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July 3, 2023

Balance of functions: commercial property

  • Mikhail Petrov
    Commercial Director of the company KamaStroyInvest
  • Anton Agapov
    Development Director, Yes Group
  • Andrey Sinyavin
    Director of the Expert Department of Sawatzky Property Management
  • German Yakimov
    Entrepreneur, Investor, Philanthropist.
  • Vladimir Frolov
    Editor-in-chief of the magazine "Project Baltia"
  • Галина Шарафутдинова
    Генеральный директор, Ассоциация рестораторов и отельеров Республики Татарстан
  • Sergei Ivanov
    Chairman of the State Committee for Tourism of the Republic of Tatarstan
  • Elena Stryukova
    Authorized Representative of the Russian Guild of Managers and Developers in the Republic of Tatarstan
Prospects for commercial property in city centers have been discussed at the Forum REBUS within the scope of the session “Balance of functions: commercial property in the historical center”.

During the discussions, the session moderator Elena Stryukova, Managing Partner of the Perfect RED and the plenipotentiary representative of the RGUD (Russian Managers and Developers Guild) in the Republic of Tatarstan, presented the results of the analysis of the commercial property market in four historical locations of Kazan.

- We have analyzed the types of business objects located in historical parts of the city. For example, on Bauman Street to the greater extend it is a hotel fund (55%) and trade facilities (27 %). On Freedom Square - it is catering facilities (55%). In Lyadskoy Garden - offices (62%) and trade facilities (only 14%). In Staro-Tatarskaya Sloboda, surprisingly enough, 50% of premises are occupied by offices, 15% - by trade facilities and 14% - by service rendering entities. We intend to investigate the opportunities of development by understanding what types of Commercial property is insufficient in these districts.

Mikhail Petrov, Commercial Director of the company KamaStroyInvest
Described how to design a successful commercial property inside residential objects in the historical center. When creating a project, the company analyses all aspects: starting from location, architectural solutions, house curtilage and up to the hiking trails. It carefully works out projects of commercial premises, as they generate up to 20% of the developer's revenue.

- Over the years of our activity in the market, we have compiled a checklist of tenant’s requirements for commercial premises. Of course, everyone wants to locate business on the central street. But not all buildings are located in the center. Therefore, we design unique architecture, we use the historical features of the surrounding objects, create special atmosphere in our complexes, making them real points of attraction. And interest in our commercial property is always growing. We have a pool tenants who settle in every new facility we create.
Sergei Ivanov, Chairman of the State Committee for Tourism of the Republic of Tatarstan
Turning to the discussion of such a type of commercial property as hotels, Sergei Ivanov, Chairman of the State Committee for Tourism of the Republic of Tatarstan, shared interesting statistic figures. 3.9 million guests visited Kazan during 2022; on average, they were 22 - 47 years old, residents of Moscow and its region, St. Petersburg and the cities of the Volga Federal District. About 60% of them were mothers with children. On the one part, it is good, as business needs customers. However, the issue of the balance of interests between tourists and residents in Kazan is acute.

— The average annual occupancy even in 5-star hotels is over 70%. Overall for the market it is 72-75%. The tourist flow is growing by 5-10% per year. It is important to prevent establishing of hostels in residential buildings, so that tourists do not interfere with local residents. At the same time, the city needs about 5-7 hotels more with 200 rooms. And from the point of view of the master plan, it is important to leave reserves for the construction of hotels in the historical center. Otherwise, the areas allocated for the hotels will remain only in the outskirts of the city. - This situation will not be interesting for investors, inconvenient for tourists to get there, hustle and bustle for the city residents.
Anton Agapov, Development Director of the YE'S apart-hotels chain.
A vivid example of how to solve the issue of the historical center development and increase the hotel rooms capacity in the city were the projects cited in the speech by Anton Agapov, Development Director of the YE'S apart-hotels chain. Together with a major developer, the company is designing an apart-hotel in Kazan, having already 6 completed projects in Russia and Kazakhstan in its portfolio. One of them is the YE’S Marata apart-hotel in the very center of St. Petersburg.

- The reception, lobby and a well-thought-out internal infrastructure available in the hotel makes almost invisible to the tourists the difference between service apartments and a classic type of the hotel. However, the construction of such objects in central locations is an opportunity for the city not only to attract a tourist flow by increasing the quality of the hotel rooms’ capacity, but also to improve the historical center itself. Thus, there once was an abandoned Krupskaya factory building in place of the hotel YE'S Marata, which today is the center of attraction for guests and residents of St. Petersburg. We managed to create a retrospective on the facade of the apart-hotel with the help of three “layers of time” using architectural styles of XIX, XX and XXI centuries.
Andrey Sinyavin, Director of the Sawatzky Expert Department
Andrey Sinyavin, Director of the Sawatzky Expert Department showed a series of successful examples of how historical structures in different cities of Russia have found their new life and purpose, practically without losing their appearance.

The old buildings are mostly used for hotels, offices and restaurants. Genuine historical materials are used in their design, and modern materials - in the creation of infrastructure.

- In management of such buildings, we use:

1. Big “expensive” tricks: connect buildings with atriums; arrange automated parking and elevators for cars;

2. Little tricks: mobile snow melting stations, walk-through lifts with corner located doors,

3. Small technical tricks: coating thermal insulation to reduce space when laying communications, carbon fiber reinforcement, lightening the weight of building structures, fire extinguishing with finely sprayed water.

And we are ready to share our experience concerning the possibility of operational details provision at a historical site both at the stage of design and reconstruction. Don’t hesitate to contact us!
Vladimir Frolov, Editor-in-Chief of the magazine “Project Baltia”
Vladimir Frolov, Editor-in-Chief of the magazine “Project Baltia” demonstrated in his speech the opportunity provided for by the commercial property to bear cultural value and create such an elusive phenomenon as the atmosphere of the historic city center. As an architectural critic and art historian, he drew attention of the session participants to the fact that the atmosphere can be inviting or otherwise create the opposite effect bearing a feeling of deadness and lifelessness. And he sees the task in finding a balance between preserving historical significance and creating new meanings and values of objects.

- We can rely on “Modern cult of monuments”, the work of a German art critic Alois Riegl, in solving this problem. The work is about the value of antiquity, the value of novelty and the artistic value on the whole. And I would add: the value of the environment or atmosphere of the place.
Svetlana Pakhnina, Deputy Mayor of Vologda, the Department Head for Economic Development
And the session ended with the speeches of three representatives of Vologda in succession, after which the participants listening them admitted that they put their mind to visiting this 876-year old city. Thus, Svetlana Pakhnina, Deputy Mayor of Vologda, the Department Head for Economic Development, told about the way how the design management and legal solutions help in promotion of the sustainable development of the historical environment in the Vologda region. Initially, historical buildings were only an expense items for administration: for their security, maintenance and resettlement. And the owners used to burn down these ancient objects of wooden architecture to build something commercially more profitable instead of them.

- It was important for us not only to preserve the accumulated historical values, but also to include them into the economic development of our city. So, the Mayor ordered that in the event of such “fire” of the ancient objects, there should be only green landscaped areas, and nothing more, in their place. The fires stopped. For stimulating business to invest in the restoration, the Administration made a decision to sell historical objects for 1 ruble, and the land under them - for the price according to its cadastral cost in the historic center, as well as exempt the owner from paying personal property tax. All objects today are sold out to investors. As a result, the tourist flow started to grow.

The investor, whose family has been restoring wooden historic houses in Vologda during already 9 years, told about the business tasks they are meant for. During this time, 3 buildings of the XIX century have already been completely restored and are used for business purposes, and 2 more houses are in the process of restoration.
German Yakimov, entrepreneur, investor and philanthropist.
- There is an opinion that restoration is very expensive. But if you approach this issue reasonably, it turns out that it occurs even cheaper than building a new house, - told German Yakimov, entrepreneur, investor and philanthropist. — It is possible to save on the interiors, using what has been preserved, in comparison with the costs of a new construction. We try to be as careful as possible during restoration. And the more you manage to keep the authenticity inside the building, the more attractive it becomes for tourists. It would cost significant funds in the new construction. I compare it with the new hotel recently constructed by us.

His daughter Anna spoke in more detail about how and which houses were restored by Yakimovs, what difficulties they faced. She called historical object a “box of secrets”, as it is hard to assess the real state and volume of restoration activity in advance.

- In 2014, we bought for business purposes a “House with Lilies” built in 1875. Soon it was recognized an object of cultural heritage. We didn't know anything about it then and started to study its condition carefully. And yet finally we decided to do its restoration. It took 3 years. And when we finished restoration of the house, we bought another one, the Izvozchikov House. We hoped to do restoration and to put it into operation quick. But the house turned to be in such a poor condition under the cladding that we had to roll it out into logs. We learned a lot from the experience of these houses and did not stop at that. We undertook to restore the oldest surviving object in Vologda - the Zasetsky House. Its owner lived in Kazan, and it was his tenement house in Vologda.

Refurbished houses receive the function of a flower shop, coffee house, photo zone, or museum exposition dealing with the history of the house. The Yakimovs received a grant for the project “House speaks” of creating an audio tour about a history of renovated houses. And all objects invariably enjoy great interest of both tourists and Vologda residents.

The session caused interest among the professional community: there were no vacant places in the hall. It was possible to achieve the following results of the work of experts:

1. Free niches in the commercial property segment in historical center of Kazan have been identified.
2. Success factors for projects in the heart of the city have been identified together with the developers and business representatives, the users of the premises: the paradigme is simple - “participatory” design process.
3. Growth points have been outlined in the interaction between the authorities and developers for successful implementation of projects in the field of commercial property in historical city centers.
The following legislative initiatives have been formulated as a result of the session:
1. In connection with the development of the trend towards multifunctionality, to expand the list of permitted use types of land plots and commercial property purpose provided for by permission to operational commissioning.
2. To simplify the procedure for changing the purpose of the building in case it is used along multiple functions. To develop regulations for passing of the named procedure.