Missing the G Mall Spot?

1,000 empty square meters waiting for Gap and H&M.

One of the biggest shopping centers in Israel was launched on Monday: Gazit Globe Israel ceremoniously inaugurated the G Kfar Sava Mall. It's the first such project that the real estate company has developed from scratch, from the stage of buying the land. But there are real doubts as to its feasibility.

G Kfar Sava is at the corner of Weizmann Street and Route 40, in the Kfar Sava industrial zone. It's a giant, too, combining the huge strip malls known in Israel as Power Centers with an indoor mall for clothing stores.

In fact the mall has, as is typical, been opening in stages. The open court, with 15,000 square meters of floor space, opened to the public a month ago. It features large stores, restaurants and cafes, and a branch of the natural grocery chain Eden Market, which alone occupies 2,800 square meters. (Eden Market opened with a slight delay, because originally the space had been slated for a Tiv Taam branch. But there was a dispute between the Tiv Taam and Gazit Globe people and that was that.)

The fashion court, with 22,000 square meters, is scheduled to open in May. It's right alongside the open area and sports large, well-known chains as well as smaller, independent stores.

All very impressive, perhaps, but G Kfar Sava Mall isn't opening in sterile ground.

Its natural customer base, the good people of Kfar Sava, are already served by a mall, Arim, which has been doing well and which is right there in the neighborhood. Arim is smack in the heart of the city, within walking distance of residential neighborhoods. Why would people drive to somewhere else?

G may be on Weizmann Street, Kfar Sava's main drag, but it's at the eastern end of the road, in the industrial zone, at the edge of town and nowhere near the residential areas. Nor is it convenient to public transportation.

Ronen Ashkenazi, chief executive of Gazit Globe Israel, says the natural customer base for the G Kfar Sava Mall is the population of the Sharon region. But it's debatable whether the people of Ra'anana, for instance would agree, given that they have their own mall, Renanim, in their own city. And Hod Hasharon is served by Margaliot, a David Azrieli Group mall.

In short, retail experts aren't sure that the G Kfar Sava Mall has the right to exist at all, and aren't sure that its gigantic size is an advantage, let alone a decisive one.

Theoretically its large dimensions enable it to house a larger range of stores. On the other hand, they aren't going to be unique ones, that could induce people from far away to trek to the G spot. Who needs to drive to a Fox store when there's another one just five minutes away?

One anonymous expert, however, thinks a second mall in Kfar Sava is a good idea: "Since Arim opened in 1994, the population has grown by tens of thousands of people, while retail space hasn't developed correspondingly," he explains. But even he thinks the location of G Kfar Sava is less than ideal, if only because an outlet of the discount giant Hetzi Hinam opened three kilometers away, with a 12,000-square meter grocery store and 12,000 square meters of other retail space.

"It has nothing to offer," says Tamir Ben Shahar, chief executive of the economic research company Czamanski Ben Shahar. "People usually stay loyal to their local mall, and sometimes travel to a distant one for a change of atmosphere."

A mall has to be a monopoly, Ben Shahar stresses. It has to bring the message of concentrated shopping to an area with a commercial vacuum, or at least to bring something special to consumers. Does the G Kfar Sava Mall meet these criteria?

To judge by the list of clothing stores, no. Most are branches of chains that are in the other malls too. Zara isn't enough to attract enough shoppers from their "home malls" to keep the G mall above water, says one retail expert.

Yet Gazit Globe has a rabbit in its hat, in the form of the 1,000 square meters of retail space that are still under wraps. That's spare earmarked for Gap and H&M. Both are chains establishing a local presence that all the malls in Israel would love to have and no, G hasn't netted the two fat fish just yet. But it's leaving the space available for flagship stores if it does, and that could make the mall, attracting shoppers from far and wide.

The G Kfar Sava Mall could theoretically have another advantage, if it were to open on Shabbat. The food court and entertainment venues already operate on weekends, says Ashkenazi, and the company has laid the groundwork for other stores to open too. But will the mall actually operate on Shabbat? Ashkenazi's responses on this are fuzzy - there is no policy yet.

So there are serious points working against G Kfar Sava Mall, not least that it's launching in the middle of a fierce recession. Nor does it help that most of the leases it struck with stores were closed at the peak of the boom, in 2007.

"It's a big challenge to open a mall at a time like this," Ashkenazi says. That's an understatement. But the mall management is encouraged by the grounds that most of the tenants went ahead and opened their stores instead of trying to void their leases. Also, in the month since they opened the stores have done well, Ashkenazi says.

Actually the tenants didn't have an option in their leases to back out and slink off into the night. But, Ashkenazi says, Gazit Globe was considerate of tenants that were afraid to expand at this time and allowed them not to open their stores. He stresses that some chains elected to go ahead with their G launch and not to open new outlets elsewhere.

Marketing people all agree that the G Kfar Sava Mall won't have an easy start. Some people will show up out of sheer curiosity, but it will take time to build a faithful clientele. Only then can the mall take off.