TBY talks to Cem Eriç, General Manager, Kanyon, on the success of the open-air mall, the REIT industry in Turkey, and the annual Istanbul Shopping Festival.

Cem Eriç
Cem Eriç started his career at Pamukbank in the corporate finance department in 1990, and worked there for three years. He later worked in the textiles sector in senior executive roles. He joined Unitim Group in 2002 and worked to restructure the company, later managing its retail activities in Turkey, Russia, the CIS, and Romania. Since September 2010 he has been managing Kanyon, a mixed-use real estate project developed by Eczacıbaşı Holding.

Kanyon has garnered many awards and much international attention since its opening. What is it that distinguishes Kanyon from its many rivals in the market?

The project started in the early 2000s, though it took a long time for the investors to decide on the core concepts. When it finally opened in 2006, it was instantly recognized as an exceptional concept for the Turkish market, with its open-air, canyon-shaped design. One of the awards the shopping mall received was from the International Council of Shopping Centers (ICSC), naming Kanyon the shopping-mall project with the best architectural design. The architectural concept is very unique. There are other open-air malls in Turkey, but this is such a sharp architectural project. When it was designed, it was designed to make people feel like they were shopping, eating, and walking on the street. All of the shops and restaurants were picked based on this street-feeling concept. Apart from that, the aim was also to launch a lot of new brands that were coming into Turkey for the first time. The idea was to give people something new—a new architectural concept, a new living concept, and a new shopping mall concept, as well as new shops and brands. I think that attracted a lot of attention. We have worked to keep it new by continually adding new shops and projects. Kanyon recently hosted the big relaunch of Habitat in Turkey. We also developed a project with Virgin Radio Turkey to launch the first shopping mall radio station: Kanyon Virgin Radio. That brought a lot of attention, and we also built projects around it, such as school parties and fashion shows in the main area of the mall. We also have the “Kanyon box" in front of the shopping mall, which displays a new brand every month. Most of those brands are picked from among those that are not represented in Kanyon or often anywhere in Turkey, such as Emily the Strange or Paul Frank. It is a way for companies interested in Turkey to see if there is a market for them here. We have been working to keep the center fresh for customers. We also try to offer everything, including shopping, restaurants, a big sports center, a cinema, and a nightclub. Kanyon has really become a great destination since it opened.

You mentioned the benefits of an open-air mall. What are some of the challenges?

Istanbul does not remain warm all year round, and has a distinct winter season. If you compare it to Miami or warmer destinations, there is a challenge. The wind is also a challenge. However, wintertime does not last too long in Istanbul, and we experience spring and summer for almost nine months. In general, people like to breathe. They do not want to feel closed in. This is one reason why we have become part of office life in the region. People come here for their coffee in the morning, for food at lunchtime, and for entertainment after work. We also have a very central location in the heart of the city, very close to residential areas in between the junction of the two Bosphorus bridges.

Kanyon is the product of a real estate investment trust (REIT), a funding model that is relatively new in Turkey but has seen recent dramatic growth. What is your expectation for the REIT industry in Turkey?

I think REITs will continue to grow because the modernization of the big cities is continuing. There has been a lot of change in Istanbul over the last five years. A lot of new projects are being built, both commercial and residential. This is also happening in Ankara, Izmir, Bursa, and Adana—and to some extent in Antalya. There are over 70 cities in Turkey, and almost 20 cities with a population of over 1 million. This shows a big potential for investment. Also, looking at the laws and legislation that have been introduced over the past few years, the government is making it an attractive area to invest in. There are 92 shopping malls in Istanbul alone. In the next three to five years up to 50 more will open. These 50 are either under construction or in a project-planning phase.

In terms of this rapid growth in malls, is demand keeping up with supply?

There is an average 100 square meters of shopping mall space per 1,000 inhabitants in Istanbul, whereas European figures are closer to 300 square meters. Figures are also much lower in Ankara and Izmir, Turkey's second and third cities. That shows that there is room for growth, which is why there are so many shopping malls under construction. One thing that needs to be taken into consideration is infrastructure. If copies of existing malls are made and located in specific areas instead of being distributed across the city, then problems might be experienced. New projects should spend a lot of time in the planning phase and developers should make sure they can create value-added for the city. The investors and the relevant municipality should develop these plans, and a professional management company that has the expertise to oversee a successful venture should run the finished product. This mix is a true recipe for success when it comes to shopping mall development.

What do you think will be the net impact of the first annual Istanbul Shopping Festival?

The Istanbul Shopping Festival is a great project, and I have been part of it from the planning phase. Istanbul is a great city, it has nature, history, entertainment, everything. It is also a great city for shopping. You can find authenticity and modernity. We have the Grand Bazaar, which is the oldest shopping center in the world and will be celebrating its 515th anniversary in 2011. There are a lot of places in Istanbul where you can experience an authentic shopping experience—including some of the best shopping centers in the world, like Kanyon. The idea is to introduce Istanbul to tourists as more than just the Grand Bazaar—to show them that Istanbul is a prime shopping and entertainment destination. The Istanbul Shopping Festival is planned to happen annually for many years to come. It is designed to occur at the same time every year, over three major holidays: Nevruz, Easter, and Passover. It is a good time to travel, so we want to make Istanbul a hub for this holiday period. Around 1 million people travelled to Istanbul thanks to this project in 2011, and the idea is to increase this number every year by 20%. It is also a way to market Istanbul as a city in the international environment. The Ministry of Culture and Tourism and the municipality are giving a lot of support to this project. I think the effect eventually will be more tourists and shopping in Istanbul—both in authentic and modern shopping areas—and more revenues for tradesman and retailers.

As a manager of one of Istanbul's iconic shopping centers, you have a unique view onto the economy. You see consumer confidence, trends, and spending habits. In this context, what is your outlook for the Turkish economy, and what does that mean for Kanyon?

The sector is recovering well after the crisis, and consumer confidence is high in Turkey. The number of visitors to Kanyon increased by 12% in 2010, and overall shopping revenues grew over 20%. I think we will have a good year in 2011 as well, parallel to 2010. This positive momentum will continue. General economic indicators are positive. Looking at the import/export figures, Turkey's competitive advantage in many export areas is continuing. All of those positive signs give us high hopes for the coming years. We also expect investment in real estate to continue strongly.