1 The Opportunity
Galerie Butovice was a 36,000 sq m shopping centre in Prague, which had been struggling since its opening in 2005. The most problematic period was 2013-2014 when main part of the first floor was closed. The asset was bought by Cromwell Property Group in 2014 and Cushman & Wakefield was appointed for property management and leasing. The project needed significant redevelopment including layout changes, new vertical communication, extension of the F&B segment, tenant mix improvements and especially saturation of the first floor with very high vacancy.
The market position of the shopping centre was very poor with very low demand from tenants. The performance of current tenants was average. Hypermarket Albert occupied 30% of GLA and represented 46% of rental income with clear strategy to downsize. For the Landlord, this situation represented a future that was either very problematic and risky or that had a huge potential for value-adding strategy if successful.
“Redevelopments of shopping centers and improving the quality of catering and leisure is a trend we see across the whole of Europe. The new Galerie Butovice was transformed exactly in this spirit and consolidated its concept of a comfortable shopping center.”– Jan Čížek
2 The Solution
Cushman & Wakefield was involved in the whole redevelopment since the very beginning including consultancy of the future layout, ERV, tenant mix and others. Important part were our B2B marketing materials to present the future of the project, fully prepared by Cushman & Wakefield. We negotiated a deal with KIKA for the extension of the centre by 15,000 sq m, prolongation of the hypermarket’s contract, layout changes of 85% of the centre, new anchors including New Yorker or Lindex and 37 new tenants. Close cooperation between the client, property management, retail leasing team and client’s project management team brought significant improvement of the KPI. New marketing communication, new logo and design changed B2C communication resulting in turnovers increase.
3 The Result
After 4 years of cooperation the redevelopment is finalised and the client is in the exit phase of selling the asset. GLA of the shopping centre increased by 15,000 sq m, which along with other changes including mall turnover increase, rental income increase and occupancy increase resulted in 100% asset value increase. In 2019 the asset was succesfully sold and Cushman & Wakefield’s Investment team assisted the seller.