A question of style

This season, Quality is definitely in. As investors and developers fight tosecure financing for their projects, counting every penny, thearchitectural and fitting out quality of upcoming retail projects is not expected tosuffer

Mladen Petrov

Bbetter –and not only in theUS                                in thelast year. Developers across theglobe are looking tomake savings, no matter what thestate of their financial health might be. Sticking tothebudget or even developing aretail project with anew, lower price tag is not only desirable, but is amust. This is clearly one of thepositive lessons investors and developers have learned during thecredit crunch – as long as they find away tomake savings without thequality of thesche                 not many investors are currently prepared totake development risks. In many instances thedebt financing has been secured, but theequity bit is not quite there,” explains Mr Klammer. The latter group, obviously, is the one looking to make additional savings.                                         on weare able togenerate between 15 and 25pct savings compared totheinitial construction budget,” Marcin Klammer observes. He goes on to add that: “The green theme, on theother hand, is not such ahigh priority yet as it is with office buildings. Developers, however, are putting thegreen issue higher up their agenda, as failure toaddress energy efficiency may hinder thepotential sale of theasset in thefuture.”    Republic          nagement and sustainability at Multi Development, believes that developers should not be stingy when it comes tolavish design, and that thesame also applies totechnical details. “Weoften hear that sustainability is expensive, but it is not. All you need todois re-think your strategy. There are plenty of affordable options, such as natural ventilation and free cooling. Obviously using renewable energy sources comes at acertain price, but there is ananswer tothat too.” In three of its shopping centres in Western Europe thecompany is applying what Mr Rehorst terms “aclever energy concept giving profitable results”, meaning that these facilities are able toproduce and sell acertain amount of energy toother parties. “Cost-wise wecan afford tolower theservice charges in our malls, and allow thetenants tospend more on rent. And – last but not least – it needs tobe remembered that in thelong run non-sustainable projects will be penalized, so thedeveloper should take measures now,” claims Arco Rehorst.

Also in November, TriGranit, which has teamed up with Polish company IPR, completed the91,000sqm Bonarka City Center mall in Kraków. The price tag on theproject, EUR 350mln, is certainly not cheap. Simon Bayley, TriGranit’s chief development officer, makes it clear that thecompany is not looking for savings at theexpense of theproject’s quality – in fact, thecompany would rather reduce thenumber of projects in its pipeline than to dramatically cut costs. “Theimpact of thecrisis on these types of projects is less than on weaker projects, and this is highlighted in Silesia City Center where wehave seen increasing footfall, sales turnover and where thenew owner Immoeast is currently planning a20,000sqm expansion. So in such situations there is less pressure tolook for savings and reduce thequality of your projects.” Savings, however, can be made. “Weare looking to economize bymaking subtle changes in thedesign –           “Weare very choosy when it comes tomaterials. And of course elaborate design is amust. No one wants todevelop ashopping centre that people don’t like.”                                       Architects in theCEE region donot suffer from low self-esteem, as local studios are now adequately qualified todraw up large scale projects, while thedays of hiring international architects belongs tothedistant past. TriGranit’s Simon Bayley confirms this: “Our design tenders are open tolocal and international companies, but   
  Arch Magic’s Paweł Graliński agrees that good architecture is currently available at adiscounted price, without going into details. “International and local design studios working on large projects work pretty much on thesame fees. It is only natural that developers are pushing for lower fees in adifficult market and while this will go on for awhile it will not last forever. There is too much added short and long term value in prime design toignore it.”