Shopping Centres Refurbishment and Redevelopment
Shopping Centres Refurbishment and Redevelopment
Shopping Centres Refurbishment and Redevelopment
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<strong>Shopping</strong> <strong>Centres</strong><br />
<strong>Refurbishment</strong> <strong>and</strong><br />
<strong>Redevelopment</strong><br />
Our competences<br />
www.dtz.com<br />
DTZ <strong>Refurbishment</strong> <strong>and</strong> <strong>Redevelopment</strong> 1
Contents<br />
The future for shopping centres in Europe 3<br />
The opportunity 4<br />
<strong>Refurbishment</strong> or redevelopment 5<br />
Key stages of the process 6<br />
Examples of completed projects 7<br />
<strong>Shopping</strong> centre redevelopment Piast, Pol<strong>and</strong> 8<br />
<strong>Shopping</strong> centre redevelopment Regent Arcade Cheltenham, UK 9<br />
<strong>Shopping</strong> centre redevelopment Forum Steglitz, Berlin 10<br />
Our services 11<br />
2 DTZ Refurbisment & <strong>Redevelopment</strong>
The future for shopping centres<br />
in Europe<br />
Maintaining the quality of place<br />
Today’s consumers expect shopping centres to deliver not only high quality but<br />
also added value. As well as dem<strong>and</strong>ing a wide variety of stores, they want to<br />
be able to spend their leisure time in attractive surroundings <strong>and</strong> be entertained<br />
<strong>and</strong> inspired. <strong>Shopping</strong> centres are a public space at the heart of communities.<br />
This is why it is increasingly important to deliver the right combination of stores,<br />
entertainment <strong>and</strong> restaurants.<br />
A critical factor in the success of any centre is the quality of space on offer.<br />
With growing competition for tenants, creating the right space in the right<br />
location is critical if owners wish to maintain or improve their market position<br />
<strong>and</strong> thus their cash flow. Maintaining high quality means adapting to changing<br />
economic, social, technological <strong>and</strong> sometimes political conditions.<br />
<strong>Refurbishment</strong> <strong>and</strong> redevelopment are important interventions to prolong the<br />
lifecycle of a shopping centre. We at DTZ underst<strong>and</strong> shopping centres <strong>and</strong> can help<br />
deliver the best results.<br />
<strong>Shopping</strong> <strong>Centres</strong> <strong>Refurbishment</strong> <strong>and</strong> <strong>Redevelopment</strong> 3
4 <strong>Shopping</strong> <strong>Centres</strong> <strong>Refurbishment</strong> <strong>and</strong> <strong>Redevelopment</strong><br />
The opportunity<br />
In Western Europe where there is a long tradition of shopping centres, the<br />
amount of new space delivered has been shrinking <strong>and</strong> now constitutes only a<br />
small percentage of supply. Many owners of centres 15 or more years old intend<br />
to refurbish or redevelop in order to raise their st<strong>and</strong>ards <strong>and</strong> increase revenues.<br />
We estimate that in France <strong>and</strong> Germany alone close to 50% of existing centres<br />
(12 million sq m of commercial space) will be subject to refurbishment <strong>and</strong><br />
redevelopment in the coming years.<br />
This trend is also a result of the changing strategies of large retailers. Rather<br />
than covering the largest possible geographical area with a network of stores, as<br />
was the case before the economic crisis, they are now focusing on the biggest<br />
commercial centres in the best locations. In order to attract tenants, shopping<br />
centres must offer high quality commercial space <strong>and</strong> be able to deliver<br />
significant footfall.<br />
Whilst the move towards refurbishment <strong>and</strong> redevelopment could be seen as<br />
a temporary consequence of the financial crisis, we believe it is a permanent<br />
trend that will become increasingly evident in the market. Many centres that were<br />
built in good locations in the first half of the nineties now require investment to<br />
continue to generate high revenues, <strong>and</strong> both the cost <strong>and</strong> investment risk of<br />
refurbishment <strong>and</strong> redevelopment can be more favourable than the construction<br />
of a new centre.<br />
The most important goals of the processes of refurbishment <strong>and</strong> development<br />
are to:<br />
• Increase the value of the retail space<br />
• Improve the functionality of the facility <strong>and</strong> deliver high quality, safe public areas<br />
• Reposition the facility in the market through its development <strong>and</strong> change<br />
of tenant-mix.
<strong>Refurbishment</strong> or redevelopment<br />
The major areas of refurbishment<br />
<strong>and</strong> redevelopment are as follows:<br />
• Architecture <strong>and</strong> planning<br />
• Interior design<br />
• Mechanical <strong>and</strong> electricity<br />
• Environmental engineering<br />
• Cost management <strong>and</strong> appraisals<br />
• Project management<br />
• Tenant co-ordination<br />
• Marketing.<br />
<strong>Refurbishment</strong><br />
<strong>Refurbishment</strong> is the renovation of<br />
an existing shopping centre. It is<br />
creating public spaces appropriate<br />
to the contemporary customer along<br />
with bringing technical specifications<br />
up to modern st<strong>and</strong>ards such<br />
as safety, electrical installations,<br />
escalators <strong>and</strong> lifts.<br />
The project is likely to involve<br />
introducing new retailers. This may<br />
require reconfiguration of space <strong>and</strong><br />
moving existing tenants.<br />
The goal of the refurbishment is to<br />
retain the tenants in the centre <strong>and</strong><br />
maintain market position.<br />
<strong>Redevelopment</strong><br />
<strong>Redevelopment</strong> is a much wider<br />
process, which aims to reposition<br />
the centre, increasing its reach <strong>and</strong><br />
improving its market position. This<br />
often includes a thorough overhaul of<br />
the facility <strong>and</strong> can include the building<br />
of additional space.<br />
<strong>Redevelopment</strong> is a more serious<br />
investment that can cause disruption<br />
for tenants occupying the centre,<br />
sometimes making it impossible for<br />
them to conduct their business for the<br />
duration of the construction works. It is<br />
very important to carry out an in-depth<br />
analysis <strong>and</strong> to plan the entire process.<br />
Some changes may be forced by<br />
shifting legal conditions – in the area<br />
of safety for example – <strong>and</strong> that such<br />
changes will not translate directly<br />
into an increase in value or lower<br />
maintenance cost.<br />
<strong>Shopping</strong> <strong>Centres</strong> <strong>Refurbishment</strong> <strong>and</strong> <strong>Redevelopment</strong> 5
PURPOSE<br />
Key stages of the process<br />
AUDIT AND ‘VIP’<br />
REPORT<br />
1<br />
To demonstrate to<br />
clients why they<br />
should consider<br />
undertaking work<br />
on their centre <strong>and</strong><br />
to show what their<br />
options might be.<br />
These are likely to be<br />
one of the following:<br />
1. Refresh<br />
2. Remodel<br />
3. Redevelop<br />
DESIGN<br />
SCHEME<br />
To work up the<br />
selected option to a<br />
high level of detail,<br />
including drawings,<br />
costs, timing,<br />
appraisals <strong>and</strong> tenant<br />
re-engineering.<br />
6 <strong>Shopping</strong> <strong>Centres</strong> <strong>Refurbishment</strong> <strong>and</strong> <strong>Redevelopment</strong><br />
PROCUREMENT<br />
MONITORING / REALISATION<br />
LEASING / MARKETING<br />
2 3 4<br />
To carry out a<br />
procurement exercise<br />
to put together the full<br />
team of consultants,<br />
contractors <strong>and</strong><br />
suppliers needed to<br />
execute the plan.<br />
To carry out periodic monitoring of the detailed<br />
design <strong>and</strong> construction process to ensure the<br />
agreed plan is being delivered on site.
Examples of completed<br />
projects<br />
• Regent Arcade in Cheltenham, UK – Canada Life<br />
refurbishment <strong>and</strong> frontage redevelopment.<br />
• Forum Steglitz in Berlin, Germany – Hammerson GmbH: market<br />
analysis, leasing, refurbishment without closing the centre, new marketing<br />
campaign.<br />
• Sarni Stok in Bielsko Biała, Pol<strong>and</strong> – ING REIM<br />
Decreasing Carrefour space <strong>and</strong> providing units for C&A, New Yorker,<br />
CCC.<br />
• Sarni Stok in Bielsko Biała, Pol<strong>and</strong> – ING REIM<br />
Changing former Galeria Centrum space into unit for TK Maxx.<br />
• MOLO in Szczecin, Pol<strong>and</strong> – ING REIM<br />
Tenant co-ordination during refurbishment <strong>and</strong> shopping centre extension.<br />
• Wars, Sawa, Junior in Warsaw, Pol<strong>and</strong> – ING REIM co-owned with CDI<br />
<strong>Refurbishment</strong> of former Galeria Centrum space into units for<br />
Marks & Spencer, Reserver <strong>and</strong> TK Maxx.<br />
• Galeria Pomorska in Bydgoszcz, Pol<strong>and</strong> – Balmain<br />
Reducing the size of Carrefour <strong>and</strong> building two fashion units <strong>and</strong> key turn<br />
pharmacy. New unit for McDonalds.<br />
• Galeria Pomorska in Bydgoszcz, Pol<strong>and</strong> – Resolution<br />
Internal refurbishment, changing the size <strong>and</strong> shape of retail units.<br />
• Galeria Bemowo in Warsaw, Pol<strong>and</strong> – Bainbridge<br />
Building kids play unit <strong>and</strong> shopping centre management office.<br />
Our clients<br />
Bainbridge<br />
Balmain<br />
Canada Life<br />
CRI<br />
Hammerson GmbH<br />
ING REIM<br />
Resolution<br />
Unibail-Rodamco<br />
<strong>Shopping</strong> <strong>Centres</strong> <strong>Refurbishment</strong> <strong>and</strong> <strong>Redevelopment</strong> 7
Case study<br />
<strong>Shopping</strong> centre redevelopment<br />
Piast, Pol<strong>and</strong><br />
Project: Piast <strong>Shopping</strong> Centre<br />
Owner: ING Real Estate Investment Management<br />
Location: Szczecin, Pol<strong>and</strong><br />
Opening: November 2000<br />
Managed by DTZ: from March 2006<br />
Number of tenants: 37<br />
Main tenants: Media Markt, Carrefour, Drogeria Natura,<br />
Deichmann, CCC, Komfort<br />
Situation before redevelopment<br />
• Lease area 25,767 sq m<br />
• Majority of local tenants<br />
• Poor interior design<br />
• Lack of national <strong>and</strong> international chain fashion retailers<br />
• Low attractiveness of the building for potential tenants<br />
• Drop in footfall in the centre<br />
• Poor awareness of ‘Piast’ br<strong>and</strong><br />
• Lack of entertainment offer<br />
• Significant increase of number of competitive centres in<br />
the nearest future<br />
• Auchan – very well merch<strong>and</strong>ised hypermarket together<br />
with its shopping gallery<br />
• Media Markt is the strongest draw<br />
• Food court only with local operators.<br />
8 <strong>Shopping</strong> <strong>Centres</strong> <strong>Refurbishment</strong> <strong>and</strong> <strong>Redevelopment</strong><br />
Main goals<br />
• Optimising the retail space <strong>and</strong> centre functionality<br />
• Developing modern space for major retailers<br />
• Developing integrated <strong>and</strong> defined tenant mix based on<br />
new letting strategy including strong fashion br<strong>and</strong>s<br />
• Creating new br<strong>and</strong>ing for Piast SC<br />
• Renegotiation of leases with the exclusivity clauses in<br />
order to develop proper tenant mix<br />
• Negotiating long term leases.<br />
Results<br />
• Additional lease space of 3,000 sq m<br />
• Decrease of Carrefour space <strong>and</strong> re-design of the unit<br />
• Re-design of the shopping centre layout to be more<br />
transparent <strong>and</strong> convenient for the clients<br />
• 40 new shops in the shopping mall gallery with modern<br />
fit-out<br />
• New, strong anchor tenants such as TK Maxx, H&M,<br />
Cubus, New Yorker, Reserved, Cropp, House,<br />
Home & You, Douglas, Burger King<br />
• Tenant-mix improvement with well known international<br />
br<strong>and</strong>s for fashion, health <strong>and</strong> beauty, kids <strong>and</strong> services<br />
categories<br />
• Remodelling of internal design: new colour scheme,<br />
green areas, rest areas, new shop fitting<br />
• Remodelling of external design: new facade, new panels<br />
for tenants logo, re-design of road access<br />
• New marketing strategy including the new image, new<br />
shopping centre name <strong>and</strong> logo – Molo - <strong>and</strong> activities<br />
increasing br<strong>and</strong> awareness.
Case study<br />
<strong>Shopping</strong> centre redevelopment<br />
Regent Arcade Cheltenham, UK<br />
Project: Regent Arcade, Cheltenham<br />
Owner: Canada Life (long leaseholder)<br />
Location: Cheltenham, UK<br />
Opening: November 2009<br />
Managed by DTZ: from 2002<br />
Number of Tenants: 68<br />
Main Tenants: anchor – BHS with over 60 stores<br />
<strong>and</strong> 7 restaurants<br />
Situation before redevelopment<br />
• Centre suffers from poorly designed entrance atrium <strong>and</strong><br />
low ceilings with poor quality finishes <strong>and</strong> restricted daylight<br />
• Units towards front of the centre are poorly configured<br />
with low visibility from the high street into the main arcade<br />
• Ongoing requirement in the town from national retailers<br />
for flexible <strong>and</strong> well configured space; existing units are<br />
too small <strong>and</strong> lacking depth<br />
• Risk of losing tenants to the nearby Beechwood <strong>Shopping</strong><br />
Centre thus restricting trade <strong>and</strong> future rental growth.<br />
Main goals<br />
• <strong>Refurbishment</strong> <strong>and</strong> frontage redevelopment<br />
• To refurbish <strong>and</strong> redevelop the existing shopping centre<br />
to provide high quality retail space to anchor the front<br />
of the scheme with a view to maintaining the scheme’s<br />
dominance within the town <strong>and</strong> ensure its long term viability<br />
• To provide the client with management <strong>and</strong> leasing<br />
advice as well as advising on the negotiations with the<br />
council to secure a regear of their headlease.<br />
Results<br />
• Planning permission for a new frontage has been obtained<br />
• This involved significant consultation <strong>and</strong> design work<br />
to ensure that the development was appropriate for the<br />
historic town centre<br />
• DTZ advised on the commercial aspects (feasibility,<br />
viability, leasing <strong>and</strong> design development) of the frontage<br />
redevelopment to ensure that the highest quality retail<br />
units were designed having regard to the potential to<br />
change <strong>and</strong> subdivide the space to provide as much<br />
future proofing as possible<br />
• DTZ provided the client with management <strong>and</strong> leasing<br />
advice as well as advising on the negotiations with the<br />
council to secure a regear of the headlease.<br />
<strong>Shopping</strong> <strong>Centres</strong> <strong>Refurbishment</strong> <strong>and</strong> <strong>Redevelopment</strong> 9
Case study<br />
<strong>Shopping</strong> centre redevelopment<br />
Forum Steglitz, Berlin<br />
Project: Forum Steglitz, Berlin<br />
Owner: Hammerson GmbH<br />
Location: Berlin, Germany<br />
Opening: after refurbishment May 2007<br />
Managed by DTZ: January 2002 - March 2009<br />
Number of tenants: 63<br />
Main tenants: H&M, Esprit, Karstadt<br />
Situation before redevelopment<br />
Why refurbish the Forum Steglitz?<br />
• Competiveness of centre decreased within the years<br />
• The shape <strong>and</strong> size of the units no longer matched the<br />
dem<strong>and</strong>s of the retailers<br />
• Few new retailers <strong>and</strong> poor lease terms<br />
• Growth of competitive retailers <strong>and</strong> shopping centres in<br />
the neighbourhood <strong>and</strong> catchment area<br />
• Change of the purchasing/shopping habits of the<br />
customers<br />
• Old building structure, not customer-friendly <strong>and</strong> modern<br />
• Timeline: good timing because of leases expired<br />
• Retailing on five floors with poor circulation.<br />
10 <strong>Shopping</strong> <strong>Centres</strong> <strong>Refurbishment</strong> <strong>and</strong> <strong>Redevelopment</strong><br />
Main goals<br />
• Increase of rental income - securing of return of<br />
investment<br />
• Improved energy efficiency<br />
• Reducing service charges for tenants <strong>and</strong> owner<br />
• Co-ordination of planning <strong>and</strong> construction works<br />
• To keep the centre opened during refurbishment work<br />
• To provide marketing during constructions works to<br />
inform customers.<br />
Results<br />
• Step by step refurbishment without closing the centre<br />
• Analysis of refurbishments goals, target groups, possible<br />
equipment<br />
• Analysis of letting market, dem<strong>and</strong>s of tenants <strong>and</strong><br />
potential tenants<br />
• Analysis of footfall, customer habits <strong>and</strong> dem<strong>and</strong>s<br />
• Analysis of current leases (e.g. rents, durations, break<br />
options, service charge agreements )<br />
• <strong>Refurbishment</strong> agreements, short-term agreements <strong>and</strong><br />
termination agreements with tenants<br />
• New lettings, owner covered buildings costs for tenants<br />
• New marketing for the centre, newly developed logo.
Our services<br />
DTZ provides unique solutions to increase the value of<br />
shopping centres using a combination of local expertise <strong>and</strong><br />
global knowledge.<br />
We underst<strong>and</strong> that people create the strength of any<br />
company, which is why we hire the best professionals to<br />
deliver exceptional service <strong>and</strong> support our clients’ longterm<br />
success.<br />
• Property <strong>and</strong> asset management<br />
• Agency – retail <strong>and</strong> leisure, office <strong>and</strong> industrial<br />
• Investment consultancy<br />
• L<strong>and</strong> <strong>and</strong> development consultancy<br />
• Consulting <strong>and</strong> research<br />
• Project <strong>and</strong> building consultancy<br />
• Valuation <strong>and</strong> appraisals<br />
• Hospitality.<br />
Contacts<br />
Martyn Chase<br />
European Retail Sector Head<br />
+44 (0)20 3296 4232<br />
martyn.chase@dtz.com<br />
Thomas Willekens<br />
Belgium<br />
+32 (0)3 303 10 09<br />
thomas.willekens@dtz.com<br />
Petr Sulc<br />
Czech Republic<br />
+420 234 262 210<br />
petr.sulc@dtz.com<br />
Jean-Philippe Carmarans<br />
France<br />
+ 33 1 47 48 77 24<br />
jean-philippe.carmarans@dtz.com<br />
Martin Lange<br />
Germany<br />
+49 (0)30 201705 541<br />
martin.lange@dtz.com<br />
Cuno van Steenhoven<br />
Netherl<strong>and</strong>s<br />
+31 30 60 222 11<br />
csteenhoven@dtz.nl<br />
Patrick Delcol<br />
Pol<strong>and</strong><br />
+48 (22) 222 31 00<br />
patrick.delcol@dtz.com<br />
Razvan Sin<br />
Romania<br />
+40 21 310 3100<br />
razvan.sin@dtz.ro<br />
Maria Krumlinde<br />
Sweden<br />
+46 8 671 34 93<br />
maria.krumlinde@dtz.com<br />
Hugh Radford<br />
UK<br />
+44 (0)20 3296 4179<br />
hugh.radford@dtz.com<br />
<strong>Shopping</strong> <strong>Centres</strong> <strong>Refurbishment</strong> <strong>and</strong> <strong>Redevelopment</strong> 11
Property management <strong>and</strong> project management<br />
DTZ is a leading global real estate company with over 4,700 professionals<br />
in 145 cities in 43 countries. Our portfolio comprises over 30 million sq m of<br />
properties under management with over 60,000 leasehold <strong>and</strong> freehold interests.<br />
We were the first real estate adviser to be listed on the London Stock Exchange<br />
in 1987.<br />
DTZ manages more than 250 retail schemes in Europe. Our global team is united<br />
by a single focus: to deliver exceptional service, rooted in a deep underst<strong>and</strong>ing<br />
of our clients’ needs <strong>and</strong> a commitment to their long-term success. We call this<br />
Bringing You the Power of One – offering deep knowledge of local markets<br />
together with the best of our global expertise.<br />
Our professionalism has been proved by numerous awards <strong>and</strong> by our clients’<br />
ongoing satisfaction.<br />
www.dtz.com<br />
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