Changing the guard at Dubai Mall

Thousands of square metres of retail space could be up for grabs at Dubai Mall as leases come up for renewal.

The mall, which opened in November 2008, has hundreds of shop leases that have reached expiry after three years. Paulo Vecina / The National

Thousands of square metres of retail space is up for grabs at Dubai Mall as leases come up for renewal and underperforming stores are asked to close.

Shopaholics:

Industry Insights Get the scoop on what's happening in the retail world. Learn More

The mall, which opened in November 2008, has hundreds of shop leases that have reached expiry after three years.

Emaar Properties, the mall operator, is asking a small number of those retailers whose sales have underperformed their peers to leave the shopping centre and is replacing them with other operators.

"All the malls, after they open, re-adjust their clients and customers," said Mohi-Din BinHendi, the president of BinHendi Enterprises, a major UAE retailer with 23 shops in Dubai Mall.

The mall "is filtering out businesses that are not really adding value by their existence in the mall", he added.

Rentare usually charged on a percentage of revenue or at a fixed rate, whichever is higher at the end of the year. Dubai Mall has expanded to more than 1,000 shops after opening with 600.

BinHendi Enterprises has not been asked to close any of its stores, which include Porsche Design, Second Cup, Adidas, Japengo and Hugo Boss, but it is taking up space recently allocated with a new gourmet restaurant and coffee shop from Austria called Julius Meinl.

"We are looking at adding more and more products to Dubai Mall," said Mr BinHendi. "You have to be able to sustain the expenses and the fixed costs in running a business in Dubai Mall. But it's a very successful mall."

He added that the numbers of shoppers had been very strong this year and sales growth in the company's Dubai Mall stores was outstripping that in other shopping centres.

Some companies are voluntarily deciding not to renew leases at their stores because of weak sales.

Retailers say the stores sited around attractions, such as the ice rink and aquarium, attract a higher number of visitors compared with corridors where there is little to entice visitors.

Jacky's Electronics has closed one of its stores on the lower ground floor of the mall and agreed new terms on its other, bigger store on the second floor.

Ashish Panjabi, the chief operating officer for Jacky's, said the situation was a "win-win" for both the retailer and the mall, as the shop on the lower ground floor had suffered weak sales.

"It was the world's biggest mall so we thought we might need two stores when we started," he said. "But we had not seen the property so went in blind. We didn't know how it would work out."

Matt Jay, the associate director of retail and commercial leasing at CBRE, a property consultant, said Emaar would have no problems finding people to fill vacated or new space. There would "always" be demand for retail space in Dubai Mall, especially from brands entering the region, he said.

"Dubai Mall is the first shopping centre they have to be seen in," Mr Jay said.

twitter: Follow and share our breaking business news. Follow us