Active commercial foundations
In Paris La Défense, Lyon, Villeurbanne and Nantes, EPPC has recently been called upon by public operators (municipalities, developers) concerned with auditing the operational and financial implementation of projects to produce commercial units on the ground floor of office, housing or collective facilities programmes.
These programs, with an area generally less than 5,000 m2 GLA spread over several lots, have multiplied since the beginning of the last decade in France. They were launched as part of the implementation of urban development operations (eco-neighborhoods, urban renewal projects, revitalization or redevelopment projects of business districts) in order to animate the ground floors of buildings, diversify occupations and offer alternative commercial development formats to shopping centers and retail parks. Their implementation has often been accompanied by the implementation of public transfer mechanisms or the search for unique private investors, intended to guarantee the community or its developer control over the marketing and future of these commercial complexes.
The results of such operations are very uneven. Many programs today are characterized by high commercial vacancy, the difficulty in identifying credible private investors, and the fragmentation of real estate ownership across walls.
What are the fundamentals of the success of such projects?
The success of such projects lies, of course, in:
– taking into account a realistic and evolving market potential, depending on the growth of the urban development project in which they are integrated (arrival of new populations…),
– the observance of precise implantation rules, volumetric organization of the foundations and coexistence with the programs implanted on the lower surface (parking lots) and on the top of the foundations (housing, offices, activities),
– anticipation of future operational issues (regulations on the use of programs, delivery management circuit, waste…),
– and above all, the implementation of flexible construction rules that allow the purpose of the base to be adapted to market realities.
This success also requires a solid structuring of the promotion phase of the commercial bases, the modalities of their investment, their marketing, as well as the modalities for the control of the design, production and marketing phases by the community or its developer.
The structuring must be carried out while ensuring compliance with the few fundamental principles:
– any choice of assembly method stems from a circumscribed analysis of the operation’s program and its method of execution; the analysis by comparison of assembly methods proves to be far from appropriate in the present case,
– any choice of arrangement must ensure the identification of clear authorities, placed in a position of competence and directly interested in the outcome of the operation in the phases of promotion, marketing, investment and exploitation of the commercial bases,
– the need for the search for a single promoter and/or investor must be assessed in the light of the specific characteristics of the operation.
Indeed, there are cases where the single investment is neither feasible nor even desirable. In these cases, the absence of unity in the investment must be compensated for by the control of the design and production phases through the guidance of one or more developers.
Finally, there are some subjects where, although risky and consuming (rare) public investment credits, public underwriting proves to be relevant, particularly when the market potential does not allow for the structuring of a credible alternative private investment.
Regarding all these topics, EPPC is able to provide a comprehensive and directly operational strategic advice to communities and developers:
– Audit of the montages,
– Detailed recommendations,
– Pre-test operators (promoters, investors) and brands,
– Drafting of the specifications,
– Assistance in selecting promoters, investors, service providers or brands,
– Complete financial modeling during the promotion and investment phases of the programs (business model investments, operating account, margin reconstitution, financing table, risk analysis, sensitivity tables),
– Assistance in structuring the investment (assembly, determination of obligations, determination of contributions, assistance in drafting the partnership agreements).