Managing retail centres a little known art

Leanne Michell - regional director of asset services under CBRE Asia Pacific

Hanoi has sprouted several shopping centres in recent years, but many have struggled.  What makes a retail centre a success or a failure?

It is absolutely critical for a developer operating a shopping centre to understand the market, such as who the consumers are, what their incomes are, what their lifestyle is, where the shopping centre is and what kind of the tenant could be attracted. When you have all of that information, you can know exactly how to arrange tenants and brands in an efficient manner. Apart from that, retail requires a lot of research, careful planning and expert consulting. It also needs a good operation because the tenants will need support from the operators.

Many centres in Hanoi have struggled because developers sold booths to multiple investors, leading to disagreements. What should developers do if they are in this situation?

My answer is “don’t do it.” For retail, one investor must completely control the centre.  They need to work with tenants very carefully. You can never reach agreement if you have a lot of investors. And my advice for these cases is that the developer should consider a plan to buy back space.

But this is a very tough task. If developers cannot buy back, they will never be able to control the centre and make that shopping centre successful. However even in this case, the tricky part is: Will all those smaller investors be willing to sell it back to the developer?”

Do you have any advice for developers who are planning to sell retail space to investors in the coming time?

Don’t do it.

But what if  it can bring about a remarkable financial recovery for the investor?

Yes, if they want to do that, I do not know much about legal system in Vietnam, but it  needs a strong rules system in this issue. All clarification and articles related to this issue must be written in a contract, so that investor can easily understand that they have to follow all of those rules. If you do not have those strong rules, you will fail.