Commerz Real's shopping mall Entré in Malmö Sweden

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Entré - a house in transition

In 2009, the Shopping and Entertainment Center Entré in Malmö Sweden opened with 44.000 square meters and 1.000 parking lots. Many referred to the surrounding area Östercity as one of the most exciting parts of Malmö and expectations were great. But somewhere over the years the Project went wrong, and some radical changes were needed. The owners, the German banking group Commerz Real, decided in 2013 to infuse some 300 MSEK to give the Project a second chance.

Entré is an experience - for the owner

The unexpected is often part of an experience but with the Project Entré, Commerz Real got more of that than they bargained for. Confronted with facts about a constant vacancy rate of more than 30% - and rising - and loss of visitors to the mall, some hard choices had to be made. One option was to sell the Project on the market or to put in more resources, develop the strategy and go for an upgraded version. The owners chose Entré 2.0 - with a new name.

unused land

Land under development - 2006.
© Malmö city

Geography and History

Entré is situated in the northern part of Rörsjöstaden and borders on the districts Kirseberg and Värnhem. The eastern parts of Malmö have always been regarded as sort of a back side of Malmö. This is, for example, where the city located a mental hospital and a large jail building. More on geography and history. plus

entré logo

The brands Entré and Malmö Plaza

Commerz Real decided to emphasize the size of their investment and the new strategy by ditching the name Entré and switch to Malmö Plaza. What has the general public read and heard about the reasons for this change of brand name? Well, the stone floor will be replaced with a lighter version, the interior lighting will be improved, some 10.000+ square meters of new shopping area, some larger windows and a new entrance facing Värnhemstorget are among the changes. Meinhart Krumrei, the project leader at Commerz Real, is quoted in the leading local newspaper Sydsvenskan February 12, 2013, as saying Such a large investment and makeover requires a new name.

Meinhart Krumrei added that he hoped that the remodeling should be ready for the 2014 Christmas season. My take is that long before that he needs to present a better Story about the whole project. One can, for example, make a comparison with one of the nearby competitors Caroli, - more known as Caroli City as they most likely will be referred to for at least 10 more years - which in a quite ambitious and coherent way have developed a Story based on the history of the area and the proximity of the former Caroli church.

Today there is no corresponding Story at all about Entré. The homepage is uninspiring a needs a substantial upgrading. The homepage, last time I visited it, doesn't even inform the public about was is going on. Incredible. It will not be an easy task for Commerz Real to base a Story on neither the history nor on the geography of the area. Shopping by itself is not a sufficient story unless your destination is truly unique, which never will be the case at Malmö Plaza. Unless this issue is creatively addressed the Project, and the new name Malmö Plaza will be looked upon as a mere cosmetic redecoration. And the Project will not survive that.

You may like or dislike the proposed new name Malmö Plaza, and it probably sounds different in the ears of the German owners and the Swedish customers and the general public one hopes to attract. Language is never neutral, and a successful brand name seeks to develop a coherence between the name, the Story and the intended customer segments.

My personal view is that the change of brand name is quite a questionable decision, especially if one considers that Commerz Real in two or three years not unlikely is faced with a situation where they have to sell the whole Project and the building.

Entré shopping mall

Land under development - 2006. © City of Malmö

The politicians of Malmö have for a long time been concerned with the fact that Malmö is a too segregated city. Areas like västra Hamnen and the nearby university cluster have replaced the earlier heavy industries and the mentality of that era, a process soon to be further emphasized when [ Nord Mill's flour mill ] is torn down within a few years and the area Varvsstaden is developed into offices and apartments. Hyllie with its large Arena, exhibition halls, offices, apartments, new bathing facility and the large mall Emporia is today another growth area in Malmö. Värnhem is in the backwater.

The Swedish National Heritage Board have made a study of the history of the district Kirseberg. The area was often called Backarna by the other citizens of Malmö and its inhabitants in many ways lived outside main Malmö. The railroad that cut through the area contributed to this marginalization.

General plan

General plan 2013
© City of Malmö. See large image

The City of Malmö is working on a new General plan for Kirseberg.

Since 2010 Kirseberg is a pilot district for sustainable development and user involved development discussions. It will take quite a long time to develop this, and nearby districts and my belief is that the area needs some form of strong social and public magnet.

The area needs a social and public attraction

entré aerial view with house

Aerial photo 2013
© City of Malmö. See large image

Thus Entrè / Malmö Plaza will for a number of years be situated in an area that will develop a lot slower compared to other areas in Malmö. The location of the building may seem to be central for the traffic entering the city from the east, but for this flow the house is more of watershed than a watering hole.

 

Hemköp and other stores

The future localization of the food store Hemköp is a central issue for Malmö Plaza. Commerz Real want to move Hemköp into the main building to attract more visitors arriving by car and to enable a larger and more inspiring entry towards the market Värnhem that has a daily flow of some 25.000 people. Ingmar Kroon, press officer at Axfood who owns the Hemköp chain says in an article in Skånska Dagbladet

We are negotiating ... But we have not yet received an offer that we find acceptable. If they (Commerz Real) present an interesting solution, we are open for discussions. But we are not the ones pushing the issue as we have a store that works well and is attractively situated at the Varnhem market.

According to several newspaper articles - e.g. this article in December 2013 in Sydsvenskan - a large number of stores have left Entré when their lease period was over. These sources - which later have been corroborated by Commerz Real - say that ... One-third of the stores at Entré, out of a total of approximately 100, have been empty since Entré opened in 2009. The competition from Emporia, Mobilia and Triangeln has become harder. One could have added the nearby and renewed Caroli City.

... would have to stop all activities ...

Commerz Real explains in a letter to the City of Malmö that they may have to stop all rebuilding activities if they don't obtain a new zoning plan that allows for a move of Hemköp from its present location into the main building. It is added that if the present zoning plan isn't changed it will lead to a disaster for us and the Värnhem Project. I have abbreviated the letter and kept its several linguistic errors.

Letter dated November 26, 2013, from Commerz Real to the City of Malmö.

Until recently there was an informal network of the stores at Entré. This network has today been dismantled. To establish a shop always involves some form of calculation of risk. Among many aspects, you have to evaluate the possible flow of visitors at the mall and potential customers. Here you must add the issue of the long-term existence of the Shopping center. Entré says on its homepage that they had 6 million visitors in 2012. I think this figure is well on the high side and besides it is nonqualitative. One can make comparisons to how much effort is put into learning more about customer behavior at leading e-commerce websites.

Commerz Real logo

Commerz Real is a company in the Commerz Bank group that has developed a number of property funds under the umbrella name of Hausinvest. They have a property portfolio with a market value exceeding 10 billion euros. According to their Annual report for Mars 2012/2013 they own three objects in Sweden, which correspond to around 3,2% of their assets, and they yielded a negative return of around 4,4%. Meinhart Krumrei is The project leader and spokesperson for the investment in Entré. The Swedish company Newsec is among other tasks responsible for store rentals. I have before this IDstory was published not had any contacts with neither Commerz Real, Newsec nor the local management.

"If this bad situation continues we will not survive"

The quote above emanates from Meinhart Krumrei in this article in Sydsvenskan January 2014. The owners financial patience and endurance is, of course, a decisive issue. One way to estimate this could be to track the number and quality of stores at the new Malmö Plaza. Which stores have they managed to attract and what Story will they have developed when the center is inaugurated with the new concept. It will also be of interest to monitor the churn rate of stores - an expression from the mobile phone industry where you carefully measure how many people switch operators. It is however not quite easy from these figures to deduct the financial results of the Shopping center.

entré under renovation

Alternative futures for the building

Many people have expressed views about Entré and the ongoing makeover. But maybe it after all will be as this poster at Entré says We are building a mall for the future.

I have talked to some experienced property developers with substantial international experience of large projects and asked them on their take of how management at Commerz Real view and evaluate the situation. They all start by emphasizing that they don't think Entré / Malmö Plaza will survive. And the main reason Commerz Real continue to invest, is a lack of will to accept the losses that they later will have to face, but then at a higher cost. I have also asked some local property brokers of large objects what they think, and their shared view is that Entré will not survive the intensified competition.

The area needs a visible public attraction of size

My main motive for writing this IDstory was that I couldn't stop reflecting on how a large German property fund thinks and acts when they try to achieve success with Entré. My basic belief is that Commerz Real didn't do their homework on the local geography in Malmö and that they continuously have underestimated the competitive forces. The most interesting development is not when Malmö Plaza changes owner next time, but what that may open for possibilities to secure what I call a signature attraction. It could, for example, be a museum that to a much greater extent would add status to the area and the surrounding districts, and much more so that what any kind of Shopping mall could attain. One may also reflect upon if the present makeover scheme will make it easier to find a new solution? And for whom? Does the ongoing investment increase or decrease the value when viewed from the vantage point of a new use of the building?

Commerz Real needs a more creative strategy for Entré.

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