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The real estate hierarchy: Retail Space where is retail space in the real estate hierarchy? Acknowledging this, what is the first step before embarking on a new project?
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Retail real estate is the only opportunity for me to
get deep into the consumer world and the community around us. As developers of shopping centres we get to influence society and influence shopping trends
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| what are the new trends that retailers are asking for? Double story facades, larger stores, blended usages? What’s hot now? The biggest trend now is towards larger stores, you’ve hit the nail on the head. This part of the world is one where there is tremendous potential for year on year growth. They don’t want to under develop their stores and have a store that is right for today but too small for tomorrow. So if you can show that you are providing a good venue for them then they will commit to a larger store. Recently, we have been overwhelmed with the areas that the retailers are willing to commit to and the confidence they have in this market. if you are interested in getting into retail real estate what should you understand and what would be your advice? Real estate is one the few industries which is old economy and new economy. It is always a core foundation of society and the business world we live in. It is a tremendously broad and stable industry to participate in. I am also of the view that one can come into the real estate industry in many different ways. You can come into it from a finance, design or engineering angle, or a sales and marketing angle. I started off as a lawyer but I found law and banking intangible and less satisfying than working on something that’s tangible and physical and leaves an impression on the built environment that we live in and that our children will live in. It is hugely satisfying when you walk through a shopping centre and recognising that you were involved in shaping that space where memories and experiences are going to be created forever. That is a tremendous responsibility and a tremendous sense of satisfaction.  If someone wants to get into the real estate industry they should have an affinity and sense of connection. We at Taubman have been known to employ people with no real estate experience at all but have an affinity for it. can you give an example of what you mean by affinity? We recently employed someone from the recruitment industry who had never worked in real estate but he had all the fundamental skills that you want in business, good communication and negotiation skills, critical thinking and judgement and is able to form relationships and networks and close deals. He also understood the responsibility you have as a developer and the value you can create for all the stakeholders in the creation of good real estate. sustainability and green is a big issue. How about retail real estate? All those lights? Yes, it’s one of the top focuses for us as a company, particularly in the U.S. We have turned our attention to the environmental aspects and environmental impacts of developing large scale shopping centres. As a developer we are required to satisfy regulatory authorities of the impact that our shopping centre development will make on the environment around us. In Asia the legislative framework for environmental consciousness is not yet in place or if it is in place it is not yet rigorously enforced. That is something we hope will happen in the future. The focus in Asia is just building as quickly as you can with little regard for what’s going on around you. We are trying to find a balance between the commercial objectives of the project and the environmental impact. You can find an alignment between a commercial objective and an environmental objective. what new trends are you seeing? One of the universal trends taking place is the format of retailing and the different types of retail real estate such as department stores, shopping centres, hypermarkets, high street shopping. In many countries in Asia there hasn’t been a full compliment of those different options. In Japan and Korea the market is dominated by the department store type of retailing which has stifled other forms of real estate for retailing. We are finding that the shopping centre format has become universally accepted. This is a good development for consumer choice. The next generation will be lifestyle centres which will be in Asia in the future as well. are there any lifestyle centres that come close to the U.S. model? There are a few shopping centres in China that have looked at that model and are trying to replicate it. The reason they may not be successful is that there isn’t the depth in the retail market in China. In the U.S. they are sitting on sixty years of retailing experience with an evolved market and thousands of retailers to choose from. In China the real estate model is getting ahead of the business model. It is a supply led boom where the real estate is being developed ahead of retailer and consumer demand. There is so much supply that it simply can’t be filled. RFP. RFP
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Key title: RFP magazine
Abbreviated key title: RFP mag.
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