Shahram Shamsaee, CEO of Merex Investment. City Walk expands its tenant mix to take in education service providers, office tenants and co-working options. It's a move that has paid off. Image Credit: Ahmed Ramzan/Gulf News

Dubai: It certainly wasn’t the best of times. Dubai’s City Walk was just three years into its operations as a shopping and leisure destination. It had about less-than-middling occupancy and visitor traffic wasn’t running too hot either.

Then Covid came calling early 2020, and that was another existential crisis the management had to deal with. Deal with the crisis, City Walk did. And a further three years down the line, the destination now sports all the outward signs of being revitalized, and there’s a buzz about the place that isn’t just about people turning up for shopping or sitting down for a meal at the many F&B joints there.

No, the vitality runs deeper, and it stems from the way the tenant mix was changed in these three years. Retail in the UAE has changed, and City Walk reflects that in spades. In an interview, Shahram Shamsaee, CEO of Merex Investment, has his say how that was done.

Was the City Walk recovery all about changing the tenant mix?

The property opened in 2017, and after 3 years had around 41 per cent occupancy. Some of the original tenant mix and target groups had just not worked out well. The thing about Covid was we had time to sit and look at it in depth - the landscape of Dubai and where our trade areas, and take a much longer-term view in terms of some of the things we needed to do.

One thing we didn't want is have a plan that constantly changes. Where the city is going to be in five, 10 years’ time, and how do we do things to completely reposition City Walk.

Originally, it was very much an alternative fashion destination. But to do that well, you need to have a certain size, scope and scale. So we were never going to continue down that path.

One of the things that you see globally today is a lot of very active retail venues that are more than retail. There's a mixed-use element to them.

We have a very large trade area with some of the most affluent people in the city. So, the idea was to basically reposition it focusing on education, health, co-working. We traditionally had a strong reputation for food and even that category changes all the time.

It was looking at a total redo in many ways. And that started with the introduction of Canadian University.

Recently we took a department store box spanning three levels and (delivery services company) Talabat has put their regional head offices there. That's about 2,000 people on a day-to-day basis that are here.

We have a much younger diverse group of customers here today. We have a captive audience during the day - the place is busy, so that's a great thing with having components that are not just pure retail.

Merex as a joint venture play
Merex Investment is a joint venture between Dubai Holding and Canada's Brookfield Asset Management. The company was formed in January 2020, which is 'an interesting time to start a new business and then came Covid'.

Apart from City Walk, the Merex portfolio includes the beachside La Mer, which is going through a major redevelopment. The first phase of it is the J1 Beach, which will see a Q4-2023 opening day.

The Merex assets also cover The Beach, JBR.

And then you introduced concepts such as car showrooms?

For the (Mercedes-Benz super-performance brand) AMG, it was sort of an ideal location because they loved the exclusivity part of it. And what they can do here for that type of a customer compared to potentially being where everybody else is and that can be a lot of clutter.

The City Walk boulevard is about 170 units in total. Two years ago, it stood at 30 per cent occupancy, but as of December 2022, we're at about 81 per cent and that's a huge leap.

We've kind of shifted away from the retail portion of it and looked at what we call ‘destination uses’. Through brands that have pulling power, and maybe don't want to be in the clutter of where everybody else is.

On top of that, we’ve really focused on re-tenanting all of this with what we call professional services, clinics, wellness, gyms, etc.. These are also the types of businesses that have a bespoke customer and they're not looking at what I call impulse buys, where you need a million people walking up and down.

City Walk now hosts multiple auto brands, including the high-performance sports car marque AMG. Image Credit: Ahmed Ramzan/Gulf News

How much of the 41 per cent of the January 2020 tenants did you end up retaining?

Very little – probably about 6-7 per cent of that is retail.

Dubai's been booming last 24 months, so you get a lot of demand for retail spaces. We try and stay away from that. We will do the occasional ones we think fits and benefits what we are. We don't want to repeat what was done.

You mentioned the City Walk Boulevard and the 81 per cent occupancy. All set to lock in the 100 per cent?

Those are the 2022 closing numbers. City Walk to is going to be around 98-99 per cent by close this year and Boulevard will be probably in the lower 90s, which is what I call nominal vacancies.

Did the demand for the City Walk residential and the launch of the Central Part project help?

Of course. With the longer term view we factored in all the development around City Walk.

Central Park is just one of the phases. Over the next five years it will be a major residential hub with a significant population.

Bringing in the Canadian University, was that a strategic decision?

Both Canadian University and Talabat were strategic decisions. We made a decision in April or May of 2020 to do a reconversion of what used to be the department store area to office-use. We had conversations with some of our key international brands in terms of an opportunity to have their regional head office.

We were fortunate because Talabat loves the location, and we love having them here. That was always a long-term plan for us. It wasn't an opportunistic thing.

Did that mean increasing the office space as opposed to the original masterplan?

The original masterplan didn’t have any office in it - it was a change of use.

You already have AMG coming in. Is there room for another automotive brand?

We've always had Rolls-Royce here. AMG was a continuation of that and today we've got Cadillac, Alfa Romeo, FIAT, Abarth and we have TechArt, which is the Porsche sort of brand. We would look to build on that.