Above standard

Aneta Cichla, ‘Eurobuild Central & Eastern Europe’: Inter IKEA Centre Group Poland has announced its new strategy that involves buying finished retail facilities. When can we expect another transaction?

Mikael Andersson, managing director, IICGP: Indeed, we are now planning to buy shopping centres for our portfolio. However, our main activity involves the construction of new shopping centres under our own brand, starting from the land purchase to the opening of the centre. Our shopping centres are usually integrated with an IKEA store as our partner. There have been some opportunities to purchase new malls for our portfolio, which we took in the case of Wola Park. The mall has great potential and it fits into our portfolio. If we find a product equally suitable for us, we will consider buying it. This is not our priority, but we have not ruled out such acquisitions.

So what do you expect from a mall? What criteria should it meet?

We are interested in shopping centres that are established on their local markets and in good locations. They have to be competitive with a suitable footfall and turnover as well as the potential for further development, so that we can add something from ourselves and strengthen it. This is what Wola Park is like – it has a very good reputation, it is stable and has opportunities for changes.

Which cities do you want to invest in?

We are interested in the largest Polish cites. The capitals of regions.

For example in Szczecin, near ul. Cukrowa?

It is too early to speak about our plans concerning Szczecin. Together with IKEA Retail we have been surveying different cities all over Poland.

You have already invested in a plot in Zabrze. What will be built there?

Our aim is to create a shopping centre that is open to the city and integrated with an IKEA store. We are currently negotiating with some of the largest retail chains about this location and are preparing the concept. It is very significant in the case of this city. Everyone who has heard about us building a centre in Zabrze thinks: ‘but it is only a short way from Katowice and Silesia City Center, whichhas a full commercial offer’. This requires us to create something different, more local, for customers based in Zabrze and its immediate area. We are still in the preliminary stages of this project.

Meanwhile the project in Lublin is slightly more advanced. What is the leasing level of the centre?

In Lublin we have started the redevelopment of the road layout and are now working on the concept of the project. We want it to fit in with the market and fulfil consumers’ expectations as much as possible. I think that it will take us a few more months to be able to come up with more details for the project. The launch of the construction work is also subject to the level of leasing, which is currently nearing 50 pct. However, I would like the construction process to be launched in the middle of next year.

The concept must stand out – Lublin is a very difficult market. To name just two large investments: the newly opened Atrium Felicity shopping centre and Tarasy Zamkowe, which is still under construction.

It is a difficult one, but it is alsovery interesting. This is why we want to tailor the project to customers’ requirements. We always analyse the local market carefully for each project. Particularly considering the fact that it is becoming increasingly mature, it is not enough just to build a shopping centre and fill it with popular brands. You need to respond to local needs – and not only in terms of retail. Thus thorough research and analysis of a location is needed. We want to create something more than simply a good place for shopping. It is supposed to be the heart of the area, reflecting consumer habits, their specificity and the history of the place.

Returning to Wola Park, the extension work is now in progress. What are your plans exactly?

Yes, the work in underway. The new section will have a leasable area of 17,500 sqm, 10,000 sqm of which will be occupied by Castorama. Around 20 other stores will be opened over the remaining space, mainly from the fashion segment. Wola Park is now twelve years old and so it is in need of a face-lift. Because of this the centre will be refurbished, especially its food court, which will be moved to a section of the second floor near the cinema. We are working on creating a specific atmosphere for the place.

The visualisations look very good...

We will make an effort to eliminate the difference between the new and the old part which will be refurbished. We want current customers to benefit from the changes and feel involved in the process. We are planning to redevelop the area in front of the facility and are investing a lot of energy and money in it. We want Wola Park not only to be a modern shopping centre but also a place for nearby residents. It is supposed to be an area not just for shopping but also rest and relaxation.

When will we be able to see the results of the changes?

The opening of the new section is planned for September 2015. It will be a busy autumn because we will be finishing the extension of the Bielany retail park in Wrocław at the same time.

The Bielany retail park is your other project that is under construction. How is it progressing?

We are currently working on the construction of the underground car park, the refurbishment of the older part of the facility is also in progress. As far as the tenants mix is concerned, each of our malls must include the top brands. This is the basis. We are supposed to be distinguished by what we offer on top of this standard. People need to be offered something more nowadays. For example, we organised an architectural competition for the Bielany retail park, which involved students from the Wrocław Academy of Fine Arts designing the leisure areas. Thanks to this we are developing the local character of the complex and forming a bond with residents.

You touched upon the issue of the character of shopping centres.What is a shopping centre for you?

For me a shopping centre is not just a building that contains shops. It is also a place for meetings, spending free time and generally an interesting spot. It is popular and satisfies many different needs. I have lived in Poland for nearly 18 years now. I have observed the transformation of the market. I have seen the births of subsequent generations of shopping centres: starting from hypermarkets to modern shopping and entertainment centres. Now we are looking at the different generations of consumers. There is a lot of talk about the X, Y and Z generations. Each of them has different needs, represents different shopping behaviour or habits. We are trying to find an approach that will suit them all. I can see changes in how people are spending their free time, which is something that provides clues on how to design retail facilities. Some consumers are doing their shopping via the internet, but they haven’t stopped visiting shopping centres – they still come here to meet others, sit in the cafés, work on their laptops or read a book. So there must be something that keeps drawing them in. Therefore a shopping centre’s function needs to change from a building containing shops to a place that is pleasant to visit and where you want to spend your free time. In my opinion, they should take on the role that city squares used to have.

Is the behaviour of Polish consumers in line with global trends?

Poles are very aware and modern customers. Here all the transformations are taking place very quickly. Sometimes they are two steps ahead and sometimes they are one step behind. I also have some experience in residential and logistics projects. All businesses in Poland are characterised by their cyclical nature. For example, everybody starts investing in something, then they suddenly stop and the situation turns around 180 degrees. This is all extremely interesting, which is why I still work here. What I am observing now in terms of, for example, the macroeconomic situation is positive. The unemployment rate has been falling, purchasing power is strengthening – these are impressive results compared to other countries. Customers still want to invest, buy apartments, become more prosperous – but in a more balanced and prudent way. These are very positive signals.

But retail chains are no longer as optimistic in this respect. The leasing of space in shopping centres has become rather difficult of late.

This is true. Tenants currently want to recoup what they have previously invested in their businesses. Developers were quite greedy at a certain point, they expected high rents and other fees. I can understand that. However, the time has come to find a common solution. Lowering rent to levels unacceptable for developers will also not result in anything positive. If tenants’ expectations are too high, developers’ business will stop being profitable. It is important to work out a win-win situation, which each party can benefit from. Some retailers are not growing as fast as they once were, because they are closing down unprofitable outlets and focusing on the best ones. So it cannot be said that the general market situation is the only source of problems in terms of commercialising malls. Each tenant has their own development model and various reasons for limiting or extending it. Online sales, the effects of which also affect us developers, also have an impact on retail chains’ growth plans. We depend upon one another and this is something that should never be forgotten.

So what is your response to the growth in internet shopping?

It needs to be brought into shopping centres, of course, but we cannot let it become the main way a mall functions, because then the physical existence of a retail facility would make no sense. More and more retail chains are opening online shops, but there are also those that used to only operate online shops but are now starting to open outlets in shopping centres. Both parties, the developer and the tenant, should find a way to benefit from online sales. And here’s the challenge: everyone has their own business area, so new arrangements need to be worked out. I hope we are heading in the direction of increased mutual understanding. The most important thing is not to lose sight of the customers and their expectations because, after all, our work boils down to satisfying their needs.

Which kind of tenant is growing at the fastest pace these days?

This is something I touched on earlier – you need to look at what people are doing in their free time. These days a shopping centre should include a cinema, a fitness club and a good gastronomy offer. It is not enough to set up a simple children’s playground. It has to be a place offering educational attractions that teach kids something. A ‘storage room’ for children is not enough. The mall should offer something more useful and promote additional cultural or educational values. Some people would like there to be more than just a shopping offer, something that goes beyond retail, so that they do not have the sense of wasting their time in a shopping centre, but instead gain something valuable or develop their interest there. Thus you need to take care of the quality of services offered. This requires closer cooperation with the tenants, but many do not want to take part in this. ν

Changing the cee retail landscape
Mikael Andersson has been the managing director of Inter IKEA Centre Group Poland since 2012. Prior to this he held the position of regional development manager responsible for Central European markets: Poland, the Czech Republic, Slovakia and Germany. A total of six projects in Poland, one in Slovakia, three in the Czech Republic and four in Germany have been carried out under his supervision. He has worked in the sector for over twenty years and has been in charge of the implementation of construction projects both for IKEA companies and other major developers. Inter IKEA Centre Group Poland is a member of the group of IKEA companies. It creates, develops and manages retail complexes where IKEA stores form an important element. The company is currently the owner and manager of eight retail parks and shopping centres located in some of the largest cities in the country: Warsaw, Łódź, Gdańsk, Katowice, Poznań and Wrocław. Furthermore, it is working on more projects: the construction of a shopping centre in Lublin, and the extensions of the Bielany retail park in Wrocław and Wola Park in Warsaw. This year the company also purchased a site for a new project in Zabrze.