The Dream House shopping center is aptly named, “The investors deliberately chose not to cut corners and try to save money on everything and as a result produced an extremely beautiful project. It is an ideal location to take your wife, children and business partners,” says Michael Belton, president and managing director of Storm Properties (in 2002 managing director of CMI Development).

In 2002 when work on the project had only just started the investors weren’t sure exactly what kind of shopping center should be built on the land lot. However they noticed that about 80% of all deliveries of construction and finishing materials pass along Rublyovo-Uspenskoye Shosse and Odintsovo. As a result, they came up with the idea of building a specialized shopping center selling luxury furniture and interior design items. They still however required more to turn their idea into a full-grown concept. With this aim they appointed Stiles & Riabokobylko (now Cushman & Wakefield Stiles & Riabokobylko) who according to Natalia Oreshina, director of the company, recommended the building of a classical shopping center. A site worth tens of millions of dollars required of course not just a theoretical assessment but comprehensive market research in order to establish the highest return option. This task fell to a marketing agency who surveyed people at gas stations along Rublyovo-Uspenskoye Shosse and at a nearby World Class fitness center.
This survey of motorists and fitness enthusiasts revealed that the majority of people would like to have a good supermarket and store selling household and garden goods close to their homes. However the initial concept for the shopping center did not include a supermarket. “We planned to build a specialized shopping center selling a range of furniture and interior design accessories,” says Anna Pankratova, general director of Dream House. “The Asbuka Vkusa supermarket on the basement floor was included at a later stage of the project’s realization.”
“It should be said that the requirements facing potential tenants were quite rigorous,” comments Vyacheslav Limonov, general director of Novoe Kachestvo, exclusive brokers for the project. “For a start, potential tenants had to fit in with the overall concept for the shopping center. Secondly, the retail goods on offer must not overlap with those of other tenants. Thirdly, they must be an official dealer for well-known international brands. Despite all these tough requirements the center is fully occupied by tenants.”

More haste, less speed
The renting out of the shopping center remained, however, a challenging task. Doing it all too quickly would have gone against both its strict specialization and the somewhat ambitious lease rates. “For a long time the consultants we asked couldn’t establish the correct lease rates to charge tenants and in answer to our questions replied ‘How much would you like?’ We received the most professional answer from Novoe Kachestvo, which became exclusive brokers for the shopping center,“ says Ms. Pankratova. “Incidentally the lease rates here aren’t regarded as exceptionally high and people sometimes even seem proud that the site has above average lease rates.”
Vyacheslav Limonov is convinced that the current lease rates have growth potential of 3 to 5%. According to Ms. Pankratova the average lease rate at the Dream House is $1600/sqm per year. This amount includes VAT with operational charges of a surprisingly low $188/sqm per year. “Naturally we cover part of the operational expenses along with the entire advertising budget, which today comes to $1 million,” says Ms. Pankratova.
The price issue was far from the only factor influencing the process. As it turned out, in the tough retail business there is still room for a more positive people-based approach. “There is fierce competition in the luxury furniture and accessories market. Some companies simply refused to be located near their competitors, whereas others formed a kind of tenant coalition in order to obtain better lease terms from the owner,” adds the director of retail real estate at Cushman & Wakefield Stiles & Riabokobylko.
The owners also at times took the initiative. One of the first tenants was a Correa’s restaurant, which rented an area on the basement level. “Significant players in the restaurant business convinced us that visitors to the shopping center would not go upstairs to a restaurant so we located it on the lowest level, which has since developed into a bustling area,” explains Ms. Pankratova.

Uniqueness
In spite of its controversial marketing strategy and the difficulty encountered renting out premises, very few would dare to describe Dream House as a poor project. The investors went about its realization in a very collected and comprehensive manner. Ms. Pankratova points out that the developer, consultants, general contractor and brokers were all appointed by tender. Also, in order to research this entirely new shopping center concept for Russia, the investor sent representatives of the consulting and development companies far and wide to find similar projects. One such project was found in Germany: the Stilwerk shopping center chain (in German Stilwerk means stylish or fashionable work). “The Stilwerk chain comprises four shopping centers located in Germany which are designer stores selling interior design goods and accessories. The main difference between Stilwerk and Dream House is in their location –the German stores are located in city centers,” says Mr. Belton.
Ms. Oreshina believes that a more significant difference between the German and Russian shopping centers is that Stilwerk is a manufacturers’ show room center that directly retails factory goods.” “I am not so sure that all the areas in Stilwerk are in fact rented by manufacturers. Some of the areas are rented out by retail companies,” comments Ms. Pankratova. “When analyzing the experience of our German colleagues we even briefly considered acquiring a franchise,” she adds. Throughout the project the investors’ and developer’s continued adherence to their chosen course had a profound impact on the quality of the architecture of the Dream House project. Despite their occasional differences they always agreed about one thing – the construction of a superb shopping center. Therefore it is hardly surprising that Dream House has become a mecca for the capital’s designers and architects. And these are hardly such an easy group to impress. “During the development of the architectural concept it was very important to organically blend the new site into the surrounding environment. We had to take into account its location not in the more aggressive city center but in a softer suburban-living environment,” says Dmitry Voskoboinkov, senior architect at Swanke Hayden Connell Architects who formerly worked at Murray O’Laoire. “When creating the atmosphere inside the center we tried to make it peaceful and cosy while at the same time impressive and striking.” According to Mr. Voskoboinikov, the best material to meet all these requirements was wood which is often used to create a home-like atmosphere in suburban houses. In the Dream House shopping center natural wood is used for the walls, floors and even the construction of the atrium roof.
The roof in particular, deserves special mention. “The roof was the most expensive element,” said Ms. Pankratova while looking up to the glass panels. “The atrium is supported on laminated beams and is currently the only one of its type in Moscow,” explains Mr. Voskoboinikov. “The atrium glass was made using a specialized double-glazing technique which prevents the roof from heating up in summer and cooling in cold winter weather.”
At the start the developer decided on the number of stores that didn’t undergo serious change during the design process. However nothing ever goes quite according to plan in the construction of a shopping center. Like many other commercial real estate projects, Dream House was delayed by about six months. “The project was unique and complex, including many ideas being implemented for the first time in Russia. Unfortunately the general contractor, Re-Bay, was unable to complete everything to deadline, which meant that the shopping center was opened later than we had originally planned,” comments Andrei Sokolov, general director of Next Development, the developer of Dream House (which took over from CMI Development). Currently the investors are in court proceedings with the general contractor.

Future dreams
It is quite difficult to evaluate the prospects for the Dream House shopping center. Some market analysts still have their doubts about the ultimate success of the project, believing it to be destined, like many other sites built on Rublyovka during the luxury segment frenzy, for closure and re-concepting. The project participants however are convinced of success. “The experience of realizing the site was so positive and successful that today we are planning to draw on this to build another site,” says Andrei Sokolov, commenting on the company’s future plans. The developer did not provide any specific details, but according to Mr. Sokolov the concept will remain the same but the total area will be increased. “We have come up with the idea of building a small number of office areas inside the shopping center to be rented out as design studios and architects’ offices. But this is still only at the concept stage,” revealed Ms. Pankratova.
As for Dream House, there are plans afoot to strengthen its marketing policy. In order to achieve this, advertising space has been purchased along Rublyovo-Uspenskoe Shosse. In addition a series of events have been planned for the shopping center in order to attract young interior designers and architects. Plans also include the create of a publication for the center and the opening of a children’s design school, Dream House Kids.
According to Dmitry Voskoboinikov all the participants of the Dream House project set out with the aim of taking a leap into the future. In the opinion of many observers, Dream House is indeed ahead of its time.

Information

Developer: Next Development

Investor: Kenton Holdings

Address: Rublevo-Uspenskoe Shosse , Barvikha 85/1, on the intersection Rublevo-Uspenskoe and Podushkinskoe Shosse, 6 km from the MKAD

Total area/retail area: 11,759 sqm/8300 sqm

Investment volume: $20 mln

Lease rates: Profile tenants: $1100–2500 (including VAT and operational expenses) Nonprofile tenants: $1000–2000 (including VAT and operational expenses)

Number of parking spaces: 220

Number of visitors per day: Weekdays: 2000–2300 , Weekends: 2500–3000

Lease term: 3–5 years

Management company: Dream House

Exclusive broker: Novoe Kachestvo

Architects: Murray O’Laoire, Dmitry Voskoboinikov, Daren Gorodkin

Anchor tenants:

furniture and decor: Room, Roche Bobois, Park Avenue, Francesco Molon, Provasi, Maitland Smith
accessories: Louvre, Interoptika
bedding: Yves Delorme, L’envie
supermarket: Azbuka Vkusa
bookstore: Bookberry