On June 14, 2020, the Gazit-Globe Real Estate Institute at Reichman University held the first session of its Zoom series on income-producing real estate. Participating in the session, which dealt with shopping centers during and after COVID-19, were Chaim Katzman, founder and CEO of Gazit Globe, and Gideon Oko, editor and presenter of Channel 12 News, who moderated the session.
Prof. Amnon Lehavi, dean of the Harry Radzyner Law School and academic director of the Gazit-Globe Real Estate Institute at IDC Herzliya, greeted the participants at the beginning of the meeting and said, “Both with regards to the format in which this series is taking place, on Zoom, and with regards to the topics that will be covered, in these sessions we will identify the challenges of this period, but also the opportunities it presents.” Later in his remarks, Prof. Lehavi thanked Chaim Katzman for agreeing to be the first speaker in the series.
Gideon Oko, editor and presenter of Channel 12 News, held an in-depth conversation with Chaim Katzman, founder and CEO of Gazit Globe. Oko noted that “The coronavirus and the economic crisis it brought with it has affected almost all areas, both in Israel and around the world, but the shopping centers and malls have been hit particularly hard. In recent weeks, we are beginning to see some recovery and a gradual return to activity, but it is still unclear if and when the malls will be as full as they were in the pre-corona period.”
Katzman began by describing his impressions of the activity of the Gazit Globe shopping centers in recent weeks in the shadow of COVID-19, saying: “I sat in quarantine for two weeks watching the red screens, and today I was in our G shopping center in Rishon Lezion. There were no available parking spaces at 11 a.m., and in the cafes there was no place to sit. So the rumors about the death of the malls are a bit premature.” According to him, “There is a terrible dissonance between the analysts' laments and what is happening on the ground. A situation has been created in which everyone is talking about a crisis, but it is different from reality.”
Katzman went on to say that "Every crisis brings about changes, but I do not think the changes here are going to be dramatic. In the retail world, the only thing that is constant is change, but people still want to go to the supermarket, the pharmacy, the hairdresser, the cafe, to meet friends…that is the case in Israel, as well as around the world.”
He believes that in dealing with the COVID crisis, “The world is divided into two clear groups: The 20-65 age group, which made an informed decision to take the risk of contracting the virus, since they are not in a high-risk group, and the over-65 age group, which is defined as high-risk, and which behaves in a more guarded and careful manner. But the majority of the population decided that corona would not prevent it from continuing its way of life.” In Katzman’s opinion, no further lockdown will be necessary either, since the distinction between the behavior of the younger population and the older, at-risk population will suffice.
Katzman noted that the company's shopping centers are based on the provision of daily essential needs and services for the population, are located in densely populated areas, and serve a population with a high socio-economic profile. The essential services offered by the group's shopping centers around the world, such as supermarkets, pharmacies, and food stores also operated throughout the lockdown period, and in his opinion, the importance of these shopping centers is growing.
Regarding the steps taken by the Israeli government to help the Israeli economy emerge from the crisis, Katzman said: "Compared to governments around the world, the Israeli government has not done enough in terms of financial assistance to the economy in dealing with the crisis. The Israeli government must act, and quickly. It can afford to borrow a lot of money and spend it quickly and resolutely in order to revitalize the economy and keep people from reaching the brink of starvation.”
With regards to the group's activities in Brazil, he said, "In Brazil, the coronavirus crisis began at a later stage and therefore has not yet ended, but last week the shopping centers reopened and life will return to normal there as well, as has happened all over the world.”
As for rental prices and occupancy in the group's shopping centers, Katzman noted that in the new lease agreements recently signed, the rental prices remained similar or were even higher than usual, and occupancy and demand for commercial space has not changed as of yet, nor does he expect them to.
In conclusion, Katzman discussed the future of shopping centers, saying, “The winning model is a combination of online and offline.” He said that even during the COVID crisis, the companies that were profitable were those that combined the two, such as Target, which supplied orders from their physical stores in the city centers. He also believes that "in the future we will see an increase in the mixed use of shopping centers, as part of the transition to the concept of ‘Live Work Play’. People prefer for everything to be close by – their residence, work and leisure. Therefore, the shopping centers will become ‘fortress properties’ characterized by a combination of functions that sustain each other.” In his opinion, “The crisis is also an opportunity to advance plans, increase asset's density, add layers and so on.”
To watch the recorded session on the Gazit-Globe Real Estate Institute’s Facebook page, click here >>
