31 October, Re Quadro
The 95 Sq m space in Galleria Vittorio Emanuele has been provisionally assigned by the City of Milan to Longchamp, which will replace Stefanel. With an upset price set at 175 thousand euro, the French brand obtained the lease of the space for 760 thousand.
Source: Re Quadro
Translator: Cristina Ambrosi
08 October, Bebeez
Ubs acquired a high-end building in Via Tornabuoni, Florence, through its fund UBS (CH) Property Fund – Europe. Cushman & Wakefield was the advisor for the operation. The asset covers a GLA of 1,700 Sq m and develops over three floors divided between two historic buildings, Torre dei Gianfigliazzi and Palazzo Tornabuoni. The building is leased to three leading luxury brands: Ermenegildo Zegna, Damiani and Dior.
Source: Bebeez
Translator: Cristina Ambrosi
24 December, La Repubblica
It was Prada that started a game which saw prices growing and growing. Prada triggered the bid that transformed Galleria into a money machine with its 59 thousand Sq m and 149 shop windows. In 2011, Prada beat Apple obtaining a 4,187 Sq m space from the ground to the top floor occupied at the time by McDonald’s. The brand made the record offer of 5.2 million euro per year for the first five years, which became 9 million with the agreement signed in 2013. Now that the contract is about to expire, Prada will pay to the City of Milan 2.2 million on top of the current yearly rent of 520 thousand euro in order to keep its location. With the new lease, the city administration will achieve incomes for 37.5 million in 2019. They were 26 million at the beginning of the Sala administration, 8.2 million in 2007.
This time, an auction wasn’t necessary to assign the spaces. As City Councillor for Budget Roberto Tasca explains, “the shop belongs to Milan’s cultural heritage”. After all, Prada was born in 1913 right here, from a small shop in Galleria that used sell suitcase, handbags and walking sticks in 1920. The products were so elegant, that Mario Prada ordered the mahogany and brass furniture from Pollard Padd in London, while the famous Scala theatre scenographer Nicola Benois created the two large panels. These elements are still in the shop. As a result, the Ministry for Culture started a procedure to preserve the shop.
Following the same logic that forced the City of Milan of repeating the call of bids for the spaces of Gatto Rosso and Salotto, considering their historical value, the city administration decided to renew the lease for other 12 years. As Tasca remarks, the new contract “will be more convenient for the City administration, pursuing the road of preservation of the cultural heritage which has given excellent results so far, with the benefit of the city finances”. Moreover, the appeal of Galleria keeps growing thanks to the tourist and the international hype of Milan. Fashion brands are willing to pay high rents to secure a spot between marbles and frescoes. The latest offer comes from Moncler which will replace Urban Center. The brand had more than doubled the auction starting price for 1.2 million by bidding 2.5. Before that, Yves Saint Laurent offered raised the auction price from 131 thousand euro to one million for an 80 Sq m space with just one window. That’s the same money paid by Cracco for its multifloored restaurant. Tasca endorses this process: “the more we earn from Galleria, the fewer Milanese will have to pay. Galleria is open also at night. For me, the shopping centre option is not that bad as someone else say”.
Source: La Repubblica
Translator: Cristina Ambrosi
20 January, Manager Italia
During the RICS conference taking place in these days, experts and players of the sector discussed the trends of the retail market.
The participants have been: Mario Abbadessa, Managing Director & Country Manager of Hines Italy; Monica Cannalire, Head of Retail Agency JLL; Maurizio Ciabatti, Worldwide Real Estate Director of Prada; Corrado Trabacchi, Investment Director of Orion Capital Managers.
More in detail, the conference was an occasion to discuss the future and the opportunities of the retail market, and the future trends for investors as well as for retails were highlighted.
1- The retail outlet is the protagonist
Monica Cannalire, Head of the Retail Agency JLL, said: “The shop remains an important protagonist of the retail, as we noticed with the last transactions and openings, like Urban Outfitters in Milan; this trend will continue also in 2018, when we will see important flagship stores of new brands not yet on the market: Starbucks, Uniqlo and other surprises on large space. There are different brands that are looking to expand in the main Italian cities, in high streets as well in shopping centres, plus the new hybrids such as the innovative Citylife Shopping District. The role of the shop is evolving: today it’s an interface with the retailer, a contact point and a complementary loyalty channel for e-commerce, the place where shop assistants are brand ambassadors rather sellers. As usual, the retailer world never sleeps.”
2-High street retail
Mario Abbadessa, Managing Director & Country Manager of Hines Italy, said: “2017 was a particularly satisfying year for Hines Italy in terms of operations and development projects. Also 2018, we continue to see important opportunities, in high street retail in particular, but also in other fields, especially in Milan, Rome, Venice, which offer excellent opportunities in terms of quality estate properties strategically located. In fact, our focus is to find the hidden value of this estate, keeping sustainability in mind and in a long-term perspective.”
3- Shopping centres, a positive cycle
Corrado Trabacchi, Investment Director for Orion Capital Managers commented: “Unlike the United State where the market is saturate, if not overcrowded, Italy is at its beginning of a positive course for shopping centers. Besides Milan that has already a pipeline of important projects, other Italians cities like Rome, where we invested two years ago, Venice and southern Italy in general have a huge potential for this kind of operations. Because the retail sector is aiming at having fewer shops but with important and profitable spaces rather than a capillary but less profitable distribution.”
4-Leisure and entertainment
As it emerges from the JLL’s report “Italy Retail. Trends Belpaese, Shopping, and Real Estate”, the retail has transformed and it’s not able to offer an experience that goes beyond selling products, offering also leisure and entertainment to visitors, for example with playgrounds for kids. With this mindset, even the food offer plays a strategic role in attracting the most selective and informed customers. More and more stores that will have spaces dedicated to the organic and ethnic food, gourmet as well as local food.
5-Technology and the human interaction
Technology is a growing reality that has a significant impact on sales and customers choices. However, who uses a physical channel to do his/her shopping recognizes the importance of human interaction. Sales assistants are destined to become actual brand ambassadors capable of providing information to customers and of sharing the brand’s values.
6-The evolution of costumer
For what concerns the physical channel, this faces a customer that has evolved, who tends to acquire information on the web in real time, to read product reviews and feedback and to carefully evaluate his/her purchases (webrooming). Therefore, the store will have to improve its pre and post sales services giving the chance to customer to negotiate a convenient final price.
7-For the investors: flexibility, dimensions, and exit strategy
For what concerns investors, the JLL report confirms some trends. Flexibility: a flexible layout is a potential advantage for the future since diversity calls interest, increases transitions and improves revenue. Dimensions: investing offers the opportunity to create an advantage in the redevelopment and development of new areas able to offer engaging experiences to customer and brands. In additions, size offers the opportunity to make economies of scale for both single operations and for the entire portfolio. Exit Strategy: a shopping mall that is the core of an area, must be a fluid investment, refundable at any moment. For this reason, it is necessary to choose the right consultants that guaranty transparency, trust and an incomparable tax structure to sustain the risk profile.
To grant the interest of international investors in our country, RICS decided to organize a second European Retail Conference in Milan planned for the 6th February 2018. This event represents one of the most interesting appointments for the retail market internationally where the main players of the business will gather.
“In less than 2 months, Milan will be the capital of the European Retail market for a day” declared Daniele Levi Formiggini, MRICS and President of RICS. “The RICS European Retail Conference will take place this year in our country. The leading companies of the industry will attend demonstrating how Milan has grown in the last few years and has become an important point for international investors, like Paris, London and Berlin”.
Source: Manager Italia
Translator: Cristina Ambrosi
03 January, Europe Real Estate
AXA IM – Real Assets has completed the acquisition of a prime retail asset in the centre of Venice, Italy from a private investor for €45.75m.
Serving as Zara’s flagship outlet in Venice, the high street property totals 2,660 m² arranged over five floors, making it one of the largest retail stores in the city. The asset was launched in its current form in October 2017 following a comprehensive redevelopment from office use to deliver a modern and high-specification retail offering which was pre-let to leading international fashion brand Zara, part of the Inditex Group, who is committed to a long-term lease.
The property is located on Calle Zorzi, just a few meters from the Piazza San Marco district in the epicentre of Venice and home to its most famous landmarks. As one of the most visited cities in the world, Venice has a significant retail offering to complement its historical tourist attractions, with luxury operators prominently represented in the San Marco high street cluster. The city is well connected by car, train, boat and an international airport, facilitating the constant inflow of visitors.
Alessio Lucentini, Local Head of Asset Management & Transactions, Italy, at AXA IM – Real Assets, commented: “This acquisition represents an excellent addition to our portfolio, providing us with exposure to the retail market of one of Italy’s most dynamic and frequented cities, Venice. This asset makes a significant real estate investment on account of its unrivalled location, prime quality and the strong covenant of its tenant, Zara. More broadly, we remain confident in the ability of the retail sector to provide secure, long-term income streams with regards to the best properties in the strongest locations and we continue to harness our local team’s expertise to seek out value enhancing opportunities for the benefit of our clients.”
05 December, Avvenire
The shopping centre that recently opened between the two towers designed by the stars Libeskind and Isozaki, where there was once the Milan Fair, is the physical denial of the apocalyptic visions of the extinction of the physical shop in favour of Amazon and e-commerce in general. It shows the effectiveness of the real estate that acts in physical spaces, not virtual ones.
The opening of the shopping district in City Life, with restaurants, cinemas, shops with their shop assistants, changing rooms, cashiers and windows, is not the only case. In Italy, retail is experiencing an extraordinary moment. In fact, along with the explosion of e-commerce, we’re assisting at the rebirth of shopping centres.
The growth of e-commerce in Italy is mighty: according to the figures of the B2C Commerce by Netcomm and by the School of Management of Politecnico in Milan, in the last five years the online purchases of physical products have almost tripled, going from 4.3 to 12.3 billion euro, surpassing this year the online purchases for services such as travels and insurance policies. There is still space for growth if we consider that the online market represents 6% of the Italian shopping, a relatively low number compared to the 12% of France, the 14% of Germany and the 19% of the United Kingdom.
The growth of shopping centres is surprising too. According to the latest survey by Cushman & Wakefield on shopping centres, Italy is the most dynamic country in Western Europe, with 100 thousand Sq m surface created in the first part of 2017. After 16 new openings in 2016, included Centro di Arese, one of the biggest shopping centres in Europe, this year we’ve seen 10 additional openings, among which City Life and Adiageo in Verona. The last census by the retail consulting company Reno carried out together with the association for franchising Confimprese, reports 949 shopping centres in Italy, 42 more than 2012. There are 18 new openings expected by 2020, among which there will be Westfield, a 1.4-billion-euro project in Segrate that might become the biggest shopping centre in Europe.
“Yes, this is a good moment. We report an increase of visits to big shopping centres, with an increasingly articulated merchandise offer”, confirms Gianenrico Buso, Reno managing director. But the growth is not everyone. Some small and local shopping centres are struggling, lacking big brands and other attractive elements. The big shopping centres are the most successful, able to offer something more than just shops. Experts define “anchors” those businesses that make customers stay within the commercial space. “Italy is not Dubai, where shopping centres feature even a ski track -reminds Buso -. The matter over anchors is still very new in Italy. Perhaps we’ll see something new with the Westfield centre. Today, food courts are the main attraction to focus on”. It’s a matter of shopping experience: the physical shop will struggle more and more to beat the virtual one, but it cannot be beaten for what concerns the shopping experience. “E-commerce stole a shopping opportunity from people, the so-called “therapeutic shopping” – reasons Buso -. Despite this, there is still the need for shopping together, meeting up, ideally over a coffee or a meal”. Online is not enough. Even Amazon admitted it, opening its physical stores in the United States. The big clothing and technology brands couldn’t agree more. While they’re strengthening their online platforms, they don’t stop opening stores in strategic locations. In the new shopping centre in Milan, there will be brands such as Piquadro, Adidas, Max&Co, and Tommy Hilfiger, as well as the first flagship store of the Chinese smartphone company Huawei. A confirmation that also for the technology giants is important having a physical store. “Our final objective is only one: reaching the consumer in the best and most complete way. For this reason, we’ve chosen a very balanced selection of distribution channels. With the opening of flagship stores, we want to test and identify a format, shopping solutions and experiences in a world where purchases are very dynamic”, explains Pier Giorgio Furcas from Huawei Italia.
One of the innovations of City Life is its nature of urban shopping centre, being located inside the city. This is a trend that started in the past few years in Europe and it’s totally new in Italy, where there are other similar projects under development. In Rome, Valle Aurelia Mall will open next year, 800 metres from the Vatican City. The local shop owners are worried about these giants entering the cities, as they have already to deal with the recession and the transformations of the sector. In February, Confcommercio reported that between 2008 and 2016 70 thousand small businesses disappeared in Italy, a fall of 12%, felt especially in the old towns. Mariano Bella, director of the research, put it very directly: “Local business is the first infrastructure to maintain Italy the way we know it. Italy with its cities, towns, bell towers, variety, etc. The old town with its shops is a shopping centre itself. When shopping centres land in the city centres, there is a coordination issue of these big structures with the rest of the urban environment. Shop owners might move to these shopping centres if such infrastructures weren’t the questionable expression of developers and companies that leave little space to traditional businesses. With the arrival of solutions imported from abroad, there is the risk to alter old towns. I’m not saying that they must not be built. But if we value traditional Italian retail, perhaps citizens should decide the future they want for their city”.
Between the online shopping boom and the blossoming of shopping centres, there is the risk of forgetting an important fact: the Italian retail index is still below the pre-crisis levels. For non-grocery goods, there is still a 2.5% to catch up. The consumers that all the shops, virtual or physical, small or large, can address are always the same. The only difference is that people now can afford less.
Source: Avvenire
Translator: Cristina Ambrosi
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