Although the most frenetic retail development is expected in central and Eastern Europe — accounting for 81 percent of shopping-center space added to the market by the end of 2014, according to Cushman & Wakefield — France still defends its number-one position as the European country with the most mall space, at 17.6 million square meters, or 189.4 million square feet.
Some argue that it’s getting crowded, but according to Eric Houviez, director of development for European projects at Unibail-Rodamco, which has a 750,000-square-foot unit in the pipeline in Cagnes-sur-Mer in the South of France, it’s not the country borders that count.
“This is not France. This is the French Riviera. We couldn’t have done this anywhere else,” he said about Polygone Riviera, due to open in fall 2015.
Despite heavy development activity in the region, which draws the criticism of local grocers and small-town retailers, the new mall, which will cost Unibail-Rodamco and its partner Socri Group 350 million euros, or $435 million at current exchange, is banking on the region’s history, unique landscape and customer behavior.
“This is the best region for doing retail today because of its low density, 20 percent below French average. At the same time, people here [have a very high disposable] income, which is 35 percent above French average,” Houviez noted.
The executive contended that while the French Riviera initially consisted of two main cities — Nice and Cannes — in the past two years, the population numbers have exploded, causing them “to grow into one large city — and we are just right in the middle of it.
“We believe we can achieve 90 percent of our turnover with locals,” the executive said, noting that Nice alone has 1.1 million people living within 30 minutes.
Unibail-Rodamco declined to make a projection regarding the sales per square foot it hopes to achieve, but Houviez observed, “We don’t finance it like a typical developer. We expect the shopping center will find its global rhythm at the end of the third year in terms of footfall because, usually, you have a very strong opening, then it goes down a little and then up again, and you tend to get a good level after three or four years. That’s how long we expect for it to catch.”
Rent per square foot, he said, would depend on the size and activity, with leases generally running for 10 years.
To distinguish itself from neighboring projects — such as Saint-Laurent-du-Var’s Cap 3000, billed as France’s first shopping center and currently undergoing a total makeover that will almost double its surface, to 1.2 million square feet, with a more premium offer — the Polygone is built as an open-air project, inspired by similar structures in Florida and California.
“We can’t say it’s a shopping center because it’s designed like a town with streets and different districts. It’s what we call a lifestyle mall — meaning, a place where people would actually want to live,” Houviez said.
The four districts, separated by green areas designed by Jean Mus and water elements, including a pond and a fountain, are themed according to their offering: There is a home-and-garden district, a lifestyle district and a premium district, plus a designer gallery that offers a mix of more established brands alongside younger, up-and-coming brands.
With 73 percent of the development leased one year ahead of its opening, the unit features a Printemps department store targeting luxury shoppers but, otherwise, will focus on the everyday needs of the local population. “People who live here have money, of course, but they don’t go to Hermès every day — that’s something tourists do. Locals want a place where they can buy everyday clothes,” Houviez noted.
Twenty restaurants featuring cooking classes and food tastings, a 10-screen movie theater (the region’s second-largest after Nice), an amphitheater and a casino are expected to draw between 8 million and 10 million visitors a year.
“What we believe is that events like concerts and runway shows will differentiate us vis-à-vis our competitors,” said Houviez, adding that a range of services, including a concierge and valet parking mimicking a five-star hotel, are also part of the offer.
Taking cues from the region’s arty background, the lifestyle mall has hired its own curator in charge of art purchases, which will comprise a revolving cast of outdoor sculptures. There to stay is the guetteur (“scout”), a 72-foot-high building, sculpted in the shape of a head by artist Sacha Sosno, that will have a restaurant and a panoramic terrace.
The Polygone Riviera is Unibail-Rodamco’s second new shopping center to be built in France, following the Aéroville project, near Paris, which does not have a food anchor at its center.
Unibail-Rodamco has been systematically selling off assets that are too small or too food-oriented — including last month’s disposal of six Carrefour-anchored shopping centers, worth 931 million euros, or $1.2 billion — “to focus on assets with the highest return potential,” according to Christophe Cuvillier, the firm’s chairman and chief executive officer.
“Initially, shopping malls in France were based on the model of hypermarkets like Auchan and Carrefour. We are changing this positioning since we saw that customers who go to the food anchor usually just go out. We believe it’s better to have strong anchors in fashion, culture and electronics, instead,” said Houviez.
The real estate giant’s most recent move involves the divestment of Nicétole, a much smaller shopping center in downtown Nice. Nicétole is to be managed by Hammerson, which plans to co-invest 10 percent with Allianz by the first quarter of 2015.
“With…this transaction, Unibail-Rodamco largely completes the streamlining of its French shopping-center portfolio,” said Cuvillier. “The group reached agreements to dispose of its noncore assets in France within a nine-month period, rather than the five years envisioned at the time [we revealed] the disposal program.”
As of June 30, 2014, Unibail-Rodamco’s portfolio was valued at 33.6 billion euros, or $41.8 billion. Present in 12 European countries, the company owns 83 shopping centers, of which 56 receive more than 6 million visits annually.
“The bigger, the better,” says Houviez. “We believe there are three channels of retail: Internet of course; proximity, as provided by small, inner-city units; and big projects like this one,” he said, referring to Polygone Riviera.
Competing developments currently under construction in the region include Bastide Rouge, a 12-screen multiplex cinema in Cannes; Nice One, a shopping center adjacent to the Allianz Riviera stadium, which will host the Euro 2016; and the complete overhaul of Nice Côte d’Azur airport’s two terminals, which will double the retail space and allow passengers to nibble on two-Michelin-star snacks.