Monday, July 15, 2024
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Transformation of Retail Real Estate

Changing and Adapting with the Times

Retail has been the commercial real estate chameleon, as it has altered and reinvented itself through unique and ever-ranging challenges, such as the rise of e-commerce and of course, Covid-19. As the post-pandemic rebirth of the sector continues, RLI will spend the next few pages looking at a selection of retail examples and retail real estate developments that highlight the changes in the industry in recent times.

With the end of lockdown, the retail real estate sector showed significant growth last year, explains Helen Belskaya in her article ‘Retail real estate sector is booming: how digital transformation can help to succeed?’ and she continues by saying the forecasts for this year prove this tendency with a retail vacancy rate falling to 4.2 per cent. She comments that digital transformation has significantly impacted retail real estate. First of all, it has led to fundamental changes in the way retailers approach their physical spaces.

Separately, Alex McCulloch, Director at CACI explains: “It is widely acknowledged that Covid pushed the consumer landscape forward five years, with the proportion of online spend increasing to a peak, then unsurprisingly dipping and hitting its current plateau at 39 per cent of all comparison goods. We’ve also seen a transformation in how we shop, with more consumers now using online for convenience and physical retail more for experiences, which coupled with the already tight retail market – and, in turn, accelerated vacancies – has forced owners to look at the nature of the offer. The food and beverage sector has seen a rise across all centre classes except for leisure parks, which have placed a greater focus on alternative leisure outlets such as competitive socialising.

Alex continues by saying that a further Covid impact that adds a degree of nuance to the nature of that offer is the importance of community; for people to feel like the places they visit reflect themselves and their values. This is best captured by incorporating independents, particularly in the leisure and catering sphere, to create that unique proposition. In the last year, 36 per cent of regional malls have increased their independent offering, with zero per cent decreasing, closely followed by 31 per cent of outlets and 29 per cent of suburban centres. We have seen that consumers have been determined to hold onto their leisure spend and to better value their retail spend.

Transformation of Retail Real Estate 1
Champions Park, Warsaw, Poland
Developer: Champions Developments

Read on to see a selection of concepts and projects from across the world of retail and retail real estate…

Transformative Projects Around the World
American luxury brand Coach has unveiled a new immersive retail concept store in a converted Boeing 747 aircraft which brings a whole new meaning of flying coach and the retail concept is situated at Freeport A’Famosa Outlet in Malacca. Dubbed ‘Coach Airways,’ the outlet store and cafe are built inside a real 1981 Boeing 747-230B aircraft and customers are given an entry pass resembling an air ticket to browse the store, which features Coach’s all-gender ready-to-wear, bags and travel accessories. The plane is also equipped with a welcoming area, an immersive gallery and a contemporary café, providing guests with a space to relax and drink refreshments while enjoying the immersive retail experience. Coined the “Queen of the Skies”, the plane is more than 231ft long with a wingspan of around 195ft and it took two years to convert into a fully decked-out store.

Royalmount, a major new retail and lifestyle destination coming to Montreal next year, has today announced Saint Laurent, Versace, Jimmy Choo, Michael Kors, David Yurman and TAG Heuer as the latest luxury brands set to open, with first launches in summer 2024. Royalmount is a $7bn, mixed-use development in the heart of Montreal, featuring retail, offices, restaurants and entertainment, all surrounding our engaging central park. The first phase will consist of 824,000sq ft, two-level retail and lifestyle complex. Royalmount will be the first 100 per cent carbon-neutral mixed-use development in the Americas and the largest LEED Gold retail project in Canada. Being delivered by real estate development and management company Carbonleo, it aims to bring best-in-class brands and experiences to the Quebec market. Upon opening, Royalmount will become the preeminent destination for shopping, dining and entertainment in Eastern Canada. Offering more than simply a place for transactions, Royalmount aims to bring people together in an environment that prioritises emotional wellness and happiness. The destination will focus on sustainable retail, connectivity and inclusive luxury where every shopper can find something to enjoy. Royalmount will reflect the evolving approach to how locals and visitors shop, work and explore new experiences.

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NEOM, Saudi Arabia
Developer: PIF

Nan Fung Group has announced the soft opening of AIRSIDE, its 1.9 million square-foot, 47-storey mixed-use development in Hong Kong’s Kai Tak in Q3 2023. In a separate announcement, Japanese lifestyle retailer Muji said its 12,000sq ft store within AIRSIDE is slated to open in September 2023. The 700,000sq ft mall offers an extensive mix of premium tenants, including home-grown brands, international cuisines and experiential retail, with almost 80 per cent of the space already leased. A 25,000sq ft City’Super store joins Muji among other retail anchors, in addition to around 40 F&B outlets and world-class entertainment, such as Hong Kong’s first large-scale indoor surfing centre. A new MCL Cinema spanning over 30,000sq ft and comprising seven cinema houses, can accommodate up to 900 movie-goers. The development will also feature a pet-friendly hub. Renowned architecture firm Snøhetta is behind the design, drawing inspiration from the intense fusion of natural elements, historic structure and contemporary urban spaces in Hong Kong. Their design invites the outside in and seamlessly connects to the main surrounding features in the area, including the Kai Tak Park and Kai Tak River. Aside from retail, the development dedicates over 10,000sq ft of space to art and culture, with a diverse range of exhibitions and programmes. The development also includes 32 floors of Grade A office space, with around 400,000sq ft already pre-leased to three global corporations.

11 SKIES is a future HL$20bn mixed-use destination located at SKYCITY. It is a game-changing destination that innovatively combines world-class retail, dining and entertaining experiences with a Grade-A business cluster. At over 3.8 million square feet, 11 SKIES stands as the largest all-in-one retailtainment destination in Hong Kong. It houses over 800 shops, 120 dining concepts and Hong Kong’s largest indoor and immersive entertainment zone at 570,000sq ft. Three thematically-designed business towers specialising in cross-border professional services complete the 11 SKIES ecosystem, making this the must-visit destination in Hong Kong. Opening in phases between 2022 and 2025 by developer New World Development, the project is strategically located right next to the Hong Kong International Airport, Hong Kong-Zhuhai-Macao Bridge and Tuen Mun-Chek Lap Kok Link and will benefit from a high volume of passengers who travel through Hong Kong International Airport, which will become a centrepiece within the GBA ‘one-hour living circle’ and a gateway to the rest of the world. The project has also recently won the RLI Future Project award at the Global RLI Awards 2023 at the Pan Pacific London hotel.

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The Ellinikon, Athens, Greece
Developer: Lamda Development

Champions Park by developer Champions Developments will be a sustainable, self-sufficient “5-10-15 min” mixed-use development located in the suburban area of Warsaw in Poland next door to the state-of-the-art football training centre of the top tier multi sports club Legia Warsaw. The goal of the development is to create a place where everyone can become the “champion of their life”. Champions Park project is a development of a new “garden city/community”. The Market Square or otherwise called the Downtown is the retail and entertainment centre of the development. It includes the commercial/ lettable areas as well as external public and semi covered spaces. This is intended to be the centre of the development where the placemaking activities such as events, entertainment, retail, F&B, services and others will be located. Phase one is set to open in 2026 and the overall development will also feature a SPA and sports hotel with 120 keys, cover a site area of 230,000sq m and a commercial area of 200,000sq m.

Lamda Development has revealed its plans for Riviera Galleria and Commercial Hub retail destinations at The Ellinikon, Greece’s and Europe’s greatest urban regeneration project that is being built on the former Athens airport. Adjacent to central Athens, the nearby Piraeus Port and the International Airport, The Ellinikon is unique in Europe for its location, its size — three times larger than Monaco — as well as its scale and ambition. The Ellinikon will set new benchmarks for the future of Mediterranean coastal development — for integrated, sustainable living; for iconic placemaking; for smart-infrastructure; and for its broad base of business potential, from tourism to innovative commercial properties to ground-breaking destination retail. A collection of several communities will be home to thousands, supported by essential services available to all – such as education and healthcare. This groundbreaking development is on course to open in 2025.

Following its success at Gravity Wandsworth, Gravity Active Entertainment utilised the lessons learnt from the Wandsworth location for its Liverpool ONE site, its biggest Gravity location to date. With over 100,000sq ft of unrivalled fun and entertainment in the heart of Liverpool ONE, the new site is home to 11 immersive experiences including e-karting, bowling and urban golf. It will also offer food and drink and live entertainment. The Liverpool ONE unit will also feature the company’s recently launched Gravity Max concept. The idea behind this is that the attraction is family-orientated during the day but then come 8 or 9pm, the lights go down, the music goes up and the venue turns into a young adult-themed location until 1am. This allows it to offer a unique site that offers multiple uses at different times of day.

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Royalmount, Quebec, Canada
Developer: Carbonleo

Developed by Battersea Power Station Development Company, Battersea Power Station opened last year and is at the heart of one of central London’s largest, most visionary new developments, which will see this vast 42-acre (over eight million square feet) former industrial brownfield site become home to a community of homes, shops, bars, restaurants, cafes, offices and over 19 acres of public space. This legendary London landmark and surrounding area has been brought back to life as one of the most exciting and innovative mixed use neighbourhoods in the world – a place for locals, tourists and residents to enjoy a unique blend of shops, bars, restaurants, leisure and entertainment venues, parks and historical spaces. It is a place to shop, eat, drink, live, work and play.

Infiniti is set to be a timeless destination for upscale 360° lifestyle experiences. Specializing in building high-end modern developments, ranging from residential to commercial, Ajdan brings contemporary luxury living to the most prominent locations in Saudi Arabia, the GCC and beyond. With a sharp eye for state-of-the-art design and an unwavering commitment to creating spaces that bring the outdoors inward, Ajdan is at the forefront of innovation in MENA real estate. The towers have been designed with each and every resident in mind, giving all residential units a view of the Arabian Gulf; rest assured knowing that the sea will accompany you all throughout your day. Each tower is complete with an infinity pool and modern landscape design. With 45,510sq m of property, an upscale F&B area, contemporary high-end residential towers and cutting-edge amenities, we’ve designed a living destination that puts your mind at ease. Situated in AlBahar District, Khobar, you’ll find yourself right amidst the liveliness of the new downtown with exciting destinations like SEVEN Entertainment, Dhahran Expo and Saudi Aramco. An opening date for the scheme is yet to be announced.

Unlike Saudi’s other giga-projects, Roshn is delivering new urban communities across the kingdom. Backed by the PIF, the real estate developer is creating its communities in cities such as Riyadh, Jeddah, Al Kharj, Al Hofuf, Al Qatif, Makkah and Abha. These feature pedestrian-friendly ‘living streets’, green spaces and retail and entertainment outlets, as well as hospitals, medical centres, mosques and sports facilities. Having been established in 2019 by Saudi Arabia’s sovereign Public Investment Fund (PIF), ROSHN specialises in developing integrated urban neighbourhoods featuring residential communities with modern standards across the Kingdom. The idea behind the project’s launch was to meet the demand for new housing supply while developing integrated neighbourhoods, localising international best practices, incorporating the latest technologies in construction and enhancing the quality of life. As a Saudi giga-project, ROSHN creates comprehensive communities to elevate the standards of living in Saudi Arabia and contributes to the objectives of VISION 2030, including enhancing the quality of life for the Kingdom’s residents. Soon after launching in November 2020, the real estate giant unveiled its first project, a community in Riyadh. Spread across 20sq km, the megaproject comprises more than 30,000 homes and is an integral part of ROSHN’s 10-year mandate to develop communities across the Kingdom. In August 2021, the project was named “SEDRA”. The mega development is strategically located north of Riyadh, south of King Khalid Airport and within close proximity to Princess Nourah University. The giga-project also aims to raise the rate of homeownership to 70 per cent in the country and the design of SEDRA is inspired by Salmani architecture.