LIFECYCLE MANAGEMENT OF SHOPPING CENTERS: ECONOMIC JUSTIFICATION OF DECISIONS ON RECONCEPTION AND RECONSTRUCTION
Keywords:
commercial real estate, the life cycle of a shopping center, reconception of the shopping center, reconstruction of the shopping center, economic justification of decisions on reconception, economic assessment of reconstruction, the market of commercial rAbstract
This paper deals with the problems of commercial real estate management on the basis of shopping centers. The author applies life-cycle concept to the shopping center management at different stages of development, sets management objectives. In the process of shopping center life-cycle analysis, the author shows the necessity for regular re-conception, changes or improvement of the frame of trading object in response to the actions of competitors and changes in consumer behavior. In the article the cyclic model of the shopping center reconstruction “reasons – means – results” is proved. Basic reasons for the reconstruction are external and internal. External factors include new trends and frames, increased ompetition, the outflow of customers, growth in demand, changes in the legal framework and technical requirements, and internal factors is the fall of operational efficiency, physical and moral deterioration of buildings and design, obsolescence of the concept, errors in positioning and design. Means of solving problems are reconception, repositioning and rebranding, which can be conducted simultaneously or in various combinations. As a result of reconstruction of the shopping center the performance of operational and strategic effectiveness should be improved. The model is cyclical, since it is repeated at regular cycles (on average every 15 years), depending both on the external as well as internal factors. The paper also presents an approach to the economic feasibility of the cost of reconstruction, based on the principle of correlation of marginal costs of reconstruction and of the difference in marginal income before and after reconstruction. The basis of approach is forecasting of future income from the operation of the shopping center after reconstruction, which should exceed the cost of reconstruction for the principle of return on investment.
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