BRISBANE, Australia — In the United States and its native Australia, the Queensland Investment Corporation’s Global Real Estate Division (QIC GRE) is pioneering the development of next-generation retail centres, stitched into the fabric of the communities and cities in which they sit. As QIC GRE invests over $3.5 billion in its development programme and looks to its global potential, BoF sits down with director of investment management Stuart Miller, to hear more.
What is QIC Global Real Estate?
Queensland Investment Corporation (QIC) was launched in 1991 as an investment vehicle for the Queensland Government. Today, QIC is a global funds manager with about $53 billion (AUD$73 billion) under management. Within that, the Global Real Estate division operates an $11 billion asset portfolio specialising in mixed-use commercial and retail assets, which includes interests in about 30 sites across Australia and the United States. Each site is different, but for us — it’s about connecting people with places. It’s as simple as that. We are a business that takes its cues and shapes its opportunities from understanding the communities within which we operate.
What has driven the real estate division’s growth into a global $11 billion retail portfolio?
The majority of the growth has come through our strategic asset creation programme, which we have built from the ground up. That has been the growth driver for the past 24 years. It’s organic growth, achieved by responding to the markets in which our real estate assets are located.
Recently we’ve established a platform in the United States — we have eight centres in a joint venture with Forest City and also manage an interest in Hawaii's Ala Moana Shopping Centre, which is a very exciting initiative for us.
What kind of experiences does QIC seek to create?
We are transforming our centres from traditional transactional shopping environments, to curated spaces for immersion and entertainment. When we deliver a project, one of our measures of success is what we call "plonk" value. We’re not just measuring success by the amount of shopping bags we’re seeing, but by people participating in the space. We’re trying to create an ambience and atmosphere in which they feel comfortable to just do that.
If you think about how people navigate a city and where they feel most comfortable, it’s rare that they’ll feel most present in privately owned space. There’s this perception that it’s safer in the public realm, be it the forecourt of a museum, a park or a town square. Anywhere they don’t feel the pressure to engage in commerce of some form.
As a result, another great measure of success for us is when a community isn’t aware of the physical boundaries of QIC GRE property and public space. In no way are we trying to disguise it, but if they cross a road or cross a square into a park — that’s actually controlled by a private company like us, which often sits adjacent to fashion, entertainment, dining — then we really have stitched ourselves into the fabric of that community and that city. That, for us, is the goal.
Why is QIC interested in fashion and why now?
The Australian market is buoyant. The average retail spend per capita is higher than the US, and our luxury e-commerce spend ranks in the top five markets for Net-a-Porter and MatchesFashion.com. Yet, only about 20 percent of the top 100 retailers have a physical presence in Australia. That’s a huge opportunity and we’ve got great assets, great locations and the vision to bring those brands with their latest concepts to the Australian market. We have to leverage the opportunity to provide the connection between the fashion industry and the customer or the community which are ready, willing and able to be served.
We are integrating fashion with food, design, architecture, culture, wellness, learning, entertainment, public spaces and the latest technology. That enables a real-time dialogue between us, our retail and experience partners and our shared customers. It’s been more of an organic alignment rather than a light bulb moment. We’ve always seen the opportunity for engagement with fashion in a meaningful way. We’ve really just had to grow into it in a relevant manner.
What can we expect to see as this new strategy is rolled out over the next 18 months?
The first manifestation of this new strategy, in a physical sense, will be Eastland. It is a billion dollar asset we’ve been working on for the last five years in the east of Melbourne. We’re moving up the quality curve in everything we do and that will be the first showcase. Stage 1 is launching in October this year.
I’m really excited about what we’ll be delivering at Eastland, as it’s a large-scale urban renewal programme that goes beyond the traditional retail model. We’ve been working with the local authorities to create a public town square, which will neighbour a knowledge, cultural and innovation centre, that the local council has created, and a dining precinct that will be home to some of Melbourne’s premiere chefs and restaurateurs. This is the first time that iconic chefs have moved outside of their inner city locations and that’s a great achievement for us. And, just as important, will be the new to market retail experiences, which includes David Jones, Australia’s most prestigious department store, launching in the development.
Following that, we have another two major projects: 80 Collins in Melbourne, which is located on the premier retail street environment in Australia, and the MLC Centre on Castlereagh Street in the heart of luxury in Sydney. Our focus is on premier precincts and world-class streets, where there will be more engagement with market retail, dining and entertainment, as well as a key focus on international designers.
The future of retail is in flux, with the emergence of e-commerce and mobile commerce, how does QIC view these developments?
E-commerce and mobile-commerce are not threats; they are enablers. They have enabled the transformation of the physical space. I think a lot of great, innovative work has been done to make bricks and mortar more activated. The traditional retail environment will continue to be the glue that binds the shopping experience together. It’s just that the ingredients and the mix of the experiences has changed, shifting from a transactional focus to an experiential one.
We find ourselves needing to establish communication, participation and collaboration with different organisations and groups that we’ve never had a dialogue or relationship with before. For us, it’s about facilitation. We are focused on how best we can facilitate both our retail partners and their consumers to create an aspirational experience.
To use a digital analogy, we, the built environment, are the hardware and the operating system, our retail partners are the apps. We’re creating some of our own apps, and we want to engage other areas of commerce — retailers, food merchants, wellness, you name it — to create their own apps for our shared customers.
How are you thinking about the QIC experience in the context of this techno- logical change and the resulting shifts in consumer behaviour?
We base our thinking on three fundamental principles: open platform thinking, a community-centric approach and destination design. We are seeking to turn the closed systems of a traditional shopping mall into something that is more open and engaging, physically and metaphorically. The space we’re creating needs to be receptive and adaptive to the changing needs of our clients, but also our brand partners and retail partners. It’s about making sure that we inspire them to connect with the physical space that we’re providing.
The second is putting people and the community at the heart of everything we do. That’s our own internal manifesto to make sure that everyone here at QIC GRE is really thinking about it and owning the responsibility of it. We need to under- stand the context in which people live their lives, and then we can cater for their needs and share meaningful experiences with them.
We’re in the business of place making, so we try to think beyond retail to a space where we can connect people and indulge their desires for discovery. Intelligent and meaningful design of the built environment plays a significant role in that. By introducing unique concepts and unique categories, we can go beyond traditional retail and deliver destinations. We have a responsibility to remain relevant and the portal for us to do so is the built environment.
Traditionally, QIC's focus has been on Australia, but now you have global ambitions. Tell us more.
We’ve had global ambitions for the best part of a decade, which has manifested with our North American investments and the opening of an office in Los Angeles.
We see ourselves as a long-term partner for both our investors and for retailers. We’ve been established almost 25 years now, but we’re always thinking about the next 20, 30, 40 years. Crossing geographical borders is logical in that context. North America is currently where our primary focus is. We believe there’s a definite opportunity for us to introduce more Australian retailers to North America and global retailers to Australia. We’re also engaging with retailers who see Asia as their next market. That’s another opportunity for us, to really capitalise on the further expansion of retailers into the Asian market, and then facilitate the introduction to Australia from there.