While shopping centers around the world are facing an uncertain future, with midsize schemes dented by e-commerce and changing demographics, at least one European nation is keeping shopping-center developers busy.
Sweden, home to a harsh climate that’s conducive to indoor activity — and spending — is giving the sector a boost.
“Following the United States, Sweden has the highest GLA [gross leased area] per capita in the world, twice as high as France,” said Lars-Ake Tollemark, managing director for the Nordic countries at Unibail-Rodamco, which has set its sights on the region.
Encouraged by local shopping behavior and future economic prospects, Unibail-Rodamco, billed as Europe’s largest commercial property owner, is managing its boldest investment in the region yet. Dubbed the Mall of Scandinavia and slated to open in fall 2015, it is costing 640 million euros, or $797 million at current exchange.
Boasting 100,000 square meters, or about 1.1 million square feet, the new venue will be Scandinavia’s largest shopping center, with about 250 retail spaces.
“Five years ago, we made the decision to go big, because we see the problems of smaller centers,” noted Tollemark. “That’s why we are focusing on projects over 50,000 square meters [538,000 square feet] or six million visitors a year.”
The executive said when he joined the company, in 2010, there were 16 shopping centers in Unibail-Rodamco’s portfolio in the area, including Haninge, Väsby and Bålsta Centrum. Today there are nine, their value improving 40 percent. Mall of Scandinavia will be the landlord’s 10th location there.
Tollemark declined to give projections on the mall’s productivity, though it is understood the developer is aiming for a figure comparable to, or higher than, Täby Centrum, Unibail-Rodamco’s other leading shopping center in the Stockholm region, boasting 66,000 square meters (710,400 square feet) of gross leasable area and 11.2 million visitors a year. Based on the estimated total turnover from 2013, the center generated approximately 50,000 Swedish kroner ($6,651) a square meter, or $618 a square foot, according to HUI, the Swedish Institute of Retail.
Situated just a few minutes from downtown Stockholm, the gargantuan development is classified as “urban” with a direct connection to public transportation, which, according to a study by Cushman & Wakefield, is the most promising location in today’s competitive retail environment and beyond.
It is also multipurpose, including a hypermarket, fashion retail, eateries, a cinema, sports facilities and vast office spaces, including the headquarters of telecom firm Telia and Nordic bank SEB, bringing the total head count of people working in the vicinity to 100,000.
Next door is a national football-stadium-cum-concert-arena able to fit 65,000 spectators, while a residential project is currently under construction.
“There have been no shopping centers built in the last 30 years in Sweden. There have been extensions and refurbishments of existing spaces, but with poor parking and the wrong ceiling height. A project like this will have a huge impact,” said Christian Claesson, head of leasing for the Nordic countries at Unibail-Rodamco.
He called the new mall “a destination shopping center on the weekends,” which will predominantly target locals. “It’s important to have the locals on board, because they give the natural footfall — at the hypermarkets and the restaurants, which need people from 8 a.m. to 10 p.m., otherwise it’s not working.”
HUI, the Swedish Institute of Retail, reports retail trade in Sweden, including e-commerce, is slated to grow 2 percent annually until 2022, when it will reach 748 billion Swedish kroner, or $100.2 billion.
“Stockholm is growing faster than London and Paris. There is room for 10 more Malls of Scandinavia in the area. That’s why the luxury brands are coming into the country,” Tollemark said.
The Stockholm region is the most densely populated area in Sweden. Almost a third of the entire population of the country — some 9.4 million inhabitants — lives within a 90-minute drive of the mall.
The new destination will boast a democratic mix of tenants, given that, as the manager put it, “the Swedes like to spend, but they don’t like to show.”
Contemporary brands, affordable luxury, including Sweden’s first Michael Kors flagship inside a shopping center, and design will be at the forefront.
A so-called “designer gallery” with roughly 20 units will introduce fashion, art as well as furniture, alongside a rotating cast of “young, trendy brands that cannot afford to have a permanent presence but want to test the business,” explained Tollemark.
Leases are expected to run between five and seven years for Swedish brands and 10 years for internationals, which is much longer than the three years Swedes were used to until recently, said Claesson.
A consultant has been hired to scout new trends and keep the product mix current, which will focus on Scandinavian labels. “The message is: We don’t want to have a static shopping center,” Tollemark added.
Claesson said his goal is to have “zero leases left” when the mall — which, according to estimates, is approximately 75 percent leased — opens in 2015.
“Three years ago, we had a lot of convincing to do,” he admitted, “but now retailers and restaurant owners understand that this is not your typical shopping center,” adding that a vital part of the center’s success is generated by the lack of retail space in downtown Stockholm.
“Also, Sweden is a country of chains, and there are quite a lot of multibrand shops, but we want to have more single stores to make it more interesting for the customer, because that is something he is not used to.”
Helping visitors navigate the giant structure is a slew of tech-savvy features. In 2012, Unibail-Rodamco, which is Paris-based, set up the UR Lab on the outskirts of the French capital, charging it with developing innovative retail-experience and in-center technology.
Among them are MeetMe, a smartphone application that can track down friends who are shopping at the center and is said to appeal to the teenage visitor in particular, as well as Find my car, which shows customers the way back to their car in the 4,000-spot parking lots.
“Overall, it’s the experience that counts,” said Tollemark. “We need a concept that will give the customer a reason to put away his laptop, get off the couch and come to the mall.”
Besides the attractive retail, he hopes to achieve that via 21 restaurants, including a luxury burger joint by Stockholm’s star chef Melker Andersson (“because you can’t buy a decent meal on the Internet, only the ingredients,” noted Tollemark); Sweden’s first commercial Imax cinema, and a 27,000-square-foot gym and sports club.