The stuff of leadership

The Polish retail market is among the most developed  in Central and Eastern Europe. To whom do we owe this success?
Mladen Petrov

It no longer causes a big sensation anymore when a Polish shopping centre wins another prestigious award. They have been consistently lauded as among the best facilities of their type in Europe. The prizes are appreciated, but few remember that the local modern retail market, considered to be a model in the CEE region, is only ten years old if we take its birth to be the opening of Galeria Mokotów in 2000.
Shopping centres for everyone
What have been the most important events on the market within the last ten years? Who would the sector in its broadest sense choose to be the developer of the decade on this basis? The major developers named by our interviewees – including ECE Projektmanagement, Echo Investment, Globe Trade Centre, Plaza Centers, Neinver, ING Real Estate Development, TriGranit and Metro Group?  Or should the smaller ones with more unique projects be credited? In private, market experts are keen to name actual companies, but on the record they prefer to be more circumspect, and even though a picture of the perfect developer emerges from their statements, any declarations as to who is closest to this ideal are much more cautious. “Three aspects count for me. The first of these is the quality of the project. This means the development of environmentally friendly centres. There are some developers that are focused on the rapid sale of their facilities, so they optimise construction costs. I would also assess the developer of the decade in terms of their honesty and reliability in business, i.e. how they treat their partners. The number of developed facilities is also not without importance. The bigger the number, the easier it is to establish that the business is a success and is suitable for duplicating,” explains Andrzej Sitko, director of the Polish branch of Arup – a consultancy that offers project management services. In his opinion the best developers should not forget who they are building their facilities for. “I cannot think of any really bad examples of Polish shopping centres, I mean people-unfriendly ones, because after all each of them functions in one way or another, but are they friendly for everyone? I do not think so. There are admittedly toilets for the disabled, but they are often hard to access. Also the elderly feel excluded from society sometimes, forming the impression that shopping centres are not for them,” emphasises Andrzej Sitko.
A wide selection
Maciej Mazur, president of the management board of Mallson Polska, which includes among its services the commercialisation of retail facilities, would most like to recognise more than one developer. He comments on the diversity of the candidates for the title of best shopping centre developer. “Our market is already so developed that choosing only one developer would be slightly unfair. On the one hand, we have large, experienced international players; while on the other there are local investors who have often staked everything on one roll of the dice to build the project of their lives. Fortunately, there is no shortage of such examples in Poland. For me as a market participant, but also as a resident of Poznań, the company which best deserves a mention is Grażyna  Kulczyk’s Fortis for the utterly exceptional Stary Browar centre. I think that Stary Browar contributed to a large extent to changing the poor image of shopping centres several years ago – and this was in the eyes of both local authorities and members of the Polish public,” claims Maciej Mazur.
The first to brave the smaller towns
“The length of time on the market, the number of delivered projects, the success of the project measured by the prestigious awards received in the country and abroad, the size of the project, its retail offer... there a lot of criteria that can be taken into account,” enumerates Agnieszka Michalczewska, head of the retail department at King Sturge. “We should not forget about innovative approach, either. Echo Investment was the first developer that was brave enough to enter smaller towns. Others needed a few years to make the same decision. For me as a leasing agent, the most important factor is the ability to cooperate with a developer that can listen and wants to draw its knowledge from an agent,” adds Ms Michalczewska.
According to Andrzej Sitko of Arup, the developers which have taken on the difficult task of revitalising the biggest cities by means of shopping centre projects deserve special recognition. “Projects such as Warsaw’s Złote Tarasy or Galeria Krakowska in Kraków have shown that a city can benefit from shopping centres and re-activate areas that had been neglected. We should also wish good luck to the developers that are taking on this considerable task in Katowice and Poznań,” argues Andrzej Sitko. So we are keeping our fingers crossed for Neinver, a company of Spanish origin that is working together with Polish State Railways (PKP) on the re-development of a railway station in Katowice, and for TriGranit, which is cooperating with the same partner on a similar project in Poznań.
The tenant’s viewpoint
Tenants also have to benefit from shopping centres. Nisan Cohen, the deputy financial director of Cinema City International, a cinema operator and at the same time a shopping centre developer (including Warsaw’s Sadyba Best Mall), lays stress on the way tenants are treated. “We have gained experience in both camps, and for us the way a developer strives to foster good relations with tenants is the most important thing. The key here is the facility management style.” According to Nisan Cohen, the developer of the decade title must go to the company that started all the positive changes in Poland: “It is a hard question because there are a lot of good candidates in Poland. But the pioneer – Globe Trade Centre – should receive the most recognition. The way in which Galeria Mokotów contributed to the development of the district is impressive indeed.” “And what about the developers that contributed to the further growth of the market,” wonders Maciej Mazur.
Drawing up a wish list
Jacek Kopija, the vice-president of the management board of Top Secret, takes into consideration relations with developers in three basic stages of project development: the design and commercialisation stage, the construction stage and finally the facility management once the mall has opened. In the first stage it is the developer that approaches the commercialisation process of its centres in a ‘friendly’ way. “The company clearly outlines the concept, the tenant mix and the activities aimed at promoting a given shopping centre. It takes long-term results into account while choosing its tenants, so it cannot allow for random brands in unplanned places. It does not fix its position regarding leasing contract provisions and treats both large and small tenants fairly.  In the shopping centre development process the best developer is the one that actively helps tenants to solve their problems on the construction site.  It is one that does not shirk its responsibilities,” says Jacek Kopija. “When it comes to facility management, we appreciate effective shared cost management through tenders for the services of shopping centres, reducing the consumption of electricity and other activities aimed at lowering the operating costs of the property. An important element is the transparency of shared costs when settling accounts with particular tenants,” adds the vice-president of the management board of Top Secret.
Piotr Mierzwa, the development director of Intersport Polska, adds that a clear contract, including estimated costs, has to form the basis of this. “We have learnt from our own mistakes how to deal with hidden costs. Meeting construction deadlines and opening the centre on schedule is the developer’s responsibility and proves its efficiency. I do not want to generalise, but big companies, thanks to their solid experience, on the whole manage projects more swiftly during the development process,” adds Piotr Mierzwa.
Developer-facility manager
“It might seem that the issue is obvious. The best shopping centres for tenants are those where they make the most money. According to this criterion, it is very easy for us to determine the developer of the decade – we can just look at the sales results. When it comes to the developer-tenant relationship, opinions are divided among tenants. “When an external company manages a centre, we have often been the victims of a short-sighted approach. A company is waiting for the end of its contract and is focusing on quick results instead of a long-term vision. This is why we generally prefer the developer to also be the facility manager,” explains the representative of the Intersport chain. He recalls a situation when maintenance costs grew three times within one year. “Tenants were not even offered any explanation for such a sudden rise. Developers must understand that the success of tenants is their own success, too and that we are not fighting on different sides,” concludes Piotr Mierzwa.