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The Warsaw Voice » Real Estate » June 17, 2010
The Real Estate Voice
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Finger on the Pulse
June 17, 2010   
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Good asset managers keep their fingers on the pulse of shopping centers and are ready to react if market trends or customers’ needs change, Renata Kinde-Czyż, a member of the management board of Metro Group Asset Management, tells Magdalena Fabijańczuk.

When does an asset manager typically begin to work for a shopping mall?
As soon as possible. In many cases we are asked to develop the project from scratch. In our case we believe in innovative and sustainable concepts for malls, which should be integrated into the planning process.

However, if we understand a center manager as an asset manager, he or she should start at the latest when the process of planning the tenant mix starts.

Before planning the tenant mix, extensive market research is needed to identify customers’ needs and the optimal future positioning of the center compared to the positioning of the competition in the region.

The choice of tenants and the quality of lease contracts are decisions which determine the mall’s value for many years to come, and they also play a major role in the volume of store sales and the type of customers visiting the mall.

Does this mean that once a shopping center has the right mix of tenants with high rents and lease contracts extending several years ahead, the asset manager can sit back and relax for a while?
A professional asset manager should never sit back and relax. They represent at least three interest groups; the owner, tenants and customers.

For the owner, they should focus on increasing the value of the property. In relation to tenants, the asset manager should be trustworthy, customer-oriented and punctual. Retail chains expect them to draw as many visitors to the mall as possible. This is vital for higher sales.

The third group are the customers. A friendly atmosphere, safety, efficient cleaning service and comfortable architectural solutions make visitors feel good and happy to come back.

How can an asset manager help increase the market value of a shopping mall?
Potential buyers/investors always look at the revenues generated by rents. Thus, we constantly monitor the tenants’ performance and question if there is an optimal mix of brands. Sometimes new tenants need to replace those whose sales are on the decline. On other occasions, when we see development potential, we advise the owner to expand the mall, but that, of course, depends on the location. Another way to increase the value of a shopping center is to add new buildings on existing property, for example DIY or sports stores.

Last but not least, I believe that investment in sustainable technologies, using renewable energy and minimizing operational costs will soon influence the value of real estate.

The prices of utilities have been systematically growing for years and so it may turn out that it is more worthwhile investing in solar, geothermal and wind power systems in the long run and in this way reduce the operational costs on the one hand but also increase value on the other hand. Even today there are excellent “intelligent” building management systems, such as those which adjust lighting, heating, ventilation to the real needs.

Expenses at shopping malls include the costs of marketing. Does it make sense to economize on marketing?
It never makes sense to economize on marketing. Marketing is an important part of the budget and an equally important determinant of a mall’s market position. Special events such as picnics, concerts and exhibitions not only draw customers to a mall, but also encourage them to spend more time there, creating pleasant memories of the place and encouraging customers to come and visit again. Marketing operations should also contain a clear message about what makes your mall special, what differentiates it from competition.

What is special about the M1 shopping centers you manage?
The M1 centers are managed by an international team. We source new ideas from all over the world. Metro Group Asset Management is part of one of the biggest retailing companies in the world. This influences our management processes and our cooperation with tenants. Our M1 centers are customer-oriented and family-friendly shopping centers. Parents who come to shop at M1 can leave their kids at special baby-sitting spots. While the parents go shopping, the children can take part in lots of different games or learn English. Our shopping centers have vast, user-friendly parking lots and all stores are located on one level. How is that family-friendly? Well, just ask any parent who needs to move from one floor to another in a mall while pushing a stroller or watching over two little children. We also have picnics and other special events at M1 for entire families, making sure any event of this kind has some educational value as well. Last but not least, when we search for tenants, we see to it there are stores with goods for the whole family.

Metro Group Asset Management is part of the international Metro Group retail corporation. In Poland, the company manages the Metro Group portfolio (Makro Cash & Carry, Real hypermarkets, Media Markt and Saturn stores with consumer electronics) and shopping centers owned by Apollo Rida and Legnicka Development.
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