Europe is not enough

Ewa Andrzejewska, ‘Eurobuild Central & Eastern Europe’: The last few months have seen some considerable changes in your company.

Barbara Topolska, chief operations officer, Neinver: Indeed. In the last few months we have undergone a number of significant changes related to the adoption of Neinver’s new strategy for developing the company. We have adjusted our structure to our present needs, stemming from the launch of new projects in Germany, France and Spain and our entry onto a new market, as well as our continuing search for further development opportunities. Now the key areas of the company’s operations are managed at the global level, leaving the management of individual centres at the local level. The change has given us a deeper appreciation of our specialists from Poland, who are now working in an international environment in the new structure: Bożena Gierszewska is responsible for the asset management of the entire portfolio of the company, Rafał Elżanowski is the head of new projects carried out not only in Poland but also in Germany and the Netherlands, while Monika Olejnik-Okuniewska is responsible for our marketing activities in Poland and the marketing of new projects abroad.

Coming back to your territorial expansion. You mentioned the seventh country that Neinver is now active in.

The seventh country of Neinver’s operations is the Netherlands, where we are carrying out the Amsterdam The Style Outlets project, which will be showcased during this year’s Mapic fair. It will be a centre with an “in the village” format, located a dozen or so kilometres away from the centre of the city. In the first stage we will build a retail area of 18,000 sqm and 1,000 sqm will be earmarked for gastronomy. Its opening is planned for 2017.

You also mentioned South America.

In Europe we are a strong player in the outlet centre sector, but the development possibilities in Europe are shrinking. There is still France and Germany, where you can make a lot of money, but the administrative processes in these countries take a long time and we want to act faster and more efficiently. Bearing in mind that we are a Spanish company, South America seems to be the closest fit for geographical expansion. We have analysed the region in terms of the legal regulations, its potential and business operating methods. It turns out that it has much in common with the Spanish market. So it seems that South America is the natural direction of expansion for Neinver, after looking at the local conditions and risks resulting from operating businesses.

What is your timeframe for this?

The next two to three years. It is, after all, a new continent for us, so we have to prepare well for such expansion. This is not Europe, where both us and the investors we cooperate with know what to expect in terms of the profitability and consumer behaviour. We will have to learn everything we can and adapt our outlet models in the best way to the local conditions. The best bets are Brazil, Chile, Peru, Mexico and even Columbia. Another direction, Asia, also seems to be an obvious place to go, considering how much Asians like shopping, how much they love brands and how dynamically this part of the world has been developing. In fact, there are countries there where we would like to expand our presence.

Asia or South America – which will be the first to see the opening of a Neinver outlet?

South America.

Does this mean that you will be scaling back your activity in Europe?

Europe is our core market. We have 15 outlet centres here, as well as some retail parks and two large shopping centres. In Spain we have also in the past built warehouse, office and residential facilities. But now we want to focus on France, Germany and the Netherlands – they are the countries where we want to build. We are also carrying out a long-awaited project in Barcelona, the preparation of which has taken us a dozen or so years. However, we are not giving up on what we have achieved so far, so we are not giving up on Poland. We have achieved a strong position of stability in the outlet centre sector, dominating four key regional markets by building five outlet centres. We are looking for new locations, but we will not be carrying out projects which in our view have no chance of becoming successful. This is the case for Szczecin, where there is already an outlet centre operating on the market. At the moment we cannot see any room for another centre with a similar profile in the city. Besides, this would not be welcomed by the market – among the Polish investors and tenants we have cooperated with for many years and who know the potential of the outlet business. However, I think that there will eventually be a shift on the outlet market in our country. Our talks with international brands, who have been monitoring the situation in Poland carefully, seem to point to that.

Can you disclose which brands these are?

It is too early to do so, as we are still negotiating. But when we meet the representatives of premium or luxury brands, the situation looks much better than it did some time ago. Then there was nothing we could talk to them about, but now they are asking us a lot of questions about the state of the  Polish retail market today and our plans for the future. The majority of these brands are interested in entering Poland in the new few years. Warsaw is their first choice, of course.

Can you not see any more room for outlets with the Factory logo in Poland?

At the moment I have the opportunity of viewing the Polish market from an international perspective and I can assess it in the context of what has happened or what will happen in the near future. I think that the situation is clear in Poland at the moment – the market is ready for outlet centres with a maximum area of 20,000 sqm. This is a model we have tried and tested and know that we are able to fill with tenants. We are also thinking about extending the scale of these centres, as in the case of Factory in Ursus, where the construction of the third phase with an area of 6,000 sqm is currently in progress. I think that the situation across Poland will be analogous to the situation in Warsaw in the next few years.

Ursus is being enlarged – but what about your Poznań and Wrocław centres? Are they going to be extended too?

As I said, I expect that the situation on the other markets to become similar to that of Warsaw. Then we will certainly be ready for further extension stages of the Factory centres. Even in Warsaw’s Ursus district we still have room for additional space to be developed.

And what about new projects in Poland?

Nothing has changed in this respect. We are still looking for good, niche projects. As we recently was the case with Galeria Malta – as well as Galeria Katowicka, which was developed in cooperation with PKP and the Meyer Bergman fund. The latter project required a great deal of involvement from us, but it also taught us a lot and provided us with the know-how needed for the implementation of large, untypical projects.

You have also entered a bid to take on PKP’s Warszawa Główna station redevelopment.

We are fully motivated to carry this project out. Of course, the investor which is eventually chosen is a decision that will be made by PKP, but it will be taken in Q1 2015 at the latest. Neinver is currently on the list of five potential investors. We know that it will be a difficult and long-term project and that the location requires it to become a new showpiece of the city.

What distinguishes Neinver’s offer from the bids of the other investors?

This is a question that PKP should be asked. So far it is too early to expect a definite response from PKP. But we are convinced that our proposal is good. We have some experience in building not only square metres but also projects that meet all the expectations of cities, consumers, investors and tenants.

Coming back to Katowice. The final stage of the project was supposed to be an office building.

And an office building is still to be built in the final stage of our project in Katowice – nothing has changed in this regard. However, we will not start the construction work before we reach a suitable level of leasing for the space in the building.

Perhaps it would be better to sell it?

Each project of this sort is intended to be sold eventually. We are discussing terms for the potential exit from the  Katowice project with our partners: PKP and the Meyer Bergman fund.

But I don’t remember seeing you at the Expo Real investment fair?

Nowadays you do not need to go to Expo to find an investor.

Some of your projects have been acquired by IRUS Property Fund, which was established in 2007.

We have transferred 13 properties to the fund – and these are properties we have built ourselves or bought especially for the fund.

Are you planning to raise money for another fund?

We are currently working on such a concept. However, it is too early to talk about details.

Your The Style Outlets chain operates only in a number of Western European countries. Will any centres bearing this logo be appearing at any point in Poland?

The Style Outlets is an outlet centre concept that works well in Western Europe and this success is based on the offer of the centre, which is dominated by premium brands. Our aim is not to change the logo in Poland from Factory to The Style Outlets. If we introduce a new brand here, we would first change the entire concept – and then the change in the name and logotype would just represent the crowning of this process. But at this point the Factory brand is strong and well recognised in Poland. And we have been working to build this position on the market for the last fourteen years.

Is online trading also having a negative impact on the profitability and footfall of outlets?

At this time we are registering stable sales and footfall growth in our centres, so e-commerce is certainly not having a negative impact on our operations. However, we know that young people represent a completely new type of consumer who wants to have access to goods and services not only on their computer or laptop but also on their mobile devices – and it should be “right here, right now”. This will certainly change the face of the market, which will be much more global, while shopping and outlet centres will have to find a way to become an attractive alternative to mobile phone shopping for these consumers. ν

From Poland to Spain

Barbara Topolska has been acting as the chief operations officer at Neinver’s Spanish headquarters since mid-2012. She has over 18 years of professional experience on the real estate market. Barbara joined Neinver in 2003 and is now responsible for managing Neinver’s assets, whose total market value comes to more than EUR 2 bln. She is also responsible for all the company’s operations related to development and expansion onto new markets. She also supervises the ongoing strategic management of the malls owned by Neinver Group. A graduate of the Jagiellonian University in Kraków, she has recently completed MBA studies at the renowned Carlson School of Management of the University of Minnesota. Neinver, which was established in 1969, is currently active in seven countries: Spain, Poland, Italy, France, Germany, Portugal and the Netherlands.