Report by Alexander Fialka "Trends in redevelopment, reconceptualization and revitalization of commercial real estate" at the Retail & Development Business Summit - 2019

 

Millions of retail space will grow

 

Today in Kyiv 1,300,000 sq m of high-quality retail space. In the next two years, another 600,000 square meters of commercial real estate will appear in the capital. Is it a lot or not?

 

 

Kyiv can easily digest additional areas if they are high quality ones. After all, the population is growing - now 5–5.5 million people live in the Kyiv aglomeration.

On the other hand, population growth is causing numerous congestion in the face of the failure to implement the reform of the main infrastructure.

 

 

Shopping without emotions is no longer needed

 

Today, our most valuable resource is time. And the generation of young people - Y and Z - are no longer ready to spend time trite only on shopping. They need adiitional advantages. Hence the need to make development attractive.

About 20% of shopping centers in America may be closed in the next five years. But it's too early to talk about the death of the commercial real estate market.

We are talking about the need to organize retail space of a different way - with new options, offers, in the format of a multifunctional public space.

 

 

In Ukraine, retail space is also transforming. Some developers completely abandon the retail space on the second floor and use it for office premises. In this interpretation, Silver Breeze, for example, was able to increase productivity by 250%. We can also look at the experience of the Caravan, which carries out a reconception and plans to restart in the format of an outlet center.

The concepts of new shopping centers are also subject to reform. For example, Retroville completely got rid of the ice rink inside, and equipped in its place a space for holding public events and concerts. So the center will attract additional traffic from visitors.

 

Generous visitor - well-fed visitor

 

In addition to reformatting the intended purpose of the space, Retroville has expanded the food court area. An increase in food courts is a global trend. In particular, in American shopping centers, food areas are growing by 4%, in France - by 7%, in the UK - by 8%. In some facilities, the proportion of food courts can reach 40%.

But the size of the place for food depends on the location, the flow of visitors and the needs of customers in each particular institution.

 

 

A show near the office is fine

 

In Kyiv, more than 1,000,000 sq m of office space. The vacancy of office real estate today is below 6%, category A business centers are crazy popular.

This prompted the Lukianivka Mall to revise the concept, halving the area of ​​retail space, 27% of the space was transferred for an entertainment, and about 24% of the space was transferred to the category of office space.

 

Visitors want to relax

 

The number of cinemas and recreation areas for children in the capital's mall is less than in neighboring countries. In the ranking according to the number of visitors to one cinema, only Belarus is ahead of us.

In our mall, there are only 35 cinemas across the country.

 

 

The number of children's entertainment centers in the mall is also clearly insufficient. This suggests that in development there is now a demand for cinemas and entertainment.

Obviously, we should expect an increase in the number of players in this segment. In the meantime, in most cases, the developer is engaged in the intertement.

 

 

How to reincarnate and make money

 

The first thing to strive for is to change on time. A prime example here is Sky Mall. When the company heard that a new shopping center was preparing to launch nearby, the Sky Mall team did a very powerful job. There, the pool of tenants was completely updated, renovated, a family amusement park was created. Understanding what will happen next gives you trump cards.

 

Secondly, shopping and entertainment centers should be integrated into the general development of the district, fit organically into the architecture, and become part of the environment. In Zaporozhye, for example, there will be a center that will connect the city park with entertainment and shopping areas. This gives the developer additional demand. Modern shopping centers no longer look like icebergs, as before.

 

Third - traffic organization of the shopping center. It is important to understand exactly who your customer is, how he gets into the center, what he is looking for. After all, time is the most valuable resource that we have today.

 

Fourth, introducing the right tenant-mix. Today is the time for developers who dictate the most comfortable conditions for retailers. And retailers have clear development plans, often agree to these plans and area restrictions. So developers mix the most convenient combination of tenants.

 

Fifth - the correct analysis of the market, so that millions of money invested are not invested in vain.