The power of collabs
At the start of this year, we predicted that the type of investor/occupier collaboration that has worked so successfully for some time in the Middle East would become much more widespread across Europe. Although it’s too early to talk about some of the deals in the pipeline (and those of us who’ve signed NDAs have to be particularly careful about what we say!) I think it’s worthwhile considering what’s happening and why.
What is particularly exciting about the potential collaborations I’m convinced we’ll be seeing more of is how well they combine operators’ market knowledge and experience with real estate know-how. Watch this space…
The kind of commercial property collaborations I’m talking about are essentially next level management agreements, which allow operators who have compelling existing or embryonic concepts, but perhaps limited access to financial capital, to grow their brand. They do this by working with a commercial property partner who provides (and owns) the real estate and takes a corresponding share of the brand’s profits. Why would property developers/investors be interested in this? Because it offers the potential to yield substantially higher returns than either traditional leasing or management agreement deals, without a correspondingly higher risk profile. It also, and perhaps more crucially, allows developers and investors to provide retail, leisure and F&B experiences that are tailor-made to their real estate assets.
One of the most innovative European players (and one that is definitely worth keeping an eye on as a bellweather for what can be achieved) is Ingka Centres, the IKEA-anchored shopping centre arm of Swedish property company Ingka Group. Actually, Ingka Centres no longer refers to its schemes as shopping centres, having rebranded them as ‘meeting places’ in the same way that P-Three has for some time referred to F-Hubs as community places and more than foodhalls.
With that in mind, it is perhaps not that surprising that Ingka Centres hooked up with one of the USA’s fastest growing workspace providers Industrious to launch a workspace-embedded-in-a-shopping centre/meeting place at 945 Market Street in San Francisco, under the new brand Hej!Workshop that it had already pioneered in Stockholm. I wouldn’t be surprised if we see plenty more of these rolling out across the States and Europe.
The San Francisco centre is also home to another IKEA collaboration, this time a brand already familiar to London-based foodies. KERB’s extensive food and hospitality expertise were undoubtedly the reason it was chosen as a partner to open the new Scandinavian food-themed “Saluhall” foodhall at 945 Market Street.
Ingka Centres has also been innovating with other collaborations closer to home, notably its Circuit retail concept at Birsta City near Sundsvall, Sweden. Here it is working with partners to create a complete circular retail operation, including purchase, maintenance, repair, and sharing. The format picked up the Best New Retail Concept prize at the most recent MAPIC Awards, so, again, I think we can expect to see it and similar operations appear in other European centres before too long.
Some of the most fun types of collaboration are undoubtedly in the leisure sector. Take Wonderwood Green Forest, an interactive, education family play zone, which is part of French property company Nhood’s Merlata Bloom new urban quarter in Milan, Italy.
F&B operations are also becoming attractive collaborative ventures for office-led property developers/investors. Manchester-based workspace specialist Bruntwood, for example, opened its Hatch retail and leisure incubator in the city centre (since sold to Stack) and there is an endless challenge for office landlords to make their buildings more exciting to temp the best talent back to their desks - operators collabs will be the future to this and this is a huge part of our work here at P-Three.
What is particularly exciting about the potential collaborations I’m convinced we’ll be seeing more of is how well they combine operators’ market knowledge and experience with real estate know-how. Watch this space… P-Three are very actively advising owners on collars and management contracts and more exciting news will be released soon!
Article by Thomas Rose
