It is currently possible to find multiple shopping centers at every major neighborhoods of Istanbul. But, how are they doing? Are the investors and tenants happy with the current extensive supply?

Istanbul residents came to know the shopping center concept by the opening of Galleria in the late 80’s. But, the first shopping center that was embraced by masses was Akmerkez of Etiler.  Akmerkez with its well thought shop-mix and brand name tenants continued to preserve its brand name for years to come.

And, neither domestic nor foreign investors were not yet pouring money into to the industry during first years of Akmerkez. For many years, analysts kept calculating the leasable space per person in Istanbul shopping malls and kept coming to the conclusion how lower this was compared to the other European countries. This, however, started to change after year 2000. Especially in the past 3 years, developing shopping centers has become the primary choice for many domestic and foreign real estate developers and funds. By 2007, Istanbul quickly became a shopping center heaven with many different centers offering various concepts and options. According to the Shopping Centers and Retailers Association of Turkey, there are currently 59 active shopping centers in Istanbul. There are 46 other centers that are currently under construction and 37 centers are still in their project or planning phases. By the end of 2007, the total space at active centers were approximately 1.5 million square meters and the total space that is currently being constructed is almost 3 million square meters.

Akmerkez, after being acquired by Corio of Holland and facing strong competition in the market, started working on a renovation project that is valued at 25 million dollars.

According to Ali Murad Kiziltas, former President of United Brands Association of Turkey and owner of Inci Leather, the supply of rentable space has increased by 40 percent. However, there was not much change in the purchasing power of consumers, nor an increase in the number of tourists visiting the centers. Tenants also started facing problems with this rapid increase in supply. Some new shopping centers that tenants had high hopes for were disappointments. Alparslan Karayalcin, the vice president of Desa Deri said “None of the newer centers were able to meet the sales numbers the older centers used to offer. These were projects we strongly believed in but none succeeded in offering as high turnover rates as we used to have at Nautilus or Capitol.”

Sisli Cevahir Mall opening its doors in 2005 and Lenvet Kanyon opening by the beginning of 2006 marked a turning point for the shopping center industry in Turkey. Kanyon had such a remarkable entry to the market, even people who had no interest in the industry started watching where the industry was going. Kanyon’s open air shopping concept later became a disadvantage for the center itself.

Kanyon

The number of Kanyon’s visitors started decreasing sharply with the cold weather during winter. However, the food court and movie theaters were a huge success. The open air concept of Kanyon was a good entry but did not turn out to be a great choice during the windy and cold winter in Istanbul. The level of shopping experience started to decline. Although there were some tenants that left the center, some companies like Banana Republic who were making their first entry to the Turkish market secured spaces in the center.

City’s

People had high hopes for Nisantasi City’s even before the center was opened. The center although small in size, had a great location and a strong shop-mix. Many domestic and international brands were in line to secure a space in the center. Projections were showing that the clientele of the center would have much higher purchasing power due to the location. But, the parking problem and alcohol permit problems at the restaurants had a negative effect after the first month. Taci Seker, owner of the Pal Zileri store at City’s, said “The first 20 days were a huge success. We were having gross sales over 20,000 YTL each of the first 20 days. Then, problems started to pile up and combined with some wrong policies of the management, number of customers and sales started to decline rapidly.”

Istinye Park and Bakirkoy Capacity

There are also some tenants who would vote for the new centers if the old centers would have to be compared to the newer ones. Cem Sunman, owner of Toyzz Shops, announced that their highest grossing store is located in Istinye Park. Nuxx Furniture store is no different. Out of many Inci stores in the country, the one with the highest sales is in Capacity Mall in Bakirkoy. But, the company also added that because the rents are very high at Capacity, this store was not the most profitable. Umit Zaim, president of Deriden, also said that they had the highest sales at Capacity and they are happy with Istinye Park. He would not comment about his store in Kanyon.

Levent Ozkan, the general manager of U.S. Polo, said their highest grossing store was located in Istinye Park. He was also satisfied with the sales at Umraniye Meydan. He also added that he was worried about Istinye Park not having a strong enough food court and the lack of a children playground. He thinks this might be a problem for the center in the long-term.