Local heroes

Rafał Ostrowski, ‘Eurobuild CEE’: You’ve been active on the Polish market for three years, during which time you’ve built up a portfolio of three shopping centres and three retail parks. What is going to be your next move?

Rory Mepham, CEO, Newbridge: Our goal is to convert these assets and others that we acquire into neighbourhood hubs. What I mean by that is that we want to manage our centres to become central to the communities in which they are located. These are not very big centres, but we want them to contain all the necessary shops and amenities that the people who live in the local community will want to use several times a week. We are not particularly interested in the type of large format shopping centres that typical shoppers might visit once a month. We are more focused on local neighbourhood schemes, which people might want to visit quite regularly – up to two or three visits a week to satisfy their regular shopping needs.

How can you ensure that your retail assets become centres for their local communities?

There are a few ways of doing this. What we want in our shopping centres is a mix of retailers that people tend to need for regular shopping trips. For example, a bank or banks, a hairdresser, a grocery, a pharmacy, a drug store, some basic fashion, maybe some electronic goods, possibly sports goods – just the basic things that people need when they go shopping. So that’s one thing, the tenant mix. The second thing is to host other events and activities to give people a reason to visit the centres regularly. So this could involve a food market or a local cycling event, a pop-up cinema... the kind of event that involves working together with community interest groups, like bike clubs. We want to make such events a regular feature in our centres. And then there is a third element, which we would describe as placemaking. What I mean by this is making our centres a pleasant and nice environment for people to spend time in – and that includes providing nice quality public areas, sitting areas, green areas, play areas, a park and so on. And these would come together with amenities, such as nice quality changing facilities for children and babies, and family areas. So it’s basically those three things: the tenant mix, events and nice quality public areas.

Smaller centres generally don’t hold such events and provide public areas. Do they?

Perhaps not. As I said, the goal is to make our centres central to their communities. That means providing not only a location for people to shop in but also for them to spend their time in. It doesn’t have to be a big centre to provide an attractive environment for people to spend time in together with their families. So this may not be typical for smaller centres, but it’s something we want to do. And the fact that we are smaller actually means that we already have some convenient and ready to use tools for achieving this. You can’t lose your car in a car park and you don’t have to walk for ten minutes from the car park to the shop you want to go into.

Who will bear the cost of adapting your centres in this way?

We are going to bear the expenses. We believe that this is an investment worth making.

You said you will be working closely with the local authorities. In what sense?

There are a couple of areas where we want to work together with the authorities. Events is one of these, in the sense that our centres can provide the facilities and perhaps even some sponsorship for the hosting of community events. The second thing we want to work together with local authorities on is the merging of residential districts with our projects. Many of our schemes are surrounded by residential buildings. We can provide some amenities on our sites for the people who live in the neighbourhood. This could mean, for example, a park or a play area for children.

Have you already had some success with this kind of scheme?

We’re still in discussions with local authorities. There is one project that we want to do in Toruń. There is a large green space between our site and a local high rise residential area that is owned by the local authorities, so we are talking to them about how we can work together on improving this green area and turning it into a more public-friendly space, which will also provide a link between our centre and the residential area. We might, for example, contribute to the costs of creating a nice public area on the local authority land. We believe that in this way we are supporting the local community and making schemes that are even better for people to use. We have a similar project in Łódź. There is a great deal of new residential development being built around our project. We have a lot of green space on our land, but at the moment it’s just bare grass. We would like to add some amenities so that the people who live around our project can actually come and use it as a place to spend time. It could be a nice children’s play area and could have a couple of cafés and restaurants. So we’re talking with the authorities about obtaining the permission to do this.

You said you are going to acquire more assets. Could you shed some more light on these plans?

Currently we have a portfolio of about EUR 150 mln and we would like to at least triple that in the next two or three years.

Is there enough product available to achieve such a goal?

Yes, there is some competition – but we believe we can get there.

Where will you be looking for these opportunities?

All over the country. The smallest town we have a project in has a population of 20,000 people, that is Namysłow in western Poland, 40 km east of Wrocław. Our main selection criteria is that our scheme needs to be a primary shopping destination for the local community.

And the other selection criteria?

If this is a primary shopping destination that probably means that the centre includes a grocery store or it’s located next door to one. In Namysłów, for example, our scheme is next door to Lidl and Kaufland stores. It’s a similar story in Włocławek, where we are located next to an Auchan and a Lidl. In Kraków, Łódź and Toruń our schemes include Carrefour supermarkets – and probably for 60 pct of the customers of those centres their primary reason for visiting us is to go to Carrefour. So having a grocery component is vital.

Why have you chosen to invest in retail, in particular ?

I believe that the growth of the retail sector is the one that is most closely aligned to the growth of the economy. What I mean by this is that as GDP increases, people’s wealth increases, and their capacity to spend more on retail increases. So, when that happens, the ability to create value out of investing in the retail sector increases. That’s why we decided to go into retail. The other thing is that investing in retail is a little bit out of fashion in Western Europe and the US – where a lot of the money that gets invested in Poland comes from. So investing in the retail sector is probably a little less competitive than buying into the office or the industrial market, so that creates a better and more balanced environment for buyers than, for example, the industrial sector, where there is a very large amount of competition for deals. ν