Despite closures, Krasta still good for developers

  • 2002-08-01
  • Lasma Amolina, Dienas Bizness, RIGA
Entrepreneurs who have set up their businesses on either side of Krasta Street believe this area has development opportunities that will attract new retailing centers.

The territory, which has started to resemble typical U.S. highways lined with car dealerships, supermarkets and malls, was set aside for commercial use in the Riga city development plan for 1995-2005.

The City Council set aside 856 hectares of Riga - 2.8 percent of the city - for the construction of office buildings, hotels, retail centers and other buildings. The largest territory for commercial usage, 103.2 hectares, is set aside on Krasta Street.

Dienas Bizness was not able to find out how many have already been developed, but Vilnis Strams, director of the City Council's development department, has said that entrepreneurs are interested primarily in land surrounding main roads. Krasta Street qualifies.

Henrijs Fogels, general director of the food retailing enterprise Kesko Food, agreed. Although his company closed its Citymarket food store on Krasta Street July 31, just four months after it opened, Fogels said the street still held development promise.

"The development of the capital city is very dynamic. Retailers don't hide that it is extremely difficult to forecast the rate and type of infrastructure development for each particular district. The land on which the Krasta Street Citymarket is located is simply not suitable for food retailing at the moment," he said.

Citymarket is planning to open a new store on Pulkveza Brieza Street in December. The building on Krasta Street, which cost 4 million lats (6.67 million euros) to build, will be leased out - just not to food retailers, Fogels said.

Earlier this year, the $10 million hypermarket Krasta Centrs also closed its doors, and the firm which ran its operations, SIA Tirdzniecibas, was declared bankrupt.

Fogels says the key to success on Krasta Street is accessibility. Most stores are on the left side of the road, opposite the right bank of the Daugava River, making good left turn lanes and traffic lights essential.

Arnis Veisbardis, director of the Mols retail center, said a retailing park similar to the Alfa mall should be established on Krasta Street, where various complexes operating in several retailing fields are combined. A household goods center, furniture store, discount shops and perhaps even a food store would make good candidates, he said.

Statistics show that there are very high traffic volumes along Krasta Street, so there is a high chance of attracting customers.

Those businesses that have closed down stores along Krasta, Veisbardis said, have employed the wrong market strategies.

Veisbardis said Mols will expand and open a new parking lot in November. An office building will be unveiled in 2004.

After the reconstruction, Mols will have 30,000 square meters for retailing and 18,000 square meters of car parking with space for 1,200 vehicles. The office building will have 3,500 square meters, and Veisbardis said two large firms had already expressed interest in it.

"It's international practice that firms rent offices outside the city center because of fewer traffic jams and fewer parking problems," Veisbardis said.

Norway's Linstow Varner plans to invest 25 million lats in the expansion of Mols, on top of the 10 million lats invested in it since it opened. It is planned that the investment could be earned back in five or 10 years.

While food retailers on Krasta Street come and go, competition between car dealers, however great, is not risky, thinks Maris Varkalis, director of SIA Adam Auto, official representative of Opel.

"People must have the chance to look at various offers, and it's good that cars from half the world can be checked out on one street, and that you don't have to crisscross the whole of Riga," he said.

Some construction along Krasta has been held up for years. Preparation of plans for the $100 million retailing and leisure center EKZ Daugava - which will include a retailing center, cinema, office building and three-star hotel - has been dragging on for more than four years.

The City Council has deferred approval of the first stage of this project until Sept. 10.

Construction of the planned SIA Domenikss car retailing and Mercedes service center next to EKZ Daugava has also been put on hold.

"There hasn't been a single site completed on schedule," said Ralfs Dakters, the firm's head of marketing.

While the center was slated for completion last February, Dakters said the delays are linked to EKZ because the city architects have decided that both projects have to be completed together.

The center should be ready by the end of 2003.