valued at €266m, consists of the shopping centres Mestre (Venice), Bussolengo (Verona) and Mesagne (Brindisi), totalling nearly 60,000 sq m. The transaction includes the future extension of the Bussolengo shopping mall, which will be transferred into the fund at the time of its opening.

Mestre is one of three malls in the new fund Immochan will provide property and leasing management services to these assets, while at the same time being a minority investor in the fund. The majority investor is the ENPAM Foundation, and the Italian welfare and assistance fund for doctors and dentists. The transaction forms part of Immochan’s expansion strategy, under which it plans to develop and extend about 70 shopping centres in the next three years, representing a total investment of approximately €1.7bn. In Italy last year, Immochan completed the extension of Mestre and Vimodrone and plans to have completed mall extensions in Rescaldina, Piacenza, Fano and Taranto by 2018.

Third Digital Summit to explore future of omnichannel retailing will learn from experts and also explore digital tools and services that can help companies better know and serve their customers, add value to the business and increase ‘stickiness’. Issues debated will include the role of digital technology within retail space, prompted by speakers who have helped to spearhead key initiatives. A mix of presentations and interactive workshops will also be used to explore the merging of digital and physical space. The next day’s MAPIC Innovation Forum will summarise what was said at the Digital Summit.

FOR THE third year running, MAPIC is organising a Digital Summit on the eve of the main event. This initiative once again brings together experts from a broad range of disciplines to debate the core issues affecting digital and bricks-and-mortar retail. At this invitation-only summit, 50 industry thought-leaders will discuss the ongoing evolution of omni-channel retailing. They will debate how new consumers’ usage and habits will impact the physical store and how to capture the unpredictable and more demanding consumer. At the 2014 Mapic Digital Summit, attendees

Turkish brands come together in pavilion The company noted that the new shopping space delivered so far has enabled national and international retailers to expand in Turkey, while “fading uncertainties” around the Turkish economy should support stronger occupier demand and investment activity on the back of increasing business confidence. This is supported by retail sales in Turkey, which were up 2.3% year on year in July, according to the Turkish Statistical Institute. A t M A PIC p a r t i c ip a nt s i n c lud i n g Renaissance, Ronesans, Atakule, Oncuoglu, Cılek, Era, Damat and Esse will be among those to take space in the new Turkish pavilion.

FOR THE first time at MAPIC this year, Turkish development and retail players will come together in a Turkish pavilion to showcase their work and the opportunities to be had in a country that has the second largest retail development pipeline after Russia. Turkey’s had more than 2.6 million sq m of shopping centre space under construction in the first half of 2014, with this high rate of construction driven by an improving economy and the continued interest of developers in the country’s regional cities. In all, 278,600 sq m of retail space was delivered to the market during the same period, according to adviser Cushman & Wakefield.

MAPIC plays host to Experience economy FIRST-time exhibitor AM — The Experience Group (AM-teg) comes to MAPIC with its portfolio of experiences developed for its target markets of shopping centres and areas with a large footfall. “We provide solutions for our clients, mainly through events, by engaging and focusing on the experience that we create for the end consumer,” said AM-teg’s Joao Amaral, international business development manager. “At MAPIC, we will highlight our travelling exhibitions and road shows, ice-related products and solutions, Christmas experiences and how we measure the return on investment [ROI] and the impact from hosting our events.” For the Christmas season, AM-teg is working in Portugal, where it is focusing on decorations and ice events. It is also active in Spain, the UK, Ireland, Brazil, Angola, Mozambique and South Africa.

AM-teg is targeting shopping centres

preview magazine I October 2014 I www.mapic.com

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News NEWS IN BRIEF

Q INTER IKEA BACKS REAL ESTATE INTER IKEA Group’s total revenues increased by 7.4% to €2,856m in 2013. Net profit increased by €70m to €516m. Investment continued, with capital expenditures around €880m. The investment in real estate development progressed as planned, increasing in both the retail-centre division and the property division, the company reported. “It’s good to see how our investments in difficult times are helping businesses to develop and grow,” said Soren Hansen, CEO of Inter IKEA Group.

Progress continues for Inter IKEA

Q CASINO SEALS AFRICA PACT CASINO and Bollore have formed a strategic partnership with the objective of developing an e-commerce platform in Africa. Cdiscount Afrique and Bollore Africa Logistics have created the joint company, with the first Cdiscount branded website launched in the Ivory Coast.

Q NEW HEAD FOR TH REAL ESTATE TIAA Henderson Real Estate (TH Real Estate) has hired Stephan Austrup as head of retail, Germany. The former Sonae Sierra executive’s primary responsibility is running the asset management for TH Real Estate’s three largest German shopping centres in Berlin, Munich and Erlangen, in addition to sourcing new stock throughout Germany. Tim Horrocks, head of Germany and director of Europe, said: “Retail is a key focus for TH Real Estate, especially in Germany.”

Summits, seminars, prizes and parties mark MAPIC milestone MAPIC will hold a wide range of events to mark its 20th edition, reflecting the range of value-added activities taking place in Cannes during the week. These include the Digital Summit curtain-raiser, the traditional MAPIC Opening Night Cocktail Party and the prestigious MAPIC Awards. The invitation-only Digital Lunch and Digital Summit, which take place on the Tuesday afternoon preceding the main three-day event, are supported by Convergences, Powering, CBRE, Echangeur and Sites Commerciaux. “Technology has empowered the customer, who is now walking around with a shopping mall in her handbag 24/7, making her ever more demanding both off and online,” said Pamela Wolf, Powering and cofounder MyLuxuryWorld. “It’s not a contest of us vs them or either/or but a convergence towards so that our unpredictable but totally in control customer remains a satisfied shopper.” Chris Igwe, head of retail, France, CBRE, said: “We need to talk about what’s economically viable so retailers avoid financial difficulty as they have not identified what works and what does not.” The issues will also be discussed at the Innovation Forum the following day. On Tuesday evening, the traditional MAPIC Opening Cocktail Party will take place at the Majestic Hotel. On the first day of MAPIC, a host of conference sessions will focus on opportunities in key regions of the world, including China and

the US. The future of retail through e-commerce and omni-channel retail will be examined, while special sessions will consider the past — and future — 20 years of retail. Food and beverage, and leisure, transport and designer outlets will also be covered. In addition, a new retailer’s cocktail will be held. Impress Media will hold a Russian Collection Dinner at the Ambassador Hall of the Palais des Festivals on Wednesday evening. Thursday will begin with the traditional Russian Breakfast, also organised by Impress Media, and an invitation-only breakfast event: the USA Breakfast at the Majestic Hotel, presented by sponsors Thor Equities, Acadia and GGP. Thursday night will also see the 19th MAPIC Awards, which will take place at the Grand Hyatt Cannes Hotel Martinez, followed by the popular MAPIC party and a firework display.

Acadia Realty realigns US portfolio ACADIA Realty Trust has completed the sale of six retail properties in Miami Beach, Florida owned by its fund platform and has acquired a retail property in Manhattan’s Soho submarket on behalf of its core portfolio. In August, Acadia completed the sale of its two Lincoln Road portfolios — one of which was owned by Acadia Strategic Opportunity Fund III LLC and the other by Acadia Strategic Opportunity Fund IV — in a single transaction worth $342m. Acadia added to its Soho collection in Lower Manhattan with the acquisition of a 3,200 preview magazine I October 2014 I www.mapic.com

sq ft (297 sq m) retail property located at 131135 Prince St for $50m. The market rent for Soho’s prime locations has already surpassed $1,000 per sq ft. The company said: “This well-located asset contains significant embedded growth, which the company will have an opportunity to realise over the next several years as the leases for the existing tenants, Folli Follie and Uno de 50, expire.” Year to date, Acadia has now completed the acquisition of $242.4m of core retail properties, of which $178.5m, or 74%, consists of high-street retail.

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30/09/2014 18:36

Awards

Lég

The Jury PRESIDENT: FREDERIC LALOUM General Manager – Leasing Altarea (France)

MAPIC AWARDS 2014

MAPIC Awards set to honour retail’s top 10

MARCO ALMEIDA Senior manager, international expansion, Parfois (Portugal)

ALAIN BOUTIGNY Director & Editor-in-Chief, Sites Commerciaux (France)

MELISSA GLIATTA Executive vice-president Thor Equities (US)

BARRY HUGHES Senior vice-president HOK (UK)

MAXIM KARBASNIKOFF Partner, retail Cushman & Wakefield (Russia)

JOHN STRACHAN Global head of retail Cushman & Wakefield (UK)

KLAUS STRIEBICH Managing director, leasing ECE Projektmanagement (Germany)

CHANTAL ZIMMER General delegate Federation Francaise de la Franchise (France)

The winners of the 2014 MAPIC Awards will be announced on November 20 at a gala dinner that will build on the success of the new-look ceremony launched two years ago

REATED in 1996, the MAPIC Awards reward excellence, innovation and creativity in the retail real estate industry. Since their inception, more than 1,600 submissions have been considered, with 118 trophies handed out to the lucky winners from 40 countries. This year, the finalists will find out who has been crowned on Thursday, November 20 at the prestigious Grand Hyatt Cannes Hotel Martinez. The winners will be revealed during the gala dinner starting at 19.30. There are 10 awards in the competition: • Best Fashion & Footwear Retail Concept (sponsored by Thor Equities) • Best Food & Beverage Retail Concept • Best Retail Global Expansion • Best Retail Digital Strategy • Best Franchise Partner (in partnership with Franchise Expo Paris and Federation

Francaise de la Franchise) • Most Innovative Shopping Centre (less than 100,000 sq m) • Most Innovative Shopping Centre (more than 100,000 sq m) • Best Factory Outlet Centre • Best Refurbished Shopping Centre • Best Retail-led Urban Regeneration Open to all MAPIC participants, the traditional MAPIC party will be held in the same venue from 22.30. The event offers delegates the opportunity to relax, mingle and network with key real estate professionals and retailers in a vibrant social atmosphere complete with cocktails, music and a variety of entertainment. BOOK YOUR SEATS NOW Please contact MAPIC Awards at: mapic.awards@reedmidem.com

preview magazine I October 2014 I www.mapic.com

PRES FRED Directe directo Altarea

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Awards

MAPIC AWARDS 2014

Success stories from the

MAPIC Awards Many companies have received the accolade of a MAPIC Award over the years. But just what does it mean for the recipients and how have they grown since? Mark Faithfull spoke to two previous winners

preview magazine I October 2014 I www.mapic.com

Awards MAPIC AWARD WINNER 2013 destinations for shoppers. Primark Fashion retailer Primark scooped the award for best global expansion in 2013, after mirroring its domestic success in Ireland and the UK across a number of mainland European markets, notably Spain, Portugal, The Netherlands, Belgium, Germany, Austria and France. Despite fierce competition in this sector, Primark’s blend of value pricing, on-trend fashions and large footprint superstores with up-to-date young and modern design has easily translated across markets —making it one of the most coveted retail tenants among shopping centre landlords — and group director of property Tom Meager says that it was extremely rewarding to receive recognition from the European industry at MAPIC last year. “Our European expansion is gathering pace and the success we have enjoyed in each of the markets has been phenomenal, which for us has really vindicated the model we have built the business on,” says Meager. “It was a tremendous honour for the retail and real estate industries to recognise and reward both the success and effort throughout our business that has gone into making us such a successful pan-European retailer. The close bond between retail and property has never been more important and I hope we are playing our own significant part in keeping shopping centres vibrant and essential

Winning a MAPIC award can only help raise our profile further and enable us to showcase our unique store concept to new landlords.” Meager, who has also spent the last year chairing the UK’s largest property trade body, the British Council of Shopping Centres, in the role of president said: “Since capturing the coveted MAPIC award, Primark has not only continued with further European expansion but recently also announced its first store in the US, which will be located in downtown Boston. “The US offers tremendous opportunities and we believe we have a proposition that will really appeal to the consumer there.” He added: “Of course we also fully recognise the challenges of entering a dynamic market such as the US and winning the acclaim of our international peers at MAPIC has meant a certain amount of US property industry recognition ahead of our launch into this new market”.

preview magazine I October 2014 I www.mapic.com

Tom Meager

wi Lo ly tab no qu It UK Lo ing M A hib Aw We en an Pe “W es ret

Feature MAPIC AWARD WINNER 2009 Westfield London So much has happened at Westfield in Europe since it became a MAPIC Award winner that the recognition for its landmark Westfield London scheme in the west of London feels a surprisingly long time ago. The company arrived in the UK after establishing itself in Australia and the US and made bold pronouncements about what it would achieve in terms of the quality and scale of its schemes. It developed, acquired and subsequently sold a number of UK schemes but it is its two London projects — Westfield London and Westfield Stratford City — and its upcoming joint ventures in Croydon, to the south of London, and Milan, for which it is best known. A long-term participant at MAPIC, Westfield will be an exhibitor for the first time this year and in 2009 the MAPIC Awards judges acknowledged what had been achieved with Westfield London, which set a benchmark for high quality environments, extensive leisure and food and beverage offers and of integrating luxury into a European mall. Peter Miller, chief operating officer, Westfield Europe, said: “Westfield is a long-term partner of MAPIC and recognises the ability of this event to attract the best international retailers. Westfield has an exciting US$11.6bn global retail

development pipeline and this year will be showcasing its flagship developments Westfield London, Milan, Croydon, Stratford and the World Trade Center in New York. Westfield was very proud to win a MAPIC Award and will strive for similar achievements for future developments.”

preview magazine I October 2014 I www.mapic.com

Peter Miller

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PROGRAMME OF CONFERENCES & EVENTS

19-21 NOVEMBER 2014 PALAIS DES FESTIVALS CANNES, FRANCE

AS OF 2 OCTOBER 2014, MAY BE SUBJECT TO CHANGE

MAPIC’s conference programme welcomes over 100 retail property experts to the stage to share essential insight into retail real estate opportunities, concepts, strategies and trends.

MEET SOME OF THEM

Alain AFFLELOU

Diego BARONCHELLI

Senior Director Retail, The North Face and Property Director O&AS VF, The North Face / VFC (Switzerland)

Mario BAUER

Alexandre LOPES DIAS

CEO, Vapiano Franchising International (Luxemburg)

Retail Director, General Shopping Brasil SA (Brazil)

President of the Supervisory Board, Alain Afflelou (France)

Ian DUDLEY

Group Property Director, Karen Millen and Aurora (UK)

Sandeep MATHRANI CEO, General Growth Properties Inc. (USA)

Fatima OUALI

Sohail SHAIKH

CEO, Klépierre (France)

Christophe PEETERS

Vice president, Global Business & Real Estate development, Pinkberry (USA)

Director of International Development, Mothercare PLC (UK)

Laurent MOREL

Deputy Mayor City of Ghent (Belgium)

Bulat SHAKIROV

CEO, Praktika Development, RCSC Board Member (Russia)

Guillaume RIO

Technology Trends Manager, Echangeur by LaSer (France)

Mehmet ŞIMŞEK Minister of Finance, (Turkey)

Director Business Development, Real Estate & Construction, HEMA (The Netherlands)

Chief Global Digital Officer, Westfield Labs (USA)

Ryan PATEL

International Project Manager, Universcience (France)

Emile RUEMPOL

Kevin MCKENZIE

Klaus STRIEBICH

Managing Director Leasing, ECE Projektmanagement GmBH & Co. KG (Germany)

Alexey VANCHUGOV Partner, Accent Real Estate Investment, Accent Group (Russia)

Ben VAN BERKEL Co-founder/Principal Architect, UNStudio (The Netherlands)

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Henrike WALDBURG Head of Investment Management Shopping Centre, Union Investment Real Estate GmbH (Germany)

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SESSIONS’ HIGHLIGHTS: SAVE THE DATE! WEDNESDAY 19 NOVEMBER BACK TO THE FUTURE :WHAT’S IN STORE FOR THE FUTURE OF RETAIL Oxford room at 10.00, Palais -1

“20 YEARS BACK - 20 YEARS FORWARD” MASTERMINDS CONFERENCE THE SHOPPING CENTRES’ PERSPECTIVES Oxford room at 15.30, Palais -1

THE OMNI-CHANNEL REVOLUTION IN RETAIL: STRATEGIES TO DRIVE GROWTH THROUGH MULTIPLE CHANNELS

Oxford room, 16.30, Palais -1

THURSDAY 20 NOVEMBER “20 YEARS BACK - 20 YEARS FORWARD” MASTERMINDS CONFERENCE THE RETAILERS’ PERSPECTIVES Oxford room at 11.00, Palais -1

RETAILTAINMENT AREA Riviera 7

MATCHMAKING EVENTS: SOURCE NEW PROJECTS AND CONCEPTS, MAKE FAST CONNEXIONS!

MAPIC PITCHING SESSIONS Spark deals, foster partnerships and explore opportunities as top retailers and property developers (selected by our jury) present their exciting new projects and ideas during a series of unique 7-minute presentations, each followed by an informal networking coffee break. Palais -1, Wednesday 11.00-13.00 & Thursday, 14.00-16.00

MAPIC SPEED MATCHINGS Pre-registration required Join your future partners in one place, at one time and launch new opportunities from a handshake with the right peer. From table to table during 45 minutes, help accelerate deals with 10 potential partners during effi cient 3-minute face-to-face speed meetings: - Investors meet developers - Master Franchisees meet retailers - City centres & shopping centres owners and managers meet retailers. Madison room – Riviera 8

MAPIC DIGITAL SUMMIT By invitation only Ma jestic Hotel Third Digital Summit to explore future of omni-channel retailing and the changing consumer 3rd edition of Digital Summit on the eve of the main event. This initiative once again brings together experts from a broad range of disciplines to debate the core issues affecting digital and bricks-andmortar retail. They will debate how new consumers’ usage & habits will impact the physical store and how to capture the unpredictable and more demanding consumer. In partnership with CBRE, Echangeur by Laser Convergences-CVL and Powering.

03/10/2014 12:04

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PROGRAMME OF CONFERENCES & EVENTS AS OF 2 OCTOBER 2014, MAY BE SUBJECT TO CHANGE

TUESDAY 18 NOVEMBER MAJESTIC HOTEL

Digital Lunch & Digital Summit

12 : 45 17 : 30

MAPIC Opening Cocktail

19 : 30

Industry Partners: CBRE, Convergences-CVL, Echangeur by Laser & Powering By invitation only

Platinum sponsor: Thor Equities Open to all MAPIC delegates

WEDNESDAY 19 NOVEMBER OXFORD ROOM, PALAIS -1

CHAMPS-ÉLYSÉES ROOM, PALAIS -1

8 : 00 9 : 00

Welcome Meeting

8 : 00 9 : 00

Welcome Meeting

Pre-registration required

10 : 00 10 : 45

Back to the future what’s in store for the future of retail

10 : 00 10 : 45

Russian business in the face of new challenges

11 : 00 12 : 00

Co-organiser: Impress Media

USA focus

Pitching Shopping Centres

Co-organiser and sponsor: CBRE USA

Making airport and 12 : 00 station retail personal 12 : 45 Co-organiser: Frontier Magazine

12 : 00 13 : 00

Culture & shopping

14 : 00 15 : 15

Co-organiser: Lord Culture

14 : 30 15 : 15

AGORA, PALAIS -1

MAPIC INNOVATION FORUM, RIVIERA 8

Discover 3 shopping centre projects

11 : 00 11 : 45

Pinel’s commercial lease status in France: back to habeas corpus

10 : 00 12 : 30

A new session every 30 minutes

Co-organiser: H&B Associés

10 : 00 13 : 00

Client sessions A new session every hour

16 : 30 17 : 15

Masterminds conference the Shopping Centres’ Perspective

The omni-channel revolution in retail: Strategies to drive growth through multiple channels

15 : 30 16 : 15

How consumers shop Co-organiser : CBRE

14 : 30 15 : 30

17 : 30 18 : 15

Outlet expansion: the way to extend your product’s life and performance Co-organiser: Neinver

18 : 30 22 : 00

19 : 00 23 : 00

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Retail in Russia: Innovations that work Co-organiser: Kommersant

Speed Matching Investors / developers

16 : 00 16 : 30

Société des Transports of Brussels: Want to expand your business in Brussels?

17 : 00 18 : 00

New retailer’s cocktail

Shopping centres: survival of the fittest 16 : 30 in the e-commerce 17 : 15 environment

17 : 30 18 : 15

14 : 30 16 : 30

A new session every 30 minutes

MAPIC Open Stage winner: 14 : 30 Convert anonymous visitors into loyal 15 : 00 members on your shopping center

15 : 00 16 : 00

MAPIC Digital Summit outcomes

Co-organiser: Cushman & Wakefield

Co-organiser: RegioPlan

A new session every 30 minutes

Discover 5 retail concepts

by Mall Connect

15 : 30 16 : 15

10 : 00 12 : 30

Pitching Retail Concepts

Pre-registration required

“ 20 years back 20 years forward”

RETAILTAINMENT ROOM, RIVIERA 7

Pre-registration required

Co-organiser: RLI

11 : 00 12 : 00

MADISON ROOM, RIVIERA 8

The city centre manager: a key partner to succeed in high street retail

By invitation only

In partnership with AMCV, British Bids and TCM Italy

Russian Collection Dinner Ambassor Hall, Palais des Festivals Organiser: Impress Media By invitation only

Turkey Investors Networking Dinner Majestic Hotel Co-organiser: AYD - Sponsors: ECE & Multi By invitation only

14 : 00 18 : 00

Client sessions A new session every hour

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SPECIFIC & NEW SEGMENTS

RETAIL INNOVATION MAPIC 2Oth ANNIVERSARY

MAPIC NETWORKING & MATCHMAKING EVENTS CLIENT CONFERENCES & EVENTS

GATEWAYS TO NEW TERRITORIES

19-21 NOVEMBER 2014 CANNES, FRANCE

THURSDAY 20 NOVEMBER OXFORD ROOM, PALAIS -1

CHAMPS-ÉLYSÉES ROOM, PALAIS -1

MADISON ROOM, RIVIERA 8

RETAILTAINMENT ROOM, RIVIERA 7

Majestic Hotel Platinum sponsor: Thor Equities - Gold sponsors: Acadia and GGP By invitation only

Russian Breakfast

8 : 30 11 : 30

Majestic Hotel Organiser : Impress Media By invitation only

The Ecommerce Battle Ground: How can traditional retailers win the second round? Co-organiser: CBRE

Keynote Address by Mehmet Şimşek, 9 : 30 Minister of Finance, Turkey 10 : 15 Direct Investment Potentials in Turkey Challenge on doing business in Brazil Cases from international 10 : 15 11 : 00 retailers and suggested approach Co-organiser : JLL

“ 20 years back 11 : 00 20 years forward” 11 : 45 Masterminds Conference the Retailers’ Perspective

With the surge in online retail and Europe moving East where 11 : 15 12 : 00 are value, opportunity and risk now?

10 : 30 11 : 30

China: growth opportunities for international retailers

Bridging the Atlantic Growing Retail Chains In North America:

Speed Matching City Centers & Shopping Centers Owners and Managers/Retailers

10 : 00 12 : 30

Pre-registration required

Co-organiser: Property Investor Europe

12 : 00 12 : 45

AGORA, PALAIS -1

USA Breakfast

8 : 00 9 : 30

10 : 00 10 : 45

MAPIC INNOVATION FORUM, RIVIERA 8

11 : 30 12 : 30

A new session every 30 minutes

10 : 00 13 : 00

Client sessions A new session every hour

10 : 00 12 : 30

A new session every 30 minutes

14 : 30 16 : 30

A new session every 30 minutes

Speed Matching Master Franchisees / Retailers Pre-registration required

12 : 15 A Conversation with the Pros 13 : 00 Co-organiser:

SiteWorks Retail Real Estate Platinum sponsor: Thor Equities Gold sponsors: Acadia and GGP

14 : 00 15 : 00

15 : 00 16 : 00

16 : 00 17 : 15

Pitching Shopping Centres Discover 5 shopping centre projects

Pitching Retail Concepts

14 : 30 15 : 15

Discover 4 retail concepts

CEEQA@MAPIC Insight Summit

15 : 30 16 : 15

The Future of Fashion Retail in New Europe Real Estate Sponsor: CEEQA

17 : 15 18 : 45

19 : 30 22 : 30

CEEQA@MAPIC Cocktail reception

17 : 00 18 : 30

14 : 00 14 : 45

Retail in Japan: overview and key trends Secrets of the Visitor Attraction World: How to lengthen stay and increase spending Co-organiser: BRC Imagination Arts

15 : 00 17 : 00

Pitchings Travel Retail

14 : 30 17 : 30

A new session every 30 minutes

Co-organiser: Russian Council of Shopping Centres

Sustainable Retailing 15 : 00 with the Innovative Strategies of 15 : 45 Turkish Brands Organiser: BMD of Turkey

15 : 45 18 : 00

Retail Real Estate in Italy: Welcome back!

Shopping Centers in Transport hubs in Russia

Client sessions A new session every hour

Co-organisers: CNCC Italy & Quotidiano Immobiliare

Sponsor:CEEQA

MAPIC Awards Gala Dinner And Prize-giving Grand Hyatt Cannes Hotel Martinez Book a seat/a table for the evening

MAPIC Party 22 : 30

Grand Hyatt Cannes Hotel Martinez Platinum sponsor: Thor Equities Open to all MAPIC delegates

FRIDAY 21 NOVEMBER AGORA, PALAIS -1 10 : 30 11 : 30

MAPIC Final Press Conference

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Feature

Metro Group has pioneered innovation with Future Store RELATED CONFERENCES DURING MAPIC “20 years back - 20 years forward” Masterminds conference The Shopping Centres’ Perspective Wednesday 19 November 15.30-16.15 Oxford Room, Palais -1 “20 years back - 20 years forward” Masterminds Conference The Retailers’ Perspective Thursday 20 November 11.00-11.45 Oxford Room, Palais -1

RETAIL AND DEVELOPMENT TRENDS

The retail and real estate that shaped the world Despite the seemingly omnipresent nature of the major retail brands, true internationalisation is a comparatively recent phenomenon. MAPIC has been the showcase for many of the most influential retail expansions and innovative schemes and Mark Faithfull picks out a few of the gamechangers during the MAPIC years

N 1995, the year of MAPIC’s inception, international grocery was still in its infancy. That year, however, MAPIC regular Carrefour opened its first hypermarkets in China and Tesco entered the Hungarian market through the acquisition of S-Market’s 26 stores in the north-west of Hungary

to create its first international business. In July 1995, Amazon began operations and sold its first book on Amazon.com: Douglas Hofstadter’s Fluid Concepts And Creative Analogies: Computer Models Of The Fundamental Mechanisms Of Thought. In the same year, online auction website eBay was

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Feature founded as AuctionWeb in San Jose, California, by French-born Iranian computer programmer Pierre Omidyar. By 1997, the site was hosting two million auctions, compared with 250,000 during the whole of 1996 — the same year that Walmart opened its first stores in China and, a year later, celebrated its first $100bn sales year. In 1999, Walmart entered the UK with the acquisition of Asda. When MAPIC made its debut in 1995, designer outlets were all but unknown in Europe, so it is no surprise that it was American Scott Malkin who backed Bicester Village in the UK. This set the benchmark for the premium outlets that have proliferated across the European continent, notably in the sector’s outlet-packed home of Troyes, France, and the pipelines of Neinver and McArthurGlen. In 1996, CentrO in Oberhausen was the first mega-mall in Germany and, indeed, the US approach was evident in a number of the other key schemes of the era, such as the 1998 opening of the Trafford Centre in Manchester and the 1999 opening of Lend Lease’s Bluewater in the UK’s South East.

Walmart’s international ambition was boosted by entry into the UK with the acquisition of Asda

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Limited Edition. “8th Avenue and 38th Street, New York” by Christopher Woodcock

Feature

V ISI T

L UT RMIVIEARAS7

Ironically, at the same

Jeff Bezos, head of digital retail pioneer time, the US was opening Amazon.com the last of its malls to enter

the top 20 by size — the 200,000 sq m Palisades Center in West Nyack, New York — and a mall that would counter this approach, Easton Town Center in Columbus, Ohio. This was arguably the first ‘lifestyle’ mall, mirroring the indoor/outdoor nature of traditional town centres and created as a community space as well as a trading centre. The world was certainly changing and in 1998 Google incorporated and launched, setting off on its path to becoming the most-used search engine in the world. THE NEW MILLENNIUM In the new millennium, H&M opened its first US store on Fifth Avenue in New York while, on 19 May 2001, Apple opened the first official Apple Retail Stores in Virginia and California. Part of the driving force for this was Steve Jobs’ dissatisfaction with selling through third-party retailers. In Europe’s east, larger schemes did not emerge until 2002, when MEGA Teply Stan in Moscow opened, to be followed in 2004 by MEGA Khimki, Moscow and, in 2006, MEGA Belaya Dacha, Moscow — all three of which are in Europe’s top 20 malls in terms of size. Such was the maturity of malls in Europe that 2003 saw the opening of a scheme to replace its namesake eyesore in Birmingham UK — Hammerson’s Bullring, complete with iconic Selfridges department store. In Madrid, inspired by ambitious plans for Mall of the Emirates, General Mills opened Xanadu outside the city, complete with indoor skiing. And a year later, Westfield pioneered an indoor/outdoor mall at Bondi Junction in Sydney, created by refurbishing the existing schemes on the site. Over in Europe, 2003 saw Ahold — one of the early pioneers of global retail — rocked by a financial-reporting scandal. As a result, the Dutch retailer announced that net earnings and earnings per share would be significantly lower than previously indicated for fiscal 2002, and that the financial statements for fiscal 2000 and 2001 would be restated. Anders Moberg was appointed president and CEO of Ahold and consolidated the company around regional hubs, creating the global model for his grocery rivals in the process. In 2004, with retailers now firmly established as a significant presence at MAPIC, the Marks & Spencer store on Paris’ Boulevard Haussmann was transformed into Lafayette Maison, following the latter’s purchase of all M&S stores in France in 2001. Since then, Galeries Lafayette has itself expanded beyond France at schemes showcased in Cannes. In the same year, social-network site Facebook launched and the 200th store for another MAPIC stalwart IKEA opened in New Haven in the US. It was 2005 when the National Retail Federation (NRF) coined the phrase ‘Cyber Monday’ for the online sales rush on the Monday after Thanksgiving in the US. A year later, in 2006, Twitter launched and, in 2007, the iPhone was introduced at Macworld, an event that arguably marked the start of the mobile-shopping revolution.

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Feature The era was also beginning to show the changing balance of retail development, with the 2005 opening of the Mall of the Emirates and the 2008 opening of Dubai Mall, both in Dubai, setting new standards in grandiose leisure, offering indoor skiing and a giant aquarium respectively. Meanwhile, the 2006 and 2007 debut of Kanyon in Istanbul and Zlote Tarasy in Warsaw, both designed by US architect Jerde Partnership, demonstrated the power of great architecture when brought to a retail centre. In 2007, Puerto Venecia also opened, although this was the big-box first phase, which preceded the 2012 opening of the leisure-filled retail centre in Zaragoza, Spain. This was the year that luxury truly entered European shopping centres — having long been established in Asia — with Istinye Park in Turkey arguably the catalyst, followed a year later by Westfield London. Another huge project — Golden Babylon Rostokino, Moscow — opened in Russia in 2009, and further large schemes are set to follow in the Russian capital this year and next. By now, fashion retail had taken over from grocery to drive internationalisation. In 2008, Inditex opened its 4,000th store in the Ginza district of Tokyo, while Metro Group opened its Future Store in the North RhineWestphalian town of Toenisvorst to test stateof-the-art technologies and concepts. THE NEW ERA: FROM CRISIS TO EXPANSION By 2008, the focus was back on London — and Australian developers — with the opening of Westfield London, to be followed in 2011 by Westfield Stratford. Milan will see the next European Westfield mega-mall. Also in 2011, Boxpark opened in London’s hip Shoreditch area, marketed as Europe’s first pop-up mall. Also reflecting this quirky change in emphasis is the food-led Mood scheme in Stockholm, which opened in 2012, and Bikini Berlin, which opened last year and mirrors the urban lifestyle vibe. But of course these were developed in difficult times. By the end of 2008, the world was descending into a financial crisis that slowed many growth plans — and, indeed, not all international expansion strategies went as intended. Although in 2010, Best Buy-branded superstores opened in the UK, with plans for up to 200 stores in Europe by 2013, on November 6, 2011, partner Carphone Warehouse announced its intention to close

its 11 Best Buy big-box format stores in the UK. In January 2012, the Best Buy Europe joint venture was discontinued. As finding partners and identifying new schemes became a core element of retail growth in Cannes, MAPIC also witnessed strides beyond Europe, with the 2011 acquisition of Massmart in South Africa by Walmart meaning it surpassed 10,000 retail units around the world and turned the spotlight on the fledgling opportunities to be had in subSaharan Africa. In 2012, India announced the repeal of FDI for multi-brand stores — although the implementation of this legislation remains mired in uncertainty — while many of MAPIC’s retail participants had already expanded to the Middle East and China. In April of 2014, Primark announced its plans to begin opening stores in the US. The first store is set to be a 7,000 sq m location in Boston, Massachusetts, due to open by the end of 2015. Last year, Land Securities opened Trinity Leeds as arguably Europe’s most digitally integrated mall — although ECE has two future lab projects in established malls that could challenge Trinity Leeds in this respect. Unibail-Rodamco’s Aeroville, Paris meanwhile, can lay claim to be the most developed airport-side mall. Also opening in France this year was Hammerson’s L es Terraces du Port, the culmination of Marseille’s long-held efforts to regenerate its core. A DISRUPTED FUTURE Quite when the digital revolution began to impact real estate is of course debatable but the real rise of e-commerce coincided with the economic crash and the rapid contraction of store growth plans and the availability of investment monies. This confluence also somewhat confused the picture in terms of what was driving change. Yet few now doubt the deep influence of online retail and in particular of mobile connectivity. Daniel Bernard, the former CEO of Carrefour, called the change as “deeply significant to retail locations as the widespread adoption of the car”. O m n i- cha n nel ret a i l now

influences everything and has become a major part of MAPIC discussions, inspiring new areas of the event and this year for the third time recognised with a Digital Summit on the day before the exhibition opens. The first part of the next 20 MAPIC years will undoubtedly be spent watching elements such as i-beacons, wi-fi and 4G, click and collect and the merger of digital and physical being played out across the world’s retail locations. At the same time many parts of the world have shifted towards an experience economy, which has in turn seen a huge rise in food and leisure within retail destinations and the blurring of the lines between retail and entertainment, again reflected in MAPIC’s exhibitors, features and conferences. The future, now looking far brighter than during the darkest days of the global downturn, promises disruption — in consumer behaviour, investment patterns, locational shifts, globalisation, leadership and brand identity against a backdrop of social media scrutiny. It is a great time to be at MAPIC.

Apple’s iPhone, an important driver of the mobile-shopping revolution

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Feature GLOBAL RETAIL

All the worldâ&#x20AC;&#x2122;s a store The first MAPIC was dominated by Western Europeâ&#x20AC;&#x2122;s big five but in the intervening 20 years Cannes has become the central meeting point for a globalised retail industry, with representatives attending from around the world. Mark Faithfull reports

T IS tempting to use MAPIC purely as the barometer of geographical retail ascendancy and indeed it is ideally placed to provide just such a service. But to do so would be too simple. Long standing attendees in Cannes will recall the years when the booming health of certain markets was particularly apparent: the Middle East, Russia, Turkey and Central and Eastern Europe are just some examples. Now rubbing shoulders with those regions, the mature Western European nations and growing presences from further afield are simply what visitors expect from the event. Other changes have been far softer, yet just as significant. In the beginning MAPIC was a traditional retail real estate fair, at a time when the retail real estate industry itself had very set parameters. Fast forward 20 years and MAPIC 2014 will include its third Digital Summit on innovation and digital in retail, host F&B operators and leisure, focus on transport hubs and continue to dedicate areas within the show to innovation from a broad spectrum of businesses. Likewise, visitors will also arrive from all of those disciplines. Mirroring the retail destinations and tenants it brings together, MAPIC is now a multi-faceted event curating the diverse companies and concepts that occupy malls, high streets, retail parks and designer outlets around the world. In compiling our annual tour of a few of the markets and companies that will feature at this yearâ&#x20AC;&#x2122;s MAPIC, national divisions become increasingly blurred. The following features are punctuated by examples of Sovereign Wealth investors, Australian developers, pan-European co-ventures, Middle Eastern franchisees operating in the CEE, British retailers opening online and with stores across Europe and the Spanish head of an Irish retailer spearheading US market entry. Such stories encapsulate why in November once again the world will come together in Cannes.

Fashion retailers like Benetton have stepped out internationally preview magazine I October 2014 I www.mapic.com

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Feature THE GLOBALISATION OF RETAIL

A number of factors are combining to push retail brands out of their home markets. But while the world of cross-border retail is full of opportunities, it is not without its risks. Graham Parker looks at some of the brands that are successful transitioning into global players

Any time, any place, anywhere T

HE SHOCKWAVES of the 2008 financial crash are finally subsiding. Those retailers that have survived are leaner and fitter and many now see international diversification as a way of insulating themselves against future financial shocks. At the same time, the surge in online retail means that traditional borders no longer apply: brands can be accessed anywhere and true omni-channel retailers have to be prepared to do business like the Martini of old — any time, any place, anywhere. Recent research from CBRE and JLL has plotted the increasing pace of international expansion among retailers. According to CBRE, the number of retailers with largescale expansion plans has increased dramatically in 2014, reflecting renewed confidence in

“An upturn in consumer confidence and renewed vigour in the global retailer community has put large-scale expansion firmly back on the agenda” Peter Gold CBRE

the global retail market. More than one third of the retailers surveyed by CBRE plan to expand their store portfolio by 40 stores or more over the next 12 months. Of those retailers preview magazine I October 2014 I www.mapic.com

looking to open 40 stores or more, mid-range fashion and value fashion are the most active sectors, each accounting for one third of the total. Peter Gold, CBRE’s head of cross-border EMEA retail, explains: “An upturn in consumer confidence and renewed vigour in the global retailer community has put large-scale expansion firmly back on the agenda. While the pace of international growth has slowed in recent years, retailers are making clear their intention to materially invest in their store networks throughout 2014. Their preference for a wide range of markets highlights the continued importance of cross-border growth.” JLL’s head of EMEA retail research and consulting, James Brown, says a number of factors are driving this new expansionary mood among retailers, the biggest of which is

Feature LINDEX: Opening in London ‘a great day in our history’ SCANDINAVIAN fashion brand Lindex, part of the Finnish-listed Stockmann Group, will open its first store in London — at the Westfield Stratford City shopping centre— in the second quarter of 2015, along with a local distribution centre. A local online shopping site for the fashion chain has already been launched. The Westfield investment is a key step in the Lindex brand’s international expansion strategy. Since starting up in Alingsas, Sweden, in 1954, Lindex has become one of the leading fashion chains in northern Europe. In recent years, it has undergone rapid expansion and currently has more than 470 stores in 16 markets. “This is a great day in our history,” says CEO Ingvar Larsson. “We have longed to offer our affordable and inspiring fashion in an exciting city like London — one of the world’s most attractive shopping destinations. We strive to provide a world-class fashion experience, both in-store and online. This includes everything, from interior decoration and service level to the fashion we offer and how we present it. Having a good store location along with an online store will allow us to reach a wide range of customers from day one.” A high level of accessibility is a vital factor in establishing the brand in a new market. Having a local distribution centre in place ensures stock availability in store can be quickly replenished. It also enables the Swedish retailer to serve its UK customers via lindex.com.

Lindex enters the UK market in 2015

growth of online retail. economic growth. “The “The internet has cerglobal economic back- “The internet has tainly made entering new drop, and the burgeoning emerging and frontier certainly made entering markets far easier than previously, and the opeconomies in particu- new markets far easier portunity to capitalise on lar, are shaping retailer than previously, and these growth markets is movements and strate- the opportunity to real,” Brown says. gies,” he adds. “The ecoSo where are the expannomic recovery is un- capitalise on these sionist retailers comdoubtedly multi-speed in growth markets is real” ing from? According to nature. However, recent James Brown CBRE’s research, US repositive news from two JLL tailers have the most exof the core markets — tensive large-scale exthe upgrade of the UK’s pansion plans, with almost half — 47% — of prospects by the IMF and the 4% growth those surveyed looking to open more than 40 coming out of the US in the second quarter — stores in 2014. And due to the maturity and suggests that growth in the developed world is competitiveness of their domestic markets, gaining pace.” many North American retailers are seeking The second factor identified by JLL’s to grow their global businesses. Redefining Retail Places research is the

AMF HELPS TAKE THE STRAIN LANDLORDS have a role to play in helping retailers to expand across borders, according to Karolin Forsling, chief development officer at Sweden’s AMF Fastigheter. She reports that the company has been working hard to attract global brands into the Mood development and AMF’s existing centres in Stockholm city centre. “The city is growing at 8% per annum and has sophisticated, well-travelled shoppers,” Forsling says. At the same time, international retailers have found it difficult to secure sites in the city centre to reach these shoppers because the market is so tight. As a result many — including Michael Kors, Victoria’s Secret and River Island — have been trading online and are only now moving into physical space. AMF has started offering brands trial stores in its five city-centre schemes. “They each have a different catchment,” Forsling explains. “Retailers are able to enter the market in all five at once and then choose the one that suits them best.” She adds: “We’re happy to work with franchises but, in Sweden, brands have found it difficult to find partners. So as a

Sweden offers ‘sophisticated, well-travelled shoppers’ landlord, we are taking over that partnership role, helping brands to understand the Swedish consumer. Retailers are sometimes surprised to see a developer owned by a pension fund sitting on the same side of the table [as them], but we both want to make money. We both want to create value.”

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Feature CBRE’s research found that Germany is by far the most attractive global retail market, ahead of France, the UK, Austria and China. Global retailers are attracted to Germany because it offers the opportunity to target 20 large cities in one market. More than 40% of retailers globally plan to open a store in Germany in 2014, and this figure increases to 70% when taking into account European retailers only. Germany is also the second most important target for US retailers. To capitalise on this trend, the Italian-based consultancy Larry Smith Consulting has formed an alliance under the United Partners (UP) brand with a number of like-minded independent brokerages in Europe, including

PRIMARK: Fast forward with fast fashion

FRANCE is a particular focus for Primark, one of the fastest growing clothing retailers in Europe. After debuting in Marseille in December 2013, it has recently opened its fifth French store in the Parisian suburb of Creteil. It will be following this with stores in Paris’ O’Parinor shopping centre and La Bongarde in Villeneuve-la-Garenne. Headquartered in Ireland, where it has 38 stores, Primark already operates in the UK (161 stores), Spain (35), Germany (11), Austria (three) and Belgium (one). The fashion subsidiary of the Associated British Foods conglomerate, which has succeeded by offering fast fashion at affordable prices, has become a key driver of footfall for shopping centres across Europe. Primark underlined the strength of its ambitions earlier this year when it struck a deal to buy the 23,000 sq m Pavilions in Birmingham, where it plans to convert half the shopping centre into a flagship store and reletting the other half. And it has recently revealed plans to open its first North American store, taking 7,000 sq m in Boston, Massachusetts, which will open in the second quarter of 2015.

The new food concept for IKEA’s MEGA Centres

FOOD OFFERS BOOST RETAIL SHOPPING centres across the developed world are looking to increase their catering offer. At a time when vacancy levels are stubbornly high and mainstream retailers are reluctant to take new stores, centre owners have learned that catering operators are still in the market for new space. And from a consumer point of view, a quality and varied catering offer can act as an important point of difference for a shopping centre. Indeed, research has shown that shoppers who stop to eat in a centre end up staying longer and spending more. Among the restaurant brands to be showcased at MAPIC is the Italian casual-dining operator Cigierre, which operates a network of 130 directly owned or franchised restaurants under the Old Wild West, Wiener Haus, Arabian Kebab and Kukkuma brands in malls and multiplex cinemas. Another fast-growing Italian brand is Alice Pizza. Founded in Rome in October 1990 by Italian entrepreneur Giovanni Domenico, it has grown across Italy by opening franchised stores, predominantly in shopping centres. At MAPIC, the company will be looking for partners to help it take its next step into new markets. Similarly Hanswurst, launched in Aachen in 2011 to sell a wide selection of traditional German sausages, is using MAPIC to drive its expansion plans. Pret A Manger, the popular UK-based sandwich chain, is attending MAPIC for the first time as it increases its international focus. From a standing start in 1986, its emphasis on fresh produce and

fast service in convenient locations has helped it to develop into a business generating €565m in annual turnover. Unlike many of its rivals, Pret A Manger does not franchise. But this has not hampered its growth and it now has 289 company stores in the UK, 50 in New York, Washington DC, Boston and Chicago, 14 in Hong Kong and 10 in Paris. IKEA Shopping Centres Russia has developed new food court concepts and undertaken mall extensions at its MEGA branded shopping centres in order to create unique leisure spaces for visitors, particularly families, where they can gather and socialise. For example, at Moscow’s MEGA Teply Stan, the current food court is being upgraded and divided into different zones such as family, youngsters and urban to suit the needs of individual customer groups. In addition, the food court’s new design is being based on a piazza, which will become a meeting point for social interaction. In addition, an upgrade at Moscow’s MEGA Khimki will incorporate a fresh food market, which along with the mall’s integration with Moscow’s light railway, will make it an attractive leisure destination for the local community. Armin Michaely, IKEA Shopping Centres Russia’s general director, says: “A key goal is to deliver the best choice and quality for our customers, while making food areas destinations for socialising and relaxing, and an attraction in themselves.”

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Feature the UK’s Lunson Mitchenall, with the aim of easing the process for global retailers looking to set up in Europe. UP’s US principal, Andrea Abrams, detects a changing mood among US retailers: “They all used to ask, ‘We have such a big country, so why should we go to Latin America or Europe when we have so much growth at home?’. But the internet has forced retailers to become more sophisticated about tracking who’s buying and who’s talking about their products. They can’t stop what’s happening online or where they have a following of customers, and that’s why you’re seeing so many brands expanding. Some brands with only 20 US stores are already going overseas. Is London now the next step ahead of the Mid West?” she says. Abrams’ London-based colleague, Lunson Mitchenall managing director Robert Wingrave, believes the changing ownership of retail businesses is also driving the pace of international expansion. “More retail businesses are now in the hands of private equity,” he observes. “And these owners have very different perspectives.” Mark Burlton, global head of cross-border retail at Cushman & Wakefield, has spent time on the tenant side as Ralph Lauren’s head of European real estate and on the landlord side as head of leasing for the UK and France at McArthurGlen. From this perspective, he agrees with Abrams’ observation about the role that the internet is playing in disseminating brands worldwide. “Omnichannel is making it easier to test a brand abroad to see whether it resonates with the consumer,” he says. “Retailers are better placed than ever to know where their customer is.” Burlton also sees a new sophistication among US retailers entering Europe: “They’ve learned from the mistakes of the past. New entrants like J Crew realise they can trade with just 10 stores rather than the 50 that Hilfiger tried a decade ago.” JLL’s Brown echoes this, and believes that sophisticated retailers are now looking at individual cities rather than national markets: “International retailers’ strategies are increasingly focusing on global cities rather than countries, as growth typically favours the major cities, which also benefit from strength of demographics. This city-led expansion strategy will span core, growth and recovery markets and, despite the obvious challenges with international expansion, for many retailers the chance to ‘chase the spend’ will be hard to ignore.”

TALLY WEiJL: Thirty-nine countries and counting TALLY WEiJL, the family-owned Swiss young-womenswear brand, was launched in the 1980s and today generates sales of €375m from 760 stores in 39 countries. Roughly half of its stores are in the hands of franchise partners. The company will be using MAPIC to source locations for new company stores and identify potential franchisees in its core markets of Austria, France, Estonia, Germany and Turkey, as well as further afield.

MIROGLIO GROUP: Taking Italian style to the world LEADING Italian fashion and textile company Miroglio Group has an annual production of around 18 million garments. Its retail arm, Miroglio Fashion, owns 49 companies in 34 countries, along with more than 2,000 single-branded stores. In April 2014, Miroglio opened a 600 sq m flagship store in Milan. The Miroglio Piazza Della Scala aims to create a unique retail environment to showcase Miroglio brands, which include the Caractere and Elena Miro collections. At the same time, it is looking to drive growth in new emerging markets through acquisitions, partnerships and joint ventures.

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Feature

Boulevard Berlin in Germany

GERMANY, AUSTRIA AND BENELUX

Structural change influences markets Stable growth and new development are helping the German, Austrian and Benelux markets to expand. But more structural change is afoot, writes Liz Morrell

CROSS Germany, Austria and the Benelux region, the market continues to evolve. In Germany, the economy is in a more positive state than in some of its neighbours, which is allowing for potential development, since the market remains undersupplied in terms of retail schemes. However, German consumers remain cautious, according to Frederic Fontaine, chief development officer at developer Corio, the Dutch-based business currently merging with France’s Klepierre. “The average spending per consumer [in Germany] is a lot lower than in the rest of Europe,” he says. “Germans are focusing on value. We could be expecting a real boom in spending, but that’s not the case. Germany is doing reasonably well, but it’s not booming,” he says. And yet retailers are still investing in the country. “There’s a strong appetite for Germany from both retailers and investors, with total investment volumes up 20% compared to last year,” says a spokeswoman for Redevco. Corio, which entered the German market in 2010, will complete a €50m refurbishment project at the end of the year for its 65,000 sq m Centrum Gallerie Dresden,

which has involved internal restructuring and circulation changes. The scheme will feature the first Primark in the former East Germany, as well as lettings to others including Superdry, Adidas and Bershka. The remodelling of Corio’s Boulevard Berlin centre to introduce a food basement and a Kaisers supermarket is due to complete mid-2015. At ECE Projektmanagement, Klaus Striebich, managing director, leasing says the mix is changing in Germany, with retailers remodelling, fashion brands going standalone and food becoming more important. “The share of gastronomy is rising from about 5% to more than 10% in some centres, as this is something the customers embrace and that is a distinction from online,” he says. ECE’s centres continue to attract firsts to Germany — most recently in the shape of Uniqlo, Pull & Bear, Forever 21 and JD Sports. The company has also announced a new development project in the southern German town of Singen near Konstanz, which will see a 16,000 sq m shopping centre open in 2017. For German-based footwear retailer Deichmann, further expansion projects have been scheduled. In Germany alone, the company expects to have opened 63

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Feature new branches by the end of 2014. Worldwide, the company expects to have opened 150 new stores, taking its total to over 3,500 outlets in 23 countries, with Russia identified as a key market for growth. In Austria, low unemployment and positive GDP growth is stimulating spending and has attracted international retailers such as Superdry and Hunkemoller. Miu Miu, Yves St Laurent, Primark, Desigual and Bershka have also debuted in Austria, with Massimo Dutti, Alexander McQueen and Prada coming soon. Philip Mountford, CEO of lingerie specialist Hunkemoller says that his company has decided to focus growth on core Western European markets, after establishing itself in the Benelux. Germany, the Netherlands, Austria and Scandinavia are targets for growth and Mountford says: “Choosing markets where we can achieve domination has proven crucial to our success. We require that critical mass.” “It is anticipated that the increased investor interest [also by international investors] will continue in the second half of the year. The investment total achieved in the previous year should be surpassed significantly,” according to Redevco. However, with the availability of new space is scarce — Vienna’s Golden Quarter luxury shopping centre, new Central

“Choosing markets where we can achieve domination has proven crucial to our success” Peter Mountford Hunkemoller

Station shopping centre, and the extension of the Auhofcenter being the only significant projects in the pipeline for this year — the fight for space is competitive and the centres are already fully leased. THE BENELUX In the Benelux, the retail market is recovering from the economic crisis. However, it is also struggling with new consumer behaviour and emerging retail forms, such as e-commerce, according to Pauline Neerman, editor in chief of RetailDetail. “Retailers who are able to adapt their strategies and make intelligent use of the new social media, e-commerce and mobile channels are showing signs of renewed growth,” she says. “But those who aren’t able to adapt keep losing market share and sales volumes and have a future that looks grim.”

In Brussels, construction has begun on the Docks Bruxsel shopping district, due to open in 2016, while NEO Brussels has received the green light and Uplace is in discussions after the Belgian Council of State cancelled its environmental permit. In Brussels, the beginning of construction this year of the Docks Bruxsel shopping district development, due to open in 2016, is encouraging, while two other projects — Uplace Brussels and NEO Brussels — have also received the green light. Indeed, Belgium has proven an extremely stable economy and retail performance held up well during the crisis. As a result, a number of new fashion retailers have debuted in Belgium in the past six months, including & Other Stories, Boggi Milano, Scotch & Soda, Minelli and Uniqlo. At Redevco, the focus is on optimising its retail parks in Belgium. “We keep investing in our retail parks, as the trend is away from the classic ‘shoe box’ type of outlet towards architecture of greater quality. A number of the better brands are following suit, so that retail warehousing is gradually getting away from its discount image,” says the spokeswoman. Belgium has also just seen the launch of a new Chocolate Cafe concept from Leonidas, which opened at Groenplaats in the centre of Antwerp in July. “The concept has a flexible

ECE has developed in Austrian capital Vienna

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Feature layout and a multi-offer, with a focus on the total chocolate experience,” says Filip Van de Vyver, international sales director for Confiserie Leonidas. Following the Antwerp launch, Van de Vyver says the Chocolate Cafe concept will roll out worldwide. “We have already received a lot of interest and several international operators are very keen to introduce the concept into their markets,” he says. Targets include travel retail locations, such as airports and train stations. The Belgian capital’s metro stations are also seeing retail development, with STIB (Societe des Transports Intercommanaux de Bruxelles) introducing retail into its network — an initiative that will be presented in more detail at MAPIC. “More than 3,900 sq m of retail space will be made available, from 20 sq m to 200 sq m,” says Alice Descamps, product manager for sales for STIB-MIVB. In the Netherlands, the fall in customer spending is now bottoming out and Corio’s Fontaine believes an upturn is imminent. “Our estimation is that customer behaviour will improve over the coming months but at a slower pace,” he says. Arno Ruigrok, associate director of Multi Development, says the recovery will be steady. “For many years, the Netherlands has seemed to be among the slower recovering EU countries, but recently there have been a number of encouraging signals that show that the Dutch economy is recovering quicker than originally expected. And most important is that the recovery is solid,” he says. The stability of both the Dutch economy and market is proving attractive. “There is continuing interest among new international retail formats in entering the Dutch market and these companies are especially interested in A1 locations in the top four cities,” Ruigrok adds. Multi Development has a substantial portfolio of development opportunity in the Netherlands. “Recently, we have delivered phase two of our Cityplaza project in the city centre of Nieuwegein, as well as the last buildings of our development in Buiten Mere, a city-district centre in the east of Almere,” Ruigrok says. “Currently, we are building Groeneweg in Utrecht, which is a convenience centre in a residential area with two supermarkets, and we are realising the redevelopment of Gelderlandplein [for investor Kroonenberg Group], a city-district centre in the prosperous southern part of Amsterdam.” In addition, in September the company opened the

Belgium’s Uplace Brussels remains hopeful of government go-ahead

“A number of encouraging signals show that the Dutch economy is recovering quicker than originally expected. And most important is that the recovery is solid” Arno Ruigrok Multi Development Nieuwe Haagse Passage in The Hague, which links the two most important retail streets of the city. Ruigrok says further convenience centres and city-centres projects are in the pipeline as Multi Development continues to redevelop its portfolio, in line with the general trend. This view is shared by Corio, the centre leader in the region. Its Hoog Catharijne centre in Utrecht, which is situated on top of the city station, is currently undergoing a major redevelopment and extension that will see it extended from 70,000 sq m to 112,000 sq m to take advantage of the footfall through its thoroughfare location of between 26 and 40 million a year. The first phase, the construction of a 7,000 preview magazine I October 2014 I www.mapic.com

sq m retail park that houses Zara, Dutch fashion brand Sting and smaller retailers including Starbucks, completed at the end of 2012. The second phase — a 20,000 sq m extension currently under construction — is due to complete in the first quarter of 2017, and the final project will deliver by the end of 2018. Although unit numbers will not increase dramatically, going up from around 180 stores to some 200, the new sized units will better suit retailers and the leasing campaign is launching now. “It’s a real hotspot for retailers and there are a lot of international names interested,” Fontaine says. In Luxembourg, there is limited development, according to Cushman & Wakefield, with Royal Hamilius expected to add 15,000 sq m of shopping-centre space to the city centre in 2017, and a small retail park — Borders in Schengen — to begin construction shortly. How quickly such developments are being impacted by the rise of omnichannel varies. According to Redevco, total online retail sales in the Netherlands will grow marginally from 3.5% in 2010 to 5.5% in 2016; in Germany, from 4% in 2010 to 8% in 2016; in Austria, where 50% of online sales is purchased cross-border in Germany, from 3% in 2010 to 6% in 2016; and in Belgium, from 2% in 2010 to 8% in 2016. It is a trend that developers and centre-owners

Feature have no choice but to embrace. At Corio, initiatives include an RFID loyalty system that allows consumers to gain points for factors including their presence in a centre as well as their spending. ECE, meanwhile, has designed two of its centres — AlstertalEinkaufszentrum in Hamburg and Limbecker Platz in Essen — as ‘Future Labs’ and is testing a number of digital services for customers. Since launching in spring 2013, successful features include 3D guiding systems and a digital ‘mall wall’ that can showcase special offers from the centre’s tenants. Both centres are also to trial click-and-collect services. Multi Development’s Ruigrok says the rise of omnichannel is requiring new views, approaches and skills for retailers, centres and developers alike. “We are rapidly refocusing on an approach that, sooner or later, will be relevant to large parts of the European retail property markets,” he says. “In the Netherlands, we are learning and defining this new future.” Ruigrok adds that adapting retail concepts and business models to reflect the omnichannel reality is forcing big changes. “We haven’t

The Nieuwe Haagsche Passage in The Hague

seen the final effect of this structural market change yet, but it is encouraging that there was almost no rise in the vacancy rate over the last year,” he says.

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Feature

The Beaugrenelle centre in Paris, which opened last year

FRANCE

Bulking up or niching down French retail is changing, with new schemes, a mega-merger and a slew of imaginative projects reshaping the market. Sarah Morris reports

wants to renovate those medium-sized centres, as well HETHER you’re looking at the as others bought from Europe’s largest real estate comMediterranean from the rooftop pany Unibail-Rodamco. And it says it could buy more of Hammerson’s 61,000 sq m shopin this niche. ping centre in Marseille, or you’re in “Through this agreement with Carmila, we are pleased the grassy children’s play area at Frey’s retail park in that Unibail-Rodamco has been able to quickly and efTroyes, the French retail sector is undergoing a quificiently deliver on its stated goal of et revolution. As consumer confurther reshaping its portfolio to fofidence makes a cautious return, cus on assets with the highest return French retail developers and manpotential. Carmila is the natural ownagers are making a dash to secure “Consumers have er of these shopping centres, anchored their place in the market by bulking started spending a bit by large Carrefour hypermarkets. We up or specialising. more compared to a are sure that Carmila will be able to The headline is clearly Klepierre’s year ago. That’s generate significant synergies and rebid this year for Dutch rival Corio, turns consistent with the requirements which could help kick off the sort of inspiring for tenants” of its shareholders. [It’s a] true win-win European consolidation that hap- Marc Reijnen transaction,” says Unibail-Rodamco pened in the US. The French shop- CBRE Global Investors CEO Christophe Cuvillier of the deal. ping centre operator, which claims “Because these different companies the merged groups could create are focusing on different sectors in the market, it creates Europe’s biggest pure-play retail property firm, also more focus, more professionalism,” adds Marc Reijnen, sold 126 Carrefour-anchored malls for €2bn in order to head of CBRE Global Investors’ €1bn asset-managefocus on larger centres. Carrefour, meanwhile, through ment business in France. its recently created shopping-centre company Carmila, preview magazine I October 2014 I www.mapic.com

Feature Frey’s centres in France offer green spaces and children’s play areas

“The launch of our first major retail development in France marks a significant milestone for Hammerson” David Atkins Hammerson

This shake-up is being facilitated by a loosening of the credit taps. The cleaning up of bad property debt from the banks’ balance sheets has helped and confidence is growing, Reijnen adds, who is also fund manager for CBRE’s retail property fund for France and Belgium. “Consumers have started spending a bit more compared to a year ago,” he says. “That’s inspiring for tenants. They see that their margins are becoming a bit better.” As a result, retail investment transaction volumes rose 460% in the first half to €2.7bn, according to JLL calculations. Those transactions included the €700m purchase by Apsys and two other investors in the new Beaugrenelle shopping centre in Paris, which opened last year. The largest transaction for a single commercial asset in France, the deal showed the enduring appeal of France’s capital to international retailers such as Marks & Spencer, which plans to open 20 food stores around the capital, and budget clothes brand Primark, whose latest openings included a 5,400 sq m store in Creteil Soleil. But it is not just the big players that are attracting investors. In the summer, Credit Agricole Assurances bought a 20% stake in Patrimoine & Commerce — the low-cost retail-park specialist started by property entrepreneur Eric Duval in 2009, which has a portfolio of assets worth €501m. “This gives us the means to accelerate our development in the low-cost retail property niche,” says Duval, who aims for the company to double its portfolio by 2016. One of the most ambitious developments this year was Hammerson’s Les Terrasses du Port in Marseille, which is part of a €7bn urbanregeneration project. It includes Parisian department store Printemps’ first new opening in three decades, as well as an indoor food market on its ground-floor level, which serves as the passenger terminal for ferries to Corsica and Sardinia. David Atkins, Hammerson chief executive, says: “The launch of our first major retail development in France marks a significant milestone for Hammerson.” Another scheme that fellow developers will be monitoring closely is the opening of Qwartz at Villeneuve-la-Garenne near Paris. Altarea Cogedim has introduced new e-shopping innovations at the 85,000 sq m centre through its website, including offering year-long leases on virtual shops enabling retailers to conduct private sales to the centre’s customers in return for a 6%-15% commission on sales. “The greatest competition for centres is the

internet,” agrees Marc Lecocq, head of projects at Frey. His company, however, is taking a different approach to the problem, focusing on free family fun at the retail parks it redevelops and operates. These feature green spaces and children’s play areas of between 300-500 sq m. “You need to offer something different,” Lecocq says. “And the children ask to come back.” For one such redevelopment in northern France — L’Aire des Moissons in Troyes in — Frey has added walkways for pedestrians, cycle paths and extra access for cars. “We are convinced that this will be the business of the future because all France’s towns have parks that need redeveloping in this way,” Lecocq adds.

Patrimoine & Commerce’s Eric Duval

Unibail-Rodamco’s Confluence centre in Lyon

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Feature

SOUTHERN EUROPE

The rebound gathers pace Europe’s south was hit hard by the downturn, but the markets of Spain, Italy, Portugal and Greece are experiencing some of Europe’s strongest bounce-backs. Sarah Morris and Mark Faithfull report

N LESS than a year, the perception of southern Europe for many investors has switched from ‘risky’ to ‘desirable’. Borrowing costs on periphery sovereign debt has dropped, Spain and Portugal have exited bailouts and even Greece — which triggered the eurozone debt crisis — is showing tentative signs of recovery. Spanish retail sales have become more consistently positive since April, after a three-and-a-half year struggle. The country is now seeing the strongest turnaround, attracting €985m of retail investment in the first half of

2014, according to JLL. The real estate company forecasts €2bn of investment by the end of this year — the highest level of transactions since 2006. “The Spain country-risk debate is off the table and it’s seen as a core market again,” says David Brown, JLL’s associate director of retail capital markets in Spain. “In many prime and dominant shopping centres, we have seen sales begin to rise again.” About €380m came from Klepierre’s acquisition in February of 63 Carrefour-owned shopping centres in Spain as part of a European portfolio it bought for €2bn.

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Feature Puerto Venecia will form the model for more Spanish mixed schemes

Then in July, Spanish real estate investment trust (REIT) Merlin Properties bought the Marineda City shopping centre in La Coruna, Galicia, for €260m. The deal for Spain’s second largest shopping and leisure complex of 200,000 sq m is the largest to have taken place in the country since 2008. On the same day, REIT Lar Espana said it had paid Igipt Spain One €80m for the 28,863 sq m AnecBlau centre in the tourist heartland of Castelldefells near Barcelona. JLL’s Brown expects more deals by Spanish REITs, known as SOCIMI, as these vehicles spend the considerable capital they have raised this year. As investors have plucked prime or dominant shopping centres, yields have dropped from the 7.2% at which Intu Properties and the Canada Pension Plan Investment Board (CPPIB) purchased Parque Principado in the northern Spanish city of Oviedo last year. This year is likely to see investors looking at secondary shopping centres and away from

Spain’s top five cities, Brown says. Private equity may have to consider centres with higher vacancies that need repositioning to maintain returns of 18%-20% geared IRR, he adds. Eurofund and Intu will jointly develop Intu Costa del Sol in Malaga, while Intu and CPPIB paid €162m for Parque Principado. David Fischel, chief executive of Intu, says: “The opportunity to acquire Parque Principado, a top-10 centre in Spain, on attractive and earnings-accretive terms firmly establishes our presence on the ground in a country where we see considerable growth opportunities in the regional shopping-centre industry.” Meanwhile, Graeme Eadie, senior managing director and global head of real estate investments at CPPIB, called the development an “attractive entry point to the Spanish retail market”. European Real Estate III CV — a fund managed by Orion Capital Managers — bought the 50% that it did not already own in the preview magazine I October 2014 I www.mapic.com

Puerto Venecia regional shopping centre and retail park in Zaragoza from British Land for €144.5m. Puerto Venecia comprises an 82,600 sq m retail park, which opened in 2008, and a 130,000 sq m fashion and leisure destination, which opened in October 2012. Aref Lahham, founding partner and managing director of Orion Capital Managers, is also bullish about Spain: “Puerto Venecia

“The Spain country-risk debate is off the table and it’s seen as a core market again” David Brown JLL

has traded incredibly well since it opened, with more than 16 million shoppers passing

Feature through its doors in its first year. We firmly believe that consolidation of the retail property market is under way in Spain and that the major regional centres will continue to perform and improve as the country comes out of recession.” Neinver, the second-largest operator of outlet centres in Europe, has joined the three outlet centres it manages in Madrid to The Style Outlets European platform, after the incorporation of Seville in 2011 and the opening of Coruna The Style Outlets in 2011. Eduardo Ceballos, Neinver’s southern Europe director, says: “Almost two decades ago, we were pioneers in the introduction of the outlet concept in Spain through the Factory brand. Nowadays, this outlet concept has evolved towards a high-quality, smart shopping experience. The Style Outlets is an innovative concept that responds to these new consumer demands and tendencies through a transversal commercial offer with added-value services.” Some fund managers prefer other southern European markets. “Spain might be a little

bit overpriced, whereas Portugal and Italy are not,” says Florencio Beccar, head of CBRE Global Investors’ retail platform and fund manager of its European Shopping Centre

“We believe that consolidation of the retail property market is under way in Spain and that the major regional centres will continue to improve as the country comes out of recession” Aref Lahham Orion Capital Managers Fund. With strong tourism numbers and the economy growing in Portugal in the second quarter, demand is picking up, particularly on the high street in Lisbon and Porto. The majority of Portuguese retailers have

The Marineda City shopping centre in La Coruna, Spain preview magazine I October 2014 I www.mapic.com

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moved into a new cycle, less concerned with cost reductions and focusing instead on reinventing or introducing new concepts, according to Cushman & Wakefield. Beccar thinks Portugal is at the point where it will attract capital. “Some of its characteristics are great — very good managers, very good schemes,” he says. “It’s a transparent market with good information on how tenants are doing.” In Italy, retail investment is already strong, up 389% in the first half to €837m. And in contrast to its southern European neighbours, there is more development under way, although financing is still tough. This year’s openings include Corio’s Nave de Vero near Venice. Anchored by 5,500 sq m hypermarket Coop&Coop, six of Zara owner Inditex’s brands also helped to ensure that 98% of the centre was pre-let on its opening in April. Australia’s Westfield is also planning to develop a 60 ha site in Milan with joint-venture partner Italian real estate developer Gruppo Stilo. Westfield believes the low penetration of shopping centre space in Milan and

Feature an above-average demographic will help the 175,000 sq m centre to generate annual sales of more than €1bn. The scheme, located next to Linate airport, will include an 18,000 sq m flagship Galeries Lafayette. This builds on the French retailer’s openings outside of its home market including in Morocco, Beijing and Jakarta. The €1.3bn Westfield Milan development will feature over 300 stores, a luxury village, cinemas, leisure and entertainment facilities, 50 restaurants, parking for 10,000 cars, the latest in digital technology, and signature shopping and tourism services. Michael Gutman, Westfield’s managing director of UK/Europe, says: “Westfield’s global strategy is to develop iconic centres in key world cities and the inclusion of Italy’s first full-line Galeries Lafayette department store in this location will be a key attraction for consumers seeking a real point of difference.” Sonae Sierra and ING recently sold 90% of Le Terrazze shopping centre, located on the northern coast of Italy, to Union Investment. Sonae Sierra will continue to hold a 10% share of Le Terrazze and will be responsible for the management of the centre. Fernando Guedes de Oliveira, Sonae Sierra’s CEO, says of the deal: “We will continue to look for growth opportunities in Italy by actively looking for new development opportunities and the acquisition of existing shopping centres.” Many of Italy’s retail developers and managers have taken their expertise abroad during the downturn. Arcoretail is working on ambitious projects with joint-venture partner Jihua Group in China to create fashion and luxury outlets that also offer sports facilities, hotels and spa centres. In Finland, at the border

Designer outlet specialist Neinver is bringing its schemes under one brand

“Some of Portugal’s characteristics are great — very good managers, very good schemes. It’s a transparent market with good information on how tenants are doing” Florencio Beccar CBRE Global Investors with Russia, Arcoretail is also working on the Vaalimaa Luxury Outlet, which will include

Italy’s Le-Terrazze shopping centre, recently sold to Union Investment

preview magazine I October 2014 I www.mapic.com

the first ‘border-crossing’ casino. Back home, Italian companies are squaring up to the competition by honing their retailmanagement strategies and improving their formats. Arcoretail is working on the relaunch of Fashion Valley in Reggello, Florence while Promos, the Italian developer headed by entrepreneur Carlo Maffioli, has developed a 60,000 sq m GLA project in Milan, Scalo Milano, where many Italian manufacturers and SMEs sell the best of their country’s design, food and fashion directly to shoppers. “Next year, we will see these markets working at improved speed,” CBRE Global Investors’ Beccar predicts. “Tenants are starting to think about expansion again and want to increase space. It’s incipient but it’s starting, and it will gather pace next year.” In Greece, where economists think the country could emerge from its six-year slump this year or next, retail sales grew 7.3% year on year in April — the strongest performance in more than two years, with double-digit increases in clothes and shoes. That improvement, albeit from a low level, is driving demand for smaller retail units. Retail investment in Greece remains “moribund”, says Cushman & Wakefield in its latest snapshot, though it adds: “Although high unemployment, fragile business confidence, austerity, weak wage growth and consumer spending will continue to weigh negatively in the short term, the outlook is generally more upbeat.”

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Feature

Stockholm’s Mall of Scandinavia

While investment has been relatively slow in coming, the opportunities in some of Europe’s most northerly markets are finally being recognised. Ben Cooper reports

“Mall of Scandinavia is attracting a big international audience and new brands. It’s really going to create a point of difference for Stockholm” David Close CBRE

SCANDINAVIA

Northern bright lights

CANDINAVIA has a lot going for it. As a region, it is known for its stability and, with relatively high income per capita, retailers — particularly grocers — are at last starting to see genuine growth. However, investment has been slow in coming and almost entirely focused on the prime cities. The limited recovery post-crisis has been felt more by the grocers than the other sectors. And with a crowded market of food retailers and discounters, spend is on the up. But as more promising signs emerge, this uplift is gradually starting to spread to those products seen as being more non-essential over the past few years. Denmark has attracted investors such as ECE and Standard Life, with stable prime yields and rental growth, although mainly confined to the prime high streets. But above all, with consumer confidence gradually on the up, Denmark is seeing expansion from the like of Zara and H&M to Lidl, while Tiger is a Danish success story. It’s a similar story in Norway where, despite having the highest shopping-centre density per capita of any country in Europe, vacancy rates remain very low and demand from international retailers healthy. Sweden continues to see the most activity, both in terms of shopping-centre development and retail growth. It is also home to the biggest retail development story in the region — Unibail-Rodamco’s Mall of Scandinavia. The major development is set to be a game-changer for the whole region when it opens its doors in a year’s time. The 100,000 sq m centre will become the largest in Scandinavia when it debuts next autumn, bringing 250 new retail stores and restaurants to an area just seven minutes outside the centre of the capital. A number of big retailers are already on board, with Inditex, Superdry, Michael Kors and Mango signed up and more on the way. CBRE director for cross-border EMEA retail, David Close, says: “Mall of Scandinavia is attracting a big international audience and new brands. It’s really going to

create a point of difference for Stockholm.” The hugely dominant names that are ubiquitous across mainland Europe — including IKEA, H&M and Lindex — are of course present in Scandinavia. Lindex, the Swedish clothing retailer now owned by Finland’s Stockmann Group, turned 60 this year. The group continues to expand in the region — and beyond, into the Gulf and Asia — and in the last quarter of 2013 reported an overall jump in like-for-like operating profits of 27%. And there are new internationals being drawn in all the time, such as the UK fashion chain River Island, which opened its first Scandinavian store earlier in the year at AMF Fastigheter’s Gallerian mall in Stockholm. Stockholm is the star at the moment, with a lot of retailer interest building and abundant opportunities for investment. In fact, Karolin Forsling, chief development officer at Stockholm-based AMF Fastigheter, says that the challenge now is the lack of city-centre space. “There is increased demand for international brands to come to Stockholm to open flagship stores, but there isn’t the right space for them,” she adds. “There needs to be more asset management of the high street. We have been working to develop the space around Mood Stockholm, as well as the centre itself.” Meanwhile, one bit of news from the international retail market is bound to have long-term effects on the region. In June, UK fashion retailer SuperGroup completed the purchase of its Scandinavian distributor, SMAC Group, in a deal that allows it to trade its Superdry brand throughout Scandinavia. Retailers and investors will be watching Scandinavia closely for opportunities. And with development and investment so far limited to the prime centres, the obvious next step are the secondary locations that were overlooked in the downturn. Klepierre-owned Steen & Strom has a number of projects under way, including a convenience centre in the middle of Kristianstad and the expansion of Allum, both due for completion next year.

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Feature Victoria Gate in Leeds

THE UK

Return to spender The UK has experienced a sustained recovery, as is evidenced by the increasing levels of investment. But e-commerce and the high-street continue to dominate the agenda, says Mark Faithfull

NVESTOR demand for UK shopping centres hit a six-year high in 2013 as transactional volumes soared on the back of increasing consumer and business confidence. Total deals reached £4.3bn, according to the IPD/Colliers International UK Shopping Centre Investment Report, which analysed an IPD sample of 223 shopping centres valued at close to £12bn. The report reveals that up to 72 malls changed hands last year, while the sector delivered a total return to investors of 6.7% year on year. Shopping-centre capital values grew by 0.8% year on year in 2013 overall, compared with a 5% decline in 2012. With little new development in 2014, the big news has been major purchases. Land Securities completed its purchase of a 30% stake in the Bluewater shopping centre for £656m from Lend Lease. The overall net initial

yield after expiry of rent-free periods was 4.1% and the deal values the scheme at circa £2.2bn overall. Bluewater, which was developed by Lend Lease, is home to 330 retailers, bars and restaurants, plus an exhibition venue and cinema. Lend Lease Retail Partnership owns 25% of the asset, M&G Real Estate and GIC own 35%, and Hermes and Aberdeen Asset Management control 10%. Scott Parsons, managing director of Land Securities’ retail portfolio, says: “The acquisition of this interest in Bluewater is part of the continued strategic shift of our retail portfolio towards dominance, experience and convenience.” According to JLL, the “shootout” between the UK’s leading REITs is partly driven by the underlying importance of gaining access to international brands and then leveraging retailer relationships across portfolios. The new owner/manager also benefits from the vast value of consumer and retailer insight, thus strengthening its market expertise. Jeremy Eddy, international director of JLL European capital markets, says: “The investment market is clearly able to identify and pick the winners — the challenges and opportunities lie in navigating the rest of the market. Buying Bluewater will give Land Securities increased exposure to international brands.” In addition, Capital & Regional (C&R), the specialist retail property company, acquired a dominant stake in the Mall Fund. C&R acquired Aviva’s 52.04% stake and Karoo’s 10.52% stake in the Fund for an aggregate consideration of approximately £213m. Meanwhile, Intu Properties completed a rights issue to raise £500m to help with the £867.8m purchase of three Westfield malls: Westfield Merry Hill, Westfield Derby and Westfield’s Sprucefield retail park in Northern Ireland. Finally, AXA Real Estate Investment Managers agreed the acquisition of a 50% stake in Cabot Circus, and the Quakers Friars area and surrounding retail ownerships in Bristol city centre for £267.8m from Land Securities, which owns the asset with Hammerson through a 50:50 joint venture. The completion of the acquisition is subject to EU merger control notification. Hammerson is retaining its 50% stake in Cabot Circus and will take over the management of the centre.

“The investment market is clearly able to identify and pick the winners — the challenges and opportunities lie in navigating the rest of the market” Jeremy Eddy JLL

preview magazine I October 2014 I www.mapic.com

Feature Land Securities has bought a stake in the Bluewater centre

Laurent Jacquemin, European head of transactions at AXA Real Estate, says: “We remain convinced of the ability of the retail sector to provide secure, long-term income streams. As such, we will continue to identify and actively invest in prime retail assets across Europe to enable us to deliver accretive returns to our clients.” Although somewhat subdued activity is expected in 2015, a notable uptick in development is forecast from 2016, with large schemes already in the pipeline and new projects on the horizon. This surge in activity will be led by Victoria Gate (117,100 sq m) in Leeds, the largest addition to the UK market since Westfield Stratford. Victoria Gate will be followed by Westfield ‘s construction of Broadway Bradford (51,500 sq m), owned by Meyer Bergman, and the regeneration of Bracknell town centre (53,900 sq m). It is anticipated that 107,200 sq m of shoppingcentre space will be completed this year and 79,100 sq m in 2015, the most significant addition the British Land development of the Old Market in Hereford, which opened in May, adding 28,600 sq m of shopping centre space. Martin Mahmuti, senior investment analyst at Cushman & Wakefield, says: “The subdued pipeline does mask the improvement in

“We will continue to identify and actively invest in prime retail assets” Laurent Jacquemin AXA Real Estate

market sentiment, retail spending, finance availability and economic growth currently under way. Indeed, a considerable acceleration in development is expected from 2016, with large schemes already in the pipeline, as well as new projects being created by the more eager developers.”

Old Market in Hereford, developed by British Land

preview magazine I October 2014 I www.mapic.com

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02/09/2014 08:41

Feature

M&S has opened a franchise flagship in Kuwait

RETAIL FRANCHISING

The fast-track franchise H

Franchising can allow retail brands to grow into new markets quickly and at a lower cost. But experts warn it is essential to find the right partner, says Graham Parker

ARNESSING the market knowledge — and the financial muscle — of a local partner can be an attractive way for retail brands to enter new markets. But retailers cannot just franchise their brand and then sit back. Both franchisee and franchisor have to actively work to make a success of the venture. JLL’s director of pan-European retail, Dominic Bouvet, advises retailers on international expansion. “Franchising is now a global trend,” he says. But its application varies around the globe and JLL’s Redefining Retail Places research highlights how it is less prevalent in the more mature markets. “The main benefit of franchising is in emerging markets, where a retailer can derisk its expansion,” Bouvet adds. He cites Russia as an example: “Russia is seen as a difficult place to get your stock into the market, so there are numerous brands still looking for partners there.”

Cushman & Wakefield’s head of global cross-border retail, Mark Burlton, concurs: “In Europe, the further east you go, the more acceptable franchising is. In emerging markets, it’s still a useful way for retailers to put a toe in the water.” But in more mature markets like France and the UK, brands may find it difficult to acquire suitable sites without putting their own covenant behind the deal. “French and UK landlords prefer the covenant strength that goes with a company store,” Bouvet says. “In my experience, you get more traction with the landlord with a company store.” However, Bouvet does concede that this may be changing as shopping centre owners look to encourage new brands to take space, creating a point of difference in an increasingly homogeneous market. Meanwhile, the US presents problems all of its own. “The US can be difficult to manage, because the laws

preview magazine I October 2014 I www.mapic.com

Feature vary from state to state and you can end up with 20 different partners of varying qualities,” says Lunson Mitchenall’s US principal, Andrea Abrams. “That’s why a lot of brands have chosen to expand there through department stores. That can be a valuable way for a new brand to gain recognition.” Although it is difficult to contemplate divorce when entering into a marriage, Cushman & Wakefield’s Burlton says an exit clause is in some ways the most important part of a franchise agreement. “Retailers buy back their franchises for all sorts of reasons,” he says. “Sometimes, retailers buy back because they have achieved their initial objectives. But in other cases, it’s because the franchisee hasn’t represented the brand in the right way or because they haven’t delivered what they promised.” Bouvet echoes this view. “Buy-back options are important,” he says. “Retailers need to be in control, otherwise they can find they are operating in locations they are not even aware of. When the time comes to buy back, you can find the brand’s been damaged by being in the wrong locations.” Lunson Mitchenall’s managing director, Robert Wingrave, says a hands-on approach is essential if a franchise deal is to succeed: “It’s a two-way process and both parties have to be committed. The brand has to provide the right support, the right processes and the right training.” So how should retailers go about finding a suitable partner? “A lot of it’s about personal recommendation,” Wingrave says. “Many retailers rely on the personal experience of their peers.” Burlton agrees: “As much as anything, it’s about personal fit as much as financial strength. The most important thing is to have a personal connection — the principals have to get on.” While franchising may be a strategic choice

“The main benefit of franchising is in emerging markets, where a retailer can de-risk its expansion” Dominic Bouvet JLL

US retailer Gap has expanded in the Gulf via franchise for fast-expanding retailers looking to enter new markets, there are times when the retailer has no choice but to franchise. In many territories such as India and the Gulf region the law dictates that retail businesses have to be majority-owned by a local company. This has clearly not been a barrier to growth, given that centres such as Dubai are among the world’s most vibrant retail destinations. And it looks as though there is more growth to come. For instance, Marks & Spencer (M&S) has just extended its agreement with its partner Alhokair Fashion Retail to significantly grow its store portfolio in Saudi Arabia with a pipeline of 10 new openings by April 2015. This growth is being spearheaded by the recently opened 930 sq m store at Aziz Mall in Jeddah, and a 1,700 sq m store at Al Nakheel Mall in Riyadh, which opened in September. Alhokair will also open M&S’ new flagship store in Baku, which will see the UK retailer enter Azerbaijan for the first time this autumn. Port Baku Mall, the country’s new luxury shopping destination, will be the home to M&S’ new 1,700 sq m flagship store. Alhokair has worked in close partnership with M&S since 2001 and currently operates 19 M&S franchise stores across Saudi Arabia, preview magazine I October 2014 I www.mapic.com

“Franchise partnerships are central to M&S’ international growth strategy” Mark Koprowski Marks & Spencer

Kazakhstan, Armenia and Georgia. The company has continued to grow M&S’ presence in Saudi Arabia and the Caucasus, including the opening of the retailer’s world-first standalone lingerie and beauty stores in Saudi Arabia in March. Alhokair chief executive Simon Marshall explains: “M&S has tremendous appeal to consumers in all the markets in which we currently operate their stores. Our focus is on driving fast, efficient and profitable growth for their core business and new store formats.” Mark Koprowski, Marks & Spencer’s regional director, Middle East and CIS, adds: “Our franchise partnerships are central to our international growth strategy. As one of the world’s leading retail operators, Alhokair offers us extensive retail expertise, local knowledge and access to some of the region’s prime shopping destinations.”

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03/10/2014 10:39

Feature RUSSIA

Retailers look to Russian potential Russia’s retail property sector entered 2014 on a roll — and it’s not over yet. Despite the uncertain political picture, international retailers continue to look at the market entry opportunities, says Ben Cooper

RELATED CONFERENCES DURING MAPIC Russian business in the face of new challenges Co-organiser: Impress Media Wednesday 19 November, 10.00-10.45 Champs-Elysees Room, Palais -1 Palais des Festivals Retail in Russia: Innovations that Work Co-organiser: Kommersant Wednesday 19 November, 15.30-16.15 Champs-Elysees Room, Palais -1 Palais des Festivals Shopping Centers in Transport hubs in Russia Co-organiser: Russian Council of Shopping Centres Thursday 20 November, 14.00-14.45 Agora, Palais -1, Palais des Festivals

ITH five million sq m of shopping-centre space currently under construction, Russia has the largest pipeline of any country in Europe. This mass of activity is transforming the country’s retail industry, particularly around Moscow, and opening untold doors of opportunity. But while development continues undaunted, the political instability of the past nine months is undoubtedly playing on international retailers’ minds. A number of big-name brands have revised their plans for Russia and growth forecasts have been downgraded. Despite this, with 42 cities with a population over 500,000 and a burgeoning middle class, retailers remain confident in the long-term potential for business in Russia. Paul Grace, general director of Turner & Townsend Russia, says that Russia’s retail property sector entered 2014 “riding on a wave of strong sentiment and foreign investment”. He adds: “Construction momentum has continued into 2014. While the IMF has revised down its forecast for Russian GDP growth this year to 0.2%, the country’s buoyant retail sector remains appealing to foreign players.” In its latest International Brands In Russia report Russian cities clearly still have a powerful pull for the big (2013/2014), Moscow-based retail real estate consultanbrands. cy Magazin Magazinov tracked 470 international retailAnd it’s not hard to see why. with predictions that, by ers active in the market from all sectors of retail. With a the end of this year, 50 new shopping centres will have healthy stream of new arrivals identibeen delivered with a total GLA fied last year — in 2013/2014, Magazin of 2 million sq m, following 2013 Magazinov identified 31 new retailers “Russia’s buoyant when, according to the Association in the market — Russia is becoming of European Businesses, 63 centres retail sector remains an international hub for shopping. were completed. Among the big new names on the appealing to foreign I n Mo s c ow a lone, M a g a z i n scene since MAPIC 2013 are Turkish players” Magazinov says that the total retail leather and fashion retailer Derimod, Paul Grace supply increased by 6% in the first Italian fashion brand Harmont & Turner & Townsend Russia half of 2014, with five major centres Blaine, New York-based chocolatier with a total GLA of 252,500 sq m Max Brenner and French maternity opening their doors. The largest of chain Prenatal. And with Forever 21, House of Fraser, these was Crocus International’s Vegas Crocus City, Harvey Nichols and Crate & Barrel all thought to be with a total GLA of 112,500 sq m, based on the Moscow close to making their Russian debut, Moscow and the big ring road. Other notable arrivals include Central preview magazine I October 2014 I www.mapic.com

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Feature Properties and Alto Assets’ joint venture, the 56,000 sq m Vesna scheme, and Immofinanz Group’s Goodzone. A wide range of projects is due for completion by the end of 2014. The largest of these in and around Moscow is AMMA Development’s Aviapark, designed by US-based architect Callison. Another major player, Hines, with 645,000 sq m of space under management throughout Russia, will also have completed the second phase of the Outlet Village Belaya Dacha scheme by year end. Against this backdrop, the opportunities in Russia are clearly huge, attracting not only the established players, but also new developers. One of these, Essence Development, is at MAPIC this year for the first time, showcasing a major portfolio of projects totalling more than 500,000 sq m. Regions Group — which currently owns 30 operating JUNE REC and Siberian Town RC developments with a total area of over 1.1m sq m — celebrated its 10th anniversary earlier this year. Near-term plans include opening three multi-functional complexes

Vegas Crocus City

with indoor theme parks in Moscow, Saint Petersburg and Yekaterinburg, as well as building another JUNE in Moscow. Maxim Karbasnikoff, national director and head of retail at Cushman & Wakefield in Russia, says: “Retailer demand has remained

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big

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in ail rst res m of ty, ow ral preview magazine I October 2014 I www.mapic.com

relatively strong in Russia, with existing retailers looking to expand and experiment with new format types. Despite the economic slowdown, consumer spending in Russia remains resilient. The retail turnover growth for 2014 is forecast at almost 2%”.

Feature The ParkLake scheme in Bucharest, Romania

CEE

CEE reshapes as retailers look east While the CEE’s strongest markets continue to dominate, those that were harder hit by the economic crisis are attracting investment once again. Ben Cooper reports

In Poznan, regional developer TriGranit has completHE CEE region is particularly varied, coned the second and final phase of the major Poznan City taining some of Europe’s richest cities and inCenter project, which has transformed Poland’s fifth vestment hubs, and some of its poorest. As a largest city. And it is also in Poznan where another big result, it is still the biggest cities and the domiproject has got under way this year — the €290m Lacina nant markets that attract the bulk of the investment and shopping centre. A joint venture bepull in the biggest new retail brands. tween French developers Eiffage But as the general economic condiand Apsys, the centre will become tions improve, so do the chances that “The Czech Republic one of the region’s largest, boasting the neglected second tier of the CEE 100,000 sq m of space and 300 new will start to attract the investment it has become a really important destination retail units. needs. Elsewhere, the development pipePoland still dominates the region, and there are a lot of lines may have been more modboth in size and development activity. newcomers. It’s a est, but there is still plenty of acEight major regional cities and a captivity. In March this year, Benoy ital that has been totally regenerated dynamic market” unveiled Galerie Teplice in the over half a century make the country Beatrice Mouton Czech Republic, a key 22,000 sq m the perfect starting place for retailers JLL retail and leisure centre over three looking to open in the CEE region — floors, which has attracted some big and development has followed suit. international retail names, including H&M, Lindex and The result is some 500,000 sq m of retail property unIntersport. der construction right now, both in the major cities and, Beatrice Mouton, head of CEE retail at JLL, says that increasingly, in the second-tier locations where much of the Czech Republic is fast becoming a key target for the opportunity now lies. preview magazine I October 2014 I www.mapic.com

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RELATED CONFERENCE DURING MAPIC CEEQA@MAPIC. Insight Summit The Future of Fashion Retail in New Europe Real Estate. Sponsor: CEEQA Thursday 20 November - 16.00-17.15 Oxford Room, Palais -1

Feature The Eiffage/Apsys Lacina North Plaza scheme for Poznan in Poland

international brands. “There are lots of opportunities for retailers,” she says. “It’s become a really important destination and there are a lot of newcomers, most of which are still coming in via franchises. It’s a dynamic market.” Some of the smaller countries in the CEE region still struggle to attract the big-name retailers and the investment needed to deliver significant pipelines. But as investors start to find the confidence to enter the secondary markets, Mouton says there are signs that this could be changing, thanks to retailer demand. “Hungary has always suffered quite a lot, but I’m hearing more positive feedback now from retailers getting established in the market,”

“Now could be the time to start looking at development opportunities in markets like Romania” Sean Briggs Colliers International

Mouton adds. “It’s not to the same extent as Poland or the Czech Republic, but there are new retailers entering.” But Sean Briggs, managing director of

TriGranit’s Poznan City Center, Poland

preview magazine I October 2014 I www.mapic.com

Colliers International’s retail agency division in Eastern Europe, believes that, outside of the region’s dominant cities, the lack of activity could be the big opportunity that developers have been waiting for. “Now could be the time to start looking at development opportunities in markets like Romania,” Briggs says. “If you think, over the years, some of the most successful projects were started and conceived at the bottom of the market. It feels like people are starting to look at the region now, and there are opportunities.” One of the projects that has got under way in Romania is a joint venture between Sonae Sierra and Caelum Development to deliver the ParkLake shopping centre in Bucharest. Due to be unveiled in 2016, the centre will include 200 new shops over a GLA of 70,000 sq m. And in another regional capital city, Sofia, a new scheme is due for completion this autumn that should prove equally transformative. The Sofia Ring Mall, owned and developed by Fourlis Group and Danaos Group, will become the largest in Bulgaria, with 100,000 sq m of retail space, an IKEA store as an anchor and 500 new residential apartments. The big question is whether or not development will ripple outside of the regional capitals, and that is harder to answer given that investors are still cautious. But with big projects such as Sofia Ring Mall and ParkLake leading the way, there’s every chance that the CEE’s secondary cities could start to see more foreign investment flowing their way.

Feature CapitaMalls’ Suzhou integrated development

SPOTLIGHT ON ASIA

China grapples with online and entertainment Retail expansion in China is becoming more focused and selective. Even so, writes Mia Hunt, the country continues to lead the world in terms of its development pipeline

ITH retail sales hitting $8 trillion in 2013, accounting for 50% of the world’s retail sales, Asia is the largest global retail market. It is also home to the world’s second and third largest retail economies in the shape of China and Japan. And with the Asia-Pacific region’s expanding middle classes continuing to drive growth, its market worth is predicted to reach $12 trillion in 2016. Activity remains strong in Hong Kong, Singapore, Japan and Australia, but it is China that is driving growth in Asia-Pacific.

“Investment and development activity in China has gone wild” James Hawkey Cushman & Wakefield

Despite the fact that its economy has slowed, China dwarfs the region’s other markets when it comes to retail spend, investment and development activity, which is booming in most preview magazine I October 2014 I www.mapic.com

major cities. Of the global pipeline, half of the world’s activity is happening in China. “Investment and development activity in China has gone wild,” says James Hawkey, managing director of retail, Asia-Pacific, for Cushman & Wakefield. “There is reasonable development in the rest of Asia, with a healthy pipeline in India, Vietnam, Malaysia and Korea. But it’s nothing compared to China, where we’re tracking 49 million sq m due for completion between 2014 and 2016 in 30 cities. Nearly every city is in danger of over-supply.” In all, 34 shopping centres have opened in the last six months in China and, by the end of

Feature “There’s been a slowdown. That’s not to say retailers aren’t still very positive about China — they are — but they are choosing schemes very carefully” Tom Gaffney JLL

2015, the number of malls on the mainland is expected to have exceeded 4,000. Dalian Wanda Group Corp plans to launch an e-commerce joint venture with internet giants Baidu and Tencent Holdings in a move to bridge China’s online technology and Wanda’s bricks-and-mortar retail space. The venture will enable customers to use Baidu and Tencent’s online maps and access Wanda’s luxury hotels, shopping malls and cinemas across China. Wanda has been seeking ways to expand online. It operates 83 shopping malls in China and is run by Wang Jianlin, who has been on a shopping and building spree in recent years. In 2012, Wanda announced the $2.6bn acquisition of US cinema chain AMC Entertainment

Carrefour has grown rapidly in China

The ice rink arena at CapitaMall Tianfu in Chengdu Holdings and, in August, the group acquired UK yacht-maker Sunseeker International. Last year, Wanda broke ground on the Qingdao Oriental Movie Metropolis, which will boast an area of 3.7 million sq m and include a film and television industrial park, a film museum, a celebrity wax museum, a film exhibition centre, an extreme car show, a tourism city, resort hotels, a yacht club, a seasidebar street, an international hospital and a global IMAX research centre. The complex is expected to be operational in 2017. While most of the developers are Chinese, there are international players too. Singaporebased CapitaMalls Asia is one of those leading development in China, with more than 60 shopping centres in 35 cities, and several more in the pipeline. “China’s retail property boom is largely fuelled by rapid urbanisation and a rising middle class,” says Lim Beng Chee, CEO and executive director of CapitaMalls Asia, explaining that 60% of the country’s population is expected to be living in cities by 2020. “In addition, the Chinese government is steering the economy to self-sustaining growth based on domestic consumption, instead of manufacturing driven by foreign investment.” Spurred by rising domestic consumption, China’s retail markets are flourishing — in the preview magazine I October 2014 I www.mapic.com

first half of 2014, the country’s retail sales rose over 12% year on year to €1.5 trillion. While CapitaMalls has significant experience in developing, owning and managing shopping centres in Asia, the same is not true of many developers. “Some are very good and some leave a lot to be desired,” Hawkey says. “Management and operations skills for shopping centres really are in short supply.” Tom Gaffney, head of retail at JLL’s Hong Kong office, agrees. “There has been a slowdown in terms of retailer expansion,” he says. “That’s not to say retailers aren’t still very positive about China — they are — but they are looking at the development pipeline and choosing schemes very carefully. There are high-calibre schemes designed by very good architects and developed by companies with a proven track record. Those are the ones retailers are interested in — they are being wary of trophy schemes.” The Chinese are well known for their love of luxury goods and, while a clampdown on corruption has slowed the market, Asia remains a key growth market for luxury brands, with some deriving 37%-46% of their global revenue from the continent. The luxury outlet market is very much in an early phase of development in China, with variable levels of quality and operational ability.

Feature RELATED CONFERENCE DURING MAPIC China: growth opportunities for international retailers Thursday 20 November - 12.00-12.45 Oxford Room, Palais -1

However, according to TH Real Estate, the sector is showing signs of positive growth as middle-class enjoyment of greater earning power makes itself felt. One outlet brand looking to expand is Florentia Village, which has one outlet in operation, two on site and a further five expected to open by the end of 2017. “The outlet market in China is prosperous with opportunity for rapid development,” says Maurizio Lupi, managing director of RDM Asia, which develops and operates Florentia Village outlets on behalf of Silk Road Holdings. “There are over 400 outlets in China, but only 10 of them are in the leadership of this industry, so we [believe] that premium outlets have increasing potential in China.” In terms of retail categories, the Chinese market is diversifying. According to JLL’s Gaffney, consumers in Hong Kong now want

Uniqlo’s Asian expansion is being led by Chinese growth

“Omni-channel is coming together. It isn’t quite there yet, but it’s making advances” Joel Stephen CBRE

products of all quality levels. Whereas three to five years ago, it was all about luxury, now other categories, such as fast fashion and cosmetics, are part of the mix. It’s a trend that has migrated to the mainland, where Jonathan Hsu, CBRE director of Asia-Pacific research, says the biggest shift has been from luxury towards lifestyle, leisure and entertainment. “In general terms, most [Chinese] people buy at a low-entry price point, and mid-market fashion retailers like H&M, Zara, Uniqlo and Gap have exploded in growth in China,” Hsu adds. When it comes to international retailers moving into China, the US and European brands are leading the way, followed by Japanese and South Korean retailers. Premier brands like

Ted Baker, J Crew, Karen Millen, Hackett, Jack Wills and Hollister have all entered, or are in the process of entering, China, as have lifestyle brands such as Lululemon. Of the lower priced retailers, New Look and Old Navy have made an entrance in the last year and Cushman & Wakefield’s Hawkey expects to see dozens of other new names in the next two to three years across all categories. Old Navy opened its first store in China on Shanghai’s Nanjing West Road in February, and there are plans to open a further four in the 2014 fiscal year. “China continues to be an important component of our overall expansion strategy and we are confident Old Navy will resonate very well with Chinese consumers,” says Glenn Murphy, chairman and CEO of Gap Inc. “Bringing the Old Navy brand to China is a logical next step in delivering on our global growth strategy.” According to CBRE’s Retail Trends: Asia Pacific report for the second quarter of 2014, retailers are focusing on the core markets of Beijing and Shanghai, as well as on cities like Guangzhou and Shenzhen in the south, which are being targeted by the mid-range fashion groups in particular. Outside the tier-one preview magazine I October 2014 I www.mapic.com

cities, Hangzhou is the major active market, while the appetite for expansion in tier-two locations such as Chengdu has faded. CBRE’s Retail Trends report also reveals that retailers across all categories are investing heavily in establishing their flagship presence; online retail continues to grow and is prompting landlords to include more entertainment options to attract people to their malls; and a number of fashion retailers are opening digital stores incorporating technology to enhance the customer experience and blend their online and in-store offerings. “Omni-channel is coming together,” says Joel Stephen, CBRE’s head of retailer representation for China. “There has been a lot of investment in logistics, with retailers opening up their own websites for e-commerce and driving synergies between the web and the instore experience. It isn’t quite there yet, but it’s making advances.” According to Hawkey, China saw e-tail growth of 33% in the year to June 2014, with total online retail sales accounting for $176bn, some 8.4% of the country’s total retail sales. Online platform Alibaba made $5.75bn during a oneday promotion last year — more, Hawkey points out, than even the best shopping

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Feature

Nanning is just one of Wanda’s projects centres would make in a year. “E-commerce is putting pressure on physical retail, so it has to focus on the advantages — the physicality and the social experience,” Hawkey adds. “Shopping centres have become more vibrant and exciting. They’re thinking about what differentiates them and embracing their own physicality. And they’re starting to install technology like beacons and pedestrian flow-tracking systems to help them make their offers even more compelling. They recognise they need an offer that really plays to the full range of senses in a way that can’t happen online.” Meanwhile, CapitaMalls Asia has earmarked a significant proportion — about 30% — for F&B and entertainment facilities within its retail mix in a bid to evolve its centres into lifestyle destinations. These attractions include children’s playgrounds, Olympic-size ice rinks featuring rink-side dining, IMAX cinemas and cineplexes, pet parks, fitness zones, roof gardens and other communal spaces. And it is investing a huge amount in new technologies designed to engage its visitors. In addition, Jihua Group plans to become one of the major players in the outlet industry by creating the first outlet network in China. Italianbased Arcotecnica Group has been appointed for the development of this ambitious project and its operational implementation. These sites will consist of fashion and luxury outlets, sport hubs, entertainment and hospitality services such as hotels, wellness centres, and restaurants. Outside China, development is more cautious than it was four or five years ago. CBRE’s Hsu, however, sees growth in new malls and department stores to tap into the growing consumer spending power across South East Asia. But the big trend, he says, is the growth of F&B brands in every market in Asia-Pacific, reflecting the region’s increase in affluence. In Hong Kong and Singapore, the consumption rate is slowing, partly because high rents are making retailers think harder about taking space. Overall, both Stephen and Hsu see Japan as the most optimistic market outside China, both in terms of its economic prime districts and its secondary locations. While the markets of Asia are hugely diverse, with some performing exponentially better than others, it remains an appealing continent for developers and retailers alike, both domestic and international. And when it comes to consumer spending, it is China that is holding aloft the continent’s retail baton. preview magazine I October 2014 I www.mapic.com fep_15_5_100x267_mapic_preview_groupe_franchiseurs_gb.indd 1

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Photo: Xxxx credit

Feature

The H&M flagship store in central New York

Ask a retail developer or pundit what’s happening in the Americas and you’ll be lucky to get the same answer twice. John Ryan looks at the sweet spots in a retail market that remains uneven

THE AMERICAS

A market of two halves

HINK retail, think North America — specifically, the US — and it’s probable that your thoughts will turn to shopping centres. The received view is that most of the retail action in the region takes place in malls rather than high streets and, to a large degree, this is correct. According to Cushman & Wakefield, the current stock of mall space in the US stands at 618 million sq m (or 35,590 malls) and this number is expected to increase to a mall GLA of 640 million sq m when everything in the current pipeline is built, with the number of malls reaching 38,000. Even for a nation of 313 million people (according to the 2012 census), this sounds a lot. So it is perhaps no surprise that the www.deadmalls.com website, which charts the US malls that have gone into terminal decline, is pretty well populated. There is a sense that, for every

new ‘super regional’ centre that rises out of the ground, several smaller schemes will be gradually making their way back into it. Another way of putting it, according to Sean Walters, vice-president of mills leasing at Toronto-based Ivanhoe

“We’ve developed a metric we call the barbell of prosperity — the top and bottom are doing well, but the middle is still very squeezed” Matthew Winn Cushman & Wakefield

preview magazine I October 2014 I www.mapic.com

Feature Cambridge, is that there are 2.2 sq m of retail space for every US citizen. Walters contrasts this with Canada, where the figure currently stands at 1.4 sq m per head, although this number, too, is set to grow. The obvious question, therefore, is whether the growth that is anticipated over the next three years is sustainable in the US? Can things keep going? Or is it going to be a case of increased asset management and redevelopment for those in the business of owning and leasing US retail space? Matthew Winn, global retail chief operating officer at Cushman & Wakefield, brings the problem into focus: “We’ve developed a metric we call the barbell of prosperity. If you look at it this way, the top and bottom are doing well, but the middle is still very squeezed. It looks like the US economy is now firing on all cylinders, but the retail spend hasn’t actually changed.” Despite the problems that this might seem to pose, Winn says that there are “certainly people who are making substantial investments in class-B malls”. Like others, Winn points to the rise of the super-regional mall and says that, while this trend might seem to be bad news for the owners of smaller developments, there is currently a move among the latter towards repurposing the tenant mix to combat this. Practically, this means that many of the small and medium malls in the US — and there are more than 34,000 of these, ranging in size from just under 5,000 sq m up to just over 40,000 sq m — are the subject of extensive remodelling and upgrading. Atlanta-based Alan Barocas, senior executive vice-president at General Growth Properties, elaborates: “The landlord community, just like the retail community, is continuing to look at upgrading assets. There is not a lot of new mall building going on. Everybody is looking at how they can improve their assets.” Barocas says that, while there are a number of different strands as far as improvement of this kind is concerned, there is one central preoccupation: “It’s about the customer experience. All of us are looking at food, for example, because we think that food is not something that Amazon, among others, can provide. We’re also putting medical, health-related offerings in centres. We want to establish the malls as a social focal point as much as a place to go shopping.” And part of the upgrade process is about taking second-tier centres and making them

RELATED CONFERENCE DURING MAPIC USA Focus co-organised & sponsored by CBRE USA Wednesday 19 November, 11.00-12.00 Oxford Room, Palais -1, Palais des Festivals

General Growth Properties’ La Cantera shopping centre in Texas

“We’re constantly looking at our B+ centres and asking what we can do to turn them into As” Alan Barocas General Growth Properties

premier league, Barocas adds: “We’re constantly looking at our B+ centres and asking what we can do to turn them into As.” There are, of course new malls appearing and there are areas of strength across the US and Canada. Chris Conlon is executive vice-president and chief operating officer of the Acadia Realty Trust, which owns and operates a number of urban and suburban malls and strip developments in the eastern half of the US. “There has been a dramatic separation between A malls, and B and C malls,” he says. “Malls with sales in excess of $600 per sq ft [A malls] are performing very well. Sales growth is a little disappointing, but rental growth is strong.” Worth noting, too, is the fact that “occupancy rates are as high as they have ever been in class-A properties”, says John Ragland, senior director of global real estate at TIAA-CREF. preview magazine I October 2014 I www.mapic.com

He adds: “Demand is high in spite of plodding sales. Rent gains continue in prime properties.” Conlan highlights the “lingering malaise around Sears and JC Penney [both frequently located in B and C malls]. JC Penney seems to have stabilised, but Sears is another story. The B and C malls are at risk of a dark period for a long time. I do think there will continue to be mall extinction.” Amid the conflicting views on the outlook for the US retail panorama, there is a school of thought that sees urban regeneration and the arrival of more foreign retailers in these locations as a coming trend. Conlan says this is an area in which Acadia has been seeing strong growth and that, in cities such as Chicago, New York, Miami and Santa Monica, there has been a conspicuous flight to quality. Arcadia, H&M, Zara, Uniqlo and soon Primark are among the expanding foreign fashion entrants, while J Crew, Gap, Footlocker, Forever 21, Abercrombie & Fitch and Williams Sonoma are among those exporting their offer to Europe and Asia. In Canada, the development story is a little more sanguine. Ivanhoe Cambridge’s Walters observes that, while there has been some weakness in eastern Canada and that the “smaller malls have been hit hard”, there are “pockets of strength”, particularly in Alberta and British Columbia in the west. And like the

RELATED CONFERENCES DURING MAPIC USA Breakfast - By invitation only. Platinum sponsor: Thor Equities Gold sponsors: Acadia and GGP Thursday 20 November - 8.00-9.30 - Majestic Hotel

US, it is in the super-regional malls where the bulk of the action is taking place. Walters says that, with 150 super-regional malls in Canada against 1,500 in the US, there is considerable room for expansion in this area. He also points to the outlet sector as being particularly robust: “We’re injecting over $1bn into The Oakridge Centre [an outlet scheme] in Vancouver,” he adds. In the US, while new schemes are thin on the ground, some of the bigger developments in the pipeline include Howard Hughes’ 157,000 sq m Downtown Summerlin super-regional mall in Las Vegas, slated to open this October, and Westfield’s World Trade Center urban mall, which will welcome its first shoppers in 2015. Also significant is Taubman’s 78,500 sq m University Town Centre mall in Sarasota, Florida. Like the Las Vegas mall, this opens its doors in October. Simon Property remains active, with three outlet centres opening — two in Canada and the other in the US. In all the company has 32 developments or refurbishments under way across the US, Canada, Mexico, China and Japan, plus stakes in European developers Klepierre and McArthurGlen. South of the border, Sonae Sierra is expanding and refurbishing Franca Shopping in Sao Paulo, Brazil, scheduled to complete in the first quarter of 2015. Meanwhile, Cushman &

Feature

Challenge on doing business in Brazil. Co-organiser JLL Thursday 20 November, 10.15-11.00 Champs-Elysees Room, Palais des Festivals Bridging the Atlantic, Growing Retail Chains in North America co-organised with SiteWorks Retail Real Estate. Platinum sponsor: Thor Equities. Gold sponsors: Acadia and GGP Thursday 20 November, 12.15-13.00 Champs-Elysees Room, Palais des Festivals

Crossiron Mills: Ivanhoe Cambridge is focusing on large regional malls

Wakefield’s Winn says that Mexico still has potential. “As the US has recovered, a lot of investment has been going into Mexico,” he says. Perhaps, as ever, North America should be regarded as a series of different markets rather than any kind of homogenous entity. Greg Maloney, CEO and president of JLL’s Americas Retail Group, sums it up: “Since 2005/2006, we’ve really looked at areas in the US and not so much across the country, mainly because different areas have been affected differently by the recession.”

“Demand is high in spite of plodding sales. Rent gains continue in prime properties” John Ragland TIAA-CREF

University Town Center, part of an expanding Simon Property portfolio preview magazine I October 2014 I www.mapic.com

business-230x300 preview.pdf

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14:44:48

Feature PRIMARK IN PROFILE

Primark: Next stop, America

Primark’s Jose Luis Martinez de Larramendi: targeting budget niche

The man charged with spearheading Primark’s expansion in Iberia will now take the brand across the Atlantic. Sarah Morris reports from Madrid on the latest Spanish fashion export

once it has built up a following. Finding large enough HE SCENE was set at a Madrid shopping cenvenues in prime spots in city centres has proved challengtre in May for yet another Primark store opening, but next year it will open its first Spanish high-street ing: balloons flying, shop assistants singing, store on Madrid’s landmark Gran Via. shoppers queuing, and sandwiches and cupPrimark has evolved its strategy to suit the demands of cakes being handed out with the packs of press informathe Mediterranean market. It switched from restocking tion. The Irish value retailer has celebrated more than shops with daily lorries from Dublin, for example, to us275 store openings in nine countries, but this time parent ing a logistics centre for Iberia in Guadalajara, 60 km company Associated British Foods had another surprise from Madrid. It has already had to more than double the for the gathered workers and journalists. size of the distribution centre. It has also recruited buyAfter the ribbon cutting, board member Breege ers specifically for Spain to add clothes more suitable to O’Donoghue named the man to tackle the firm’s potenthe hotter climate to its collections. tially biggest challenge since it began in 1969. Spaniard The lessons learned in Spain on Jose Luis Martinez de Larramendi, targeting local tastes may stand de who has headed Primark in Spain Larramendi in good stead in the and Portugal since 2008, will next “The Spanish public has US. “We take our time to learn,” year take the brand to the US, the O’Donoghue says. “We want a US market that has proved an impos- supported us and made business, not a Spanish business, sible nut to crack for many western us into the number-one European retailers. brand in terms of market not an Irish business.” As in Spain, Primark is likely to In choosing Martinez de share in units sold” evolve its sourcing and distribuLarramendi for the job, Primark has tion chain as it grows business in picked a man who has spearhead- Jose Luis Martinez de Larramendi the country. Initially, it will source ed one of the brand’s great achieveclothes from its current suppliers ments. In just eight years, during in Asia, but it may later build up closer suppliers in counmost of which Spain’s economy has slumped or barely tries such as Mexico. grown, Primark has expanded to more than 40 stores and It will locate stores first in the North East corridor, 114,000 sq m, making the Spanish market more important O’Donoghue says, which has “the same climate as than its home country, Ireland, and second only to the UK. Ireland and the UK”. A 6,500 sq m unit in Boston in Extra space and double-digit increases in like-for-like the Burnham Building, the former home to the famous sales in Iberia have boosted Primark’s results this year. Filene’s department store, will be followed quickly by “Fortunately, the Spanish public has supported us and openings in New York State and Pennsylvania to take it made us into the number-one brand in terms of market to circa 46,451 sq m of retail space in the country. share in units sold,” de Larramendi says. In the US, Primark will find a very well-established Primark has achieved this despite the giant presence of budget sector, including a number of home-grown rifast-fashion king Inditex, not to mention Mango, Desigual vals. Gap’s Old Navy chain, for instance, is already apet al. The world’s largest clothing retailer, Inditex, operpealing to the value consumers that Primark wants to ates eight brands and around 1,800 stores on its home turf. win over. With more than 930 stores in the US alone, It makes a fifth of its €16.7bn 2013 sales in Spain and reOld Navy generated sales of €4.4 bn last year. Then there tains strong shopper loyalty, particularly with its flagship are the nearly 1,200 Ross Dress for Less stores, which brand Zara and teen brands Bershka and Stradivarius. achieved sales of €7.9 bn last year, and which are expandBut de Larramendi has tapped an under-developed ing at nearly 100 stores per annum. Powerful generalbudget niche, as his fashion-hungry compatriots have merchandise retailers such as Walmart and Target also become more cost-conscious in a climate of austerity have substantial clothing sales. cuts, higher taxes and sky-high unemployment. He says While the challenge is formidable, de Larramendi can Primark had no plans to start advertising or to return to take comfort from the fact that Primark’s financial gamonline sales after its brief experiment with ASOS, given ble on the US venture looks manageable. An initial capithe brand’s high-volume, low-margin model. Rather, it tal investment of €252m is being spent, compared to the has taken advantage of increased vacancies and turnobrand’s €5.4bn a year turnover. Primark also has plenty of ver at Spanish shopping centres to secure large spaces of room left in Europe in countries including France, where more than 2,000 sq m. It has also on occasion enlarged its store openings this year have been well received. its leased space in centres, such as Madrid’s Plenilunio, preview magazine I October 2014 I www.mapic.com

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Tips & Services

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Quick before-the-show checklist Have you: prepared your transportation to Cannes? booked your accommodation? logged into the Online Database to set up your meetings, see all MAPIC attendees and discover projects in advance? checked the conference and event programme? downloaded the MAPIC App to stay up-to-date on the latest show news? If you have NOT answered YES to all these questions, visit my.mapic.com to find everything you need to know.

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