Not a human zoo

Amnon Shiboleth, chairman of Blue City: First, I will look at the US retail market. It’s true, that sales in American malls are down. They’ve dropped maybe around 10 pct because of shopping on the Internet. But, two brand new mega shopping malls are going to be opened this year, which are much bigger than anything that has come before in America. One is in Miami and the other is in West New York City. Entertainment is going to be much bigger in these malls than before. You’ll be able to go down underwater in a submarine in the new shopping centre in Miami or go skiing. We are heading the same way – and bringing more entertainment to Blue City. And customers love this.

Are entertainment tenants good for the malls in terms of the rents they pay?

I won’t give you any numbers, but I think, that our cinema will pay us no less than our fashion tenants and our other anchors. Restaurants are a part of the entertainment too and they see their rents as extremely high, much more than average. Secondly, we’re not always looking at the rent, and that maybe one of the differences between us and our French competitors who run three malls in Warsaw. For example, we decided to try to attract an Ikea store to open here in Blue City and we didn’t look on the rent, because they could end up bringing us another 2 mln people.

How well is Blue City doing?

In Blue City we have many more anchors per sqm than anyone else. We believe that even if they pay less than the small stores, it is better for us and for the shoppers. And that’s why when others lose people, we have more and more and our footfall grows. High footfall brings us high turnover. But I’m not sure we want to have more than 12 mln people per year here. We don’t want to be a human zoo – that’s not our strategy. We want to keep a pleasant atmosphere in Blue City. Soon TepFactor is going to open – Blue City is the first centre in Poland and the third in the world to have TepFactor as a tenant. We’re going to have the biggest gym on the Polish market and one of the largest playrooms in Warsaw – our Inca Play tenant is undergoing a metamorphosis. And most importantly Ikea is going to open with their new concept. And here the first Warsaw cinema is going to open of the Helios chain.

What about the extension of Blue City?

I wish. We are trying to do the re-zoning, because originally we didn’t wanted to put the cinema on the top floor here, but above the multi-storey car park [which is separate from the shopping centre] and it would have had an entrance from the Blue City building. We could not convince the provincial government. If we get the re-zoning we want to expand and make Blue City much more attractive. We want to build more parking space, because we very much need it. But now, for reasons that are partly political, it’s become a very complicated thing. Originally, we intended to build an office section on the roof of the car park, but the office market here isn’t very attractive – rents are not as high as we thought, so we looked at developing maybe student housing. And we still want to. We could create 200 units here. We are waiting only for the acceptance of the city authorities for the re-zoning plans and the building permit.

What do you think of your working relations with city hall?

In Warsaw investment is complicated. Everything takes too long. There are too many people involved with each case. It’s difficult to get anyone to make a decision. Everyone checks all the documents 20 times and in the end they just say: “It’s really complicated.” Some city officials are really not very efficient. We need to look at the political situation in Poland too. I just hope that this government understands that they need foreign investors just like oxygen. But sometimes my friends from other countries ask me: “what’s happening in Poland?” They know that economically it’s still OK, investors are still coming here – but for how long? They also know that there are some rules and regulations that have been changed, such as new taxes being introduced (this year they will cost us USD 1 mln); there’s a trade ban on Sundays and other legal changes.

Do you see more opportunities to further invest in the market through building new projects or through buying existing ones?

We wanted to buy more land behind our Blue City building. We bought it and have it. But now that’s it for our plans in this area. Warsaw is a very difficult city in which to expand. We have just opened an office building Villa Metro near the Wilanowska metro station. We are searching for the same kind of locations as where Villa Metro is. Next to it there’s an old building owned by the city. If we buy it, we will do the same thing again: the same shape of building, the same standard, and the same design as in Villa Metro. But the transaction is, as it always is in Warsaw, very difficult. And it it’s not about the money. So far, we’re just talking. We’ve nearly bought a small shopping centre in Warsaw. The deal’s not been finalised yet. If a number of issues are sorted, we’ll buy it. We’re looking at the market for other assets too. I’m optimistic. I’m looking for more things to do here. But one thing is certain – we’re not going to build another big project like Blue City.