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Shopping centre reactivation

Rafał Paszkiewicz, Head of Project & Building Consultancy, DTZ

Extensions and redevelopments of retail projects take place increasingly often; they require significant expenses and can be a challenge from both technological and formal point of view. A well-planned and successfully carried-out investment gives benefits not only to the developer but also to the local community - says Rafał Paszkiewicz, Head of Project & Building Consultancy, DTZ.

What benefits can be achieved when deciding to redevelop or extend a retail project?

The decision to extend or redevelop a shopping centre results not only with the increased value of the fixed asset, strengthening of the market position or increased income from operations but also improves the tenant mix and the satisfaction level of the customers. It can also improve the spatial environment. However, this requires a broader view from both the owner and all parties involved. Economic calculation is crucial, however being aware of needs and the effects of changes in the broadly defined market, including the spatial environment has tangible meaning.

Wouldn't it be easier to extend an existing and well-known project rather than introduce a completely new one to the market?

Building extension takes place in an operating facility and is a tremendously demanding task. However, as time goes by, extensions of existing developments will become the necessary factor that grows in parallel to construction of new buildings. In 2012, 15 existing shopping centres were extended, while 33 new projects were constructed (including 19 shopping centres, 8 freestanding retail warehouses, 4 retail parks and 2 outlet centres). Introducing changes in existing projects is justified by changes in their context, e.g. competition from new  schemes, but also expansion of cities, including development of transporting system furthermore the desire to keep the market position and the effects of normal everyday use. .

When to decide on an extension or redevelopment? 

My advise to clients is to make the decision on extending in advance, after a detailed analysis of the current situation, trends and forecasts concerning the market and having validated the possibilities of introducing changes to the tenant-mix. However, when negative tendencies can be observed, such as a turnover decrease, a vacancy rate increase, a drop of footfall – then it is the highest time to verify the model and prepare alternative scenarios of the recovery plan. The primary measure to be taken is changing the tenant-mix and correcting some of the mistakes in the layout, which had been made during the planning stage. In properly managed retail properties, changes are introduced on current basis...

Read more Almanac of Shopping Centres 2013/2014

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