Galerie Butovice: How to Increase Value of Your Property

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Posted on 24. 11. 2019

The Galerie Butovice shopping centre in Prague’s Jinonice quarter is currently enjoying good times. The scheme’s footfall has been rising constantly ever since the centre’s principal reconstruction and extension in March 2018, which resulted in changes to tenant structure and a much more varied offer of the food court. These changes were crowned by a successful sale in October 2019 to Investika realitní fond, a Czech open fund.

The Galerie Butovice shopping centre in Prague’s Jinonice quarter is currently enjoying good times. The scheme’s footfall has been rising constantly ever since the centre’s principal reconstruction and extension in March 2018, which resulted in changes to tenant structure and a much more varied offer of the food court. The changes, which we facilitated for Cromwell Property Group, the co-owner and manager at the time with a massive support from the major shareholder York Capital Management, with our Retail Property Services and Retail Shopping Centre Releasing teams were crowned by a successful sale in October 2019 to Investika realitní fond, a Czech open fund. Galerie Butovice has come a long way over the last four years with 85% of retail space changed and 40 new tenants having opened their shops in the centre. The scheme’s overall performance improved greatly and its growth potential is not yet exhausted.

2015: Starting Our Retail Therapy

We took over the shopping centre along with Martin Šimek’s team at #CW Retail Property Services in the spring of 2015 and our task was to manage the scheme on a day-to-day basis as well as to suggest concept changes that would enhance its overall value for our client over the anticipated investment horizon of 4 to 5 years. The initial analyses showed that the centre’s potential was great, but not used to the full. It was desirable to enhance tenant structure in particular in terms of fashion, expand the food court, change communication towards customers, improve access to the first floor and offer attractive services and/or goods. Before too long, the centre’s new asset manager and co-owner (Cromwell Property Group together with York Capital Management) and we agreed that the centre should undergo major remodelling. Based on the instruction given to us by David Svoboda from Cromwell Property Group and inspiration from him as well as from the architects we prepared a detailed plan for the changes, aiming to achieve greater connection of the shopping centre and its local environment and reflect the current retail trends. I especially appreciate the fact, that the whole team (the owners, us, external architects and advisors) were on the same page and going through such demanding exercise was giving us a lot of positive energy needed during the execution phase that followed.   

2017 – 2018: Total Facelift

All our common thoughts were rooted in the nature of the location that includes both residential schemes and one of Prague’s largest office hubs. We carried out thorough research of the catchment area and our result was that Galerie Butovice should work as a shopping centre for the local residents as well as a convenience centre for quick shopping for the employees of companies residing in the office buildings in Nové Butovice and Jinonice, along Radlická Street.

The revitalisation of the scheme took more than a year and a half and involved multiple structural modifications, including an extension to include a KIKA furniture shop, a new façade, comprehensive revitalisation of the interiors including the food court, a new main entrance, a larger lobby and both a replacement and addition of escalators to enable more people to pass through the individual floors. The shopping mall was radically revamped and made lighter, so we could work with the leased space.

Core Upgrade: 85% of GLA Changed; 40 New Tenants

The shopping centre’s retail space increased from 36,000 sq m to the current 51,500 sq m and we could start expanding the range of goods and services in multiple directions. Let me mention the most prominent changes:

  • Furniture. A great portion of the new space was allocated to the furniture retailer KiKa that attracts customers come from the entire left-bank side of the Czech capital.
  • Fashion. We significantly strengthened the affordable fashion segment so that, today, you can find brands such as New Yorker, Lindex, Pepco and TimeOut in Galerie Butovice. They complement the former tenants such as H&M, Takko, Orsay, CCC and Deichmann.
  • E-commerce. ZOOT.cz’s first e-commerce outlet opened in the scheme. It is the second e-commerce shop in the centre; Mall.cz opened its very first brick-and-mortar shop in a shopping centre in 2017.
  • Leisure. The Jatomi fitness centre (1,500 sq m) and the Saunia world of saunas (900 sq m) will be joined by a new 2,500 sq m Superland (Children’s Entretainment World) next year. It will be the first ever indoor children’s park within a shopping centre in Prague – and within walking distance from a Metro B station, too. We were able to accommodate the children’s park in the space vacated after the renovation and downsize of the Albert hypermarket.
  • Food Court. The enlargement of the food court, which is currently one of the most varied in Prague, was very important for the footfall in Galerie Butovice. During our tenure as the scheme’s managers, concepts such as PizzaHut, Bageterie Boulevard, CostaCoffee, UGO salaterie, Bombay Express and many others opened in the centre. Today, you can choose from 16 restaurants and three cafés that can serve up to 3,000 customers during lunchtime.

2019: The Show Must Go On

All the described changes resulted in a significant increase in the shopping centre’s value and, in cooperation with #CW Investment, who advised the owners Cromwell Property Group and York Capital Management, and in a successful sale to Investika realitní fond, a Czech open real estate fund. The centre’s development has not yet ended and everything is up to the new owner now. We can certainly see room for a further expansion of the offers of shops and service outlets. Galerie Butovice now has a firm position on the market and can continue boosting its performance.

Jan Čížek, Head of Shopping Centre Releasing,

Cushman & Wakefield Prague, 11/2019

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