IMMOFINANZ: "The shopping center is an entertainment company"

In an interview for our annual report 2013/14, Wolfgang Idl, Director Retail IMMOFINANZ Group, speaks about the latest integration of center management and explains why each shopping center needs a "mayor". We have also pictures of our opening of the STOP.SHOP. extension in Gödöllö.

For years, asset management has followed a policy that involves the gradual internationalisation of both services and the staff. In the retail segment, center management for the properties in Romania, Poland and Slovakia was taken over at the beginning of the 2014 calendar year. What are you trying to achieve?

Wolfgang Idl: The basic idea is to move us closer to our customers and improve our support for tenants. We want to manage the shopping center directly and know exactly what’s going on. That leads to better occupancy and, in total, increases the depth of the value chain. After the integration of property management for our retail warehouse portfolio in the Czech Republic, Slovakia and Hungary, it was the next logical step. This high degree of internalisation is now reflected in internal rentals of roughly 50% in the retail segment, which means without agents participation. And this rate will increase further in the future. Excluding Russia, we have already reached 90%. Our goals in taking over center management activities are to improve quality and optimize costs. And results from the first months show that we’re on the right course.

Where can you see this?

The above-mentioned integration of property management cut operating costs by roughly 10% in the 2013 calendar year. These cost savings were supported by new tenders for all types of services, greater weight in the purchasing area and efficiency improvements. We now intend to take these same steps in center management.

What is your motto for center management?

We do everything in our power to create an ideal environment for our tenants and support them with the best possible service. Our goal is to create an exciting tenant mix that ideally fits with the particular location. Each shopping center has up to 15 persons working in different areas of center management.

Exactly what does this staff do?

The staff is headed by a center manager who more or less serves as the “mayor“ of the shopping center. He or she takes care of matters that concern the tenants and also represents the property owner, meaning IMMOFINANZ. The center manager is supported by a strong structure: the rental department is responsible for the ongoing rental of shop units, while specialty leasing rents out kiosks, stands, advertising billboards and similar objects in the general areas. In large shopping centers, specialty leasing can generate six-digit rental income in a single year. It also creates a good opportunity to involve local trade specialists. The operations department organises all maintenance, repairs and services like cleaning and security. The marketing department is responsible for ongoing marketing and event management. By the way, these activities are becoming more and more important – we need to offer entertainment and emotional factors that make the shopping center attractive for customers. Actually, the role of a “mayor“ is no longer enough for the center manager, he or she also needs to act as a “circus director“, to quote Wolfgang Richter, Managing Director of RegioPlan.

The shopping center as an entertainment company?

Yes, the shopping center has become a kind of entertainment company. We have to offer regular events and attractions ranging from fashion shows to special activities for children, cooking shows, make-up tips and pop-up stores to Facebook campaigns – just to name a few examples from our center marketing.

That sounds like a lot of new staff for center management?

Yes, that’s right. We’ve already integrated roughly 80 employees and increased the total asset management retail staff to roughly 130. This is a well-coordinated team: these men and women previously already worked for our shopping centers, but now they can identify more closely with IMMOFINANZ. That also reflects our experience in integrating property management for our 32 STOP.SHOP. retail warehouses in the Czech Republic, Slovakia and Hungary.

One excellent example is our STOP.SHOP. in Gödöllo. This city is located roughly 30 kilometres northeast of Budapest, near the Hungaroring motorsport racecourse. The STOP.SHOP. has nearly 8,300 sqm of space, which we are now expanding by 1,600 sqm. The opening is scheduled for September 2014, and the new space has been fully rented since the start of this year – to retailers like DM, Fressnapf and KIK. They will provide a good addition to the already excellent tenant mix, which includes H&M, New Yorker, C&A, Takko, Deichmann and Hervis.

We also have expansion plans for the Hungarian STOP. SHOP. in Veszprem and already commitments from wellknown western retailers.

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Update: The opening of the extension in Gödöllo alreade took place. The mayor and his deputy celebrated the ceremony with us. Pictures below: