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62 iagail.coseptember 2013

markets in the Middle East, North Africa 

and Asia. So with over 40 successful

shopping centre projects in his portfolio

he understands retail and shopping

centres, the heart of his approach being

to create customer centric, well-executed

shopping centres that generate strong

returns for the investor.

He founded McArthur & Company in

2011, with offices in Dubai and Toronto,

to provide comprehensive advisory

services to developers in new excitingglobal markets such as Dubai and Abu

Dhabi (UAE), Muscat (Oman), Cairo

(Egypt), Beirut (Lebanon), Riyadh (Saudi

 Arabia) and New Delhi (India), its basic

 philosophy being to add real financial

 value to each retail development project

- ranging from development and design

to merchandising, leasing, operations,

marketing, branding and investment

management.

The company’s list of illustrious

 projects include Deira City Centre, Mall

of the Emirates and Dubai Festival City

in the UAE, Guildford Town Centre and

Metropolis at Metrotown in Canada, IFC

Mall in Korea, and Muscat City Centre in

Oman. More recent clients include Baghd

Mall in Iraq and Mall of Qatar in Doha.

Inexperienced developerscan benefit from timely adviceMcArthur feels retailers and landlords in

mature markets such as North America 

have a clear understanding of their 

role and how they fit into a developer’s

long-term vision. Things are different

in the Middle East, where a clutch of 

inexperienced developers and retailers

without any solid business strategy

entered the business in the early 1990s.

McArthur viewed this situation as anopportunity, given the sudden explosion

of shopping centre development in the

Middle East, particularly in the UAE,

since the mid-90s. He had another reaso

for setting up base in the UAE – shoppi

centre growth worldwide is currently

happening outside North America and

Europe, primarily in Asia - including the

Middle East region, South America and

Russia.

“The likes of Majid Al Futtaim and

Emaar have raised the bar for shopping

centre development in the UAE, setting

standards in the region over the last twodecades. But most other shopping centre

lack the expertise or vision in terms of 

a strong business strategy built around

real estate investment, marketing, leasin

customer service and so on,” explains

McArthur.

“When we deal with such developers,

our brief goes beyond just designing the

mall, selecting the tenant mix and leasin

retail space to include streamlining the

Helping breathe new life

into shopping centresFrom creating new shopping centres to reinvigorating older centres, McArthur & Company offers its global

expertise to steer new regional developers in the right direction, reports Dennis Daniel

The two biggest mistakes shopping

centre developers in the Middle

East make are inadequate planning

and formulating strategies based on

intuition. The primary reason is lack of prior

experience in shopping centre development.

But things are changing as developers get

more familiar with international standardsand best practices and learn how to

implement them in their facilities.

The learning curve isn’t easy to navigate.

They need someone to advise them and

 point out their lack of preparedness. They

need someone to help them build a long-

term vision of what retail development is

all about and create a roadmap of where

they see themselves in the future. In other 

words, developers need to consult the

right people with global expertise –people

who’ve tested the waters and seen both

successful and failed retail ventures.New developers are increasingly

seeking the guidance of shopping

centre specialists who provide advisory

services in development and design,

merchandising, leasing, asset management

and so on. These experts analyse market

conditions, find opportunities, ask tough

questions and get to the bottom of why

a shopping centre – essentially a real

estate investment above everything else –

 performs in a certain way or doesn’t.

“Novice developers believe the same

strategy applies to building residential,

hotel and retail complexes. They couldn’tbe more wrong. Each project needs to

be approached with a different strategy.

Developing and managing a mall requires

expertise, discipline and skill in making

everyday judgements,” points out Phil

McArthur, managing director, McArthur &

Company.

McArthur has been in the shopping

centre business since 1981, working with

developers in North America and emerging

Phil McArthur: hire the right people

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Real estate

63iagail.co september 2013

mall’s finance and operations departments

as well as housekeeping and staffing,

especially the number of people required

to run the mall on opening day,” he adds.

Take the case of Mall of Qatar. Originallycalled Al Rayyan Mall, McArthur suggested

the developers adopt a brand name that

reflects their grand vision and is easier to

market.

“The developers hadn’t built or managed

a shopping centre before Al Rayyan Mall.

Their staff was inexperienced in this area 

of expertise; so they really weren’t up to

the task and put in their resources to the

best of their ability,” says McArthur.

There was an even more fundamental

question that needed to be answered first.

Does Qatar need a super-regional mall and

will it face the risk of market saturation.With over 1.7 million sqft of GLA on three

levels, Mall of Qatar will have 400 shops

including a hypermarket, five department

stores, over 20 international restaurants

and an indoor streetscape with double

height flagship stores. Add to that the 2.7

million sqft GLA Doha Festival City, which

will feature over 500 shops offering a 

selection of international and local brands

and more than 70 restaurants and cafes.

 A recipe for market saturation? This is

where global expertise comes into play,

feels McArthur. He believes there’s spacefor all players, with super-regional malls

having a certain traction that’s missing in

smaller malls.

“It’s all about the variety and quality

of stores and their execution in the mall.

The Dubai Mall proved this when it

opened over 1,200 stores spread across

3.7 million sqft of leasable space in the

midst of a highly competitive market.

That business model proves that people

will drive past 10 malls to visit a super-

regional mall such as The Dubai Mall. So

Doha will definitely benefit from having

mega shopping centres such as Mall of Qatar and Doha Festival City,” explains

McArthur.

“We have received strong support from

the retail community in our preliminary

assessment of the Greater Doha and Qatar 

markets. The philosophy of the shopping

centre project completely mirrors our 

 vision to deliver a high quality retail

experience for the mall’s expected 20

million plus customers a year. The modern

consumer loves the opportunity to shop

in an environment that is large enough

to host all the great brands and offers a 

multitude of reasons to visit week in and

week out,” he adds.

Established developers, too, needto rework their growth strategiesSince super-regional malls will always be

the biggest draw for visitors, McArthur 

feels smaller malls need to take a fresh

look at how consumers view them in a 

retail scenario of equally good or better 

malls developed over the years. He

warns such shopping centres not to see

themselves in a single development cycle,

 pointing out that old, iconic centres in

the UAE can devise new strategies to

reposition themselves in the market so

they continue to remain relevant to their consumers, both residents and tourists.

“A developer could get everything right,

from buying land in the best location to

designing the mall, leasing and managing

it well. But then along comes a competitor 

who develops a bigger project nearby.

So what can the developer do? There

are ways for them to continue turning in

a profit despite competition and loss of 

market share,” McArthur observes.

His words of advice to both established

and new developers: hire the right

 people with expertise if you wish to

remain competitive. According to him,

the management of big shopping centres

should ideally have global experience indifferent markets, not just in one or two

malls in a single market. They should have

worked in difficult environments in both

good and bad malls across several markets.

McArthur also urges shopping centre

developers to talk to their retailers on a daily

basis. He warns that developers who are

interested in only rents and are disconnected

from the performance of their tenants do not

have a future in the business.

“Developers should take an interest in

tracking the sales performance of each

tenant in a mall. Any conversation on

sales will automatically lead to the issueof rents. So developers can be in the know

and do not to need to push rents to levels

their retailers cannot afford. On their 

 part, retailers can agree to pay a certain

 percentage of their sales as rent depending

on their sales margins. This helps build a 

stronger relationship between the landlord

and tenant and automatically contributes

to the long-term financial growth of the

shopping centre,” concludes McArthur. n

Mall of Qatar