BIG Glilot - Israel's biggest shopping center set to open

The shopping center will send shockwaves through the retail sector in Tel Aviv and the Sharon region and could put some of the area's malls out of business.

When fashion chain Factory 54 opened a pop-up store in Herzliya’s Arena Mall late last month, the discounts of up to 90% were cause for celebration among consumers. From a business perspective, however, this was anything but a celebration. It was a liquidation sale for one of the mall’s anchor stores, symbolizing the end of its purpose as a fashion complex, perhaps as a mall in general. Factory 54, which specializes in international luxury brands, is moving across the coastal highway to BIG Shopping Centers (TASE: BIG) new BIG Fashion Glilot complex.

This transition is just one example of the new shopping and entertainment complex’s impact. Scheduled to open at the end of this month, BIG Fashion Glilot has been dubbed "Israel’s biggest commercial center." In the first phase, it will offer 44,000 square meters of commercial space, almost twice currently offered by other complexes in the area: Israel Land Development Co.’s (ILDC) Seven Star Mall and Melisron's Ofer Ramat Aviv Mall.

BIG Fashion Glilot is an open-air strip mall whose "streets" will be populated mainly by domestic and international fashion brands, including flagship stores and luxury brands. Alongside the stores, the food court will host chef restaurants - including Chef Yuval Ben Neriah, Turkiz Restaurant, and Bar Italia - as well as branches of Tel Aviv eateries not usually found in malls, such as Aharoni’s Fried Chicken, Pizza Mount Sinai, and chains like Meat Bar and Shake Shack. Because of these, and the fact that it will be open on Saturdays, the BIG complex is expected to pose a real competition to its surrounding rivals.

"Chains were attracted by our rental prices"

The entry of BIG Fashion Glilot into this sector is a significant consumer event. It is the first large mall to open in Israel in about eight years. Not since the opening of the TLV Mall in Tel Aviv, has there been an event of this magnitude in the shopping center market segment, certainly not in the Gush Dan region. By contrast, the Seven Stars Mall that opened in Eilat last year is six times smaller than BIG Fashion Glilot.

Although the birth pangs are expected to be difficult, the complex’s opening, along with the fact that it will be open on Saturdays, will affect the sector, especially the competitors - ILDC’s Seven Star Mall and Melisron's Ofer Ramat Aviv Mall. "Within a year from now, anyone going to shop for clothes will choose BIG Glilot as their first choice," an industry source tells "Globes." "Many malls in the central region will be in trouble, especially when it comes to fashion, but the burden of proof will be on BIG. When someone shops at Zara in the Ramat Aviv Mall, they’re not just shopping at any Zara; the location itself is very significant. BIG will have to uphold the branding they have taken on. In my opinion, in the end, anyone who wants to buy clothes on Shabbat will go there."

Another issue that will certainly play a role in the competition between BIG and the surrounding shopping centers concerns rental costs. "Business owners in BIG Glilot have a very good chance of making a profit in this place, because they pay a low monthly rent, significantly lower than the Ramat Aviv Mall and lower than the Seven Stars Mall," says Tamir Ben Shahar , owner and CEO of economic and business consulting firm Czamanski & Ben Shahar Ltd. "This is also one of the reasons that BIG will be able to find replacements relatively easily, in case someone wants to leave."

"The rental prices at BIG have attracted practically all the chains in the country," says marketing and strategy expert Avi Zeitan . "When they started marketing the project four or five years ago, they pretty quickly targeted all the international and Israeli chains looking for large retail space."

The Ofer Ramat Aviv Mall charges an average monthly rent of NIS 528 per square meter, while rent at BIG Glilot is estimated to be half that or even less. According to BIG data, the average rent for all its complexes under development, including the one in Glilot, is NIS 179 per square meter per month. At the Seven Stars Mall, the average monthly rent is NIS 293 per square meter.

One of the new Glilot complex’s main strengths lies in the wealth of brand names, as the center positions itself as a huge fashion complex. Among other things, it will be home to the first stores in Israel for homegrown fashion house Maskit and for Oysho, the sports brand from Zara's Inditex group. Also on the list are Lulu Lemon, Nike, Alo Yoga, Adidas, Foot Locker, Castro, Fox and, as mentioned, Factory 54. Zara will open its largest branch in Israel in the complex.

"The TLV mall will collapse completely"

Considering this, it is not surprising that the two prominent rivals are advancing renovation and enhancement measures. Although these processes started before BIG Glilot was set to open, they are not unrelated. Over the past two years, the Ramat Aviv Mall has invested NIS 120 million in a comprehensive renovation and added high-end brands such as Louis Vuitton, mainly to reinforce its greatest advantage: its image of luxury. The Seven Stars Mall has invested NIS 50 million in transforming it into a place primarily for dining and entertainment, including the introduction of restaurants Calata 15 and CasaTua, and opening both facades of the mall to the adjacent Herzliya park. Seven Stars Mall holds mostly small businesses, with no stores exceeding 1,000 square meters to maintain a more intimate "neighborhood" atmosphere.

According to Yaniv Fainshnider , CEO of ILDC’s shopping malls and commercial centers division, the changes at the Seven Stars Mall were not motivated by the new Glilot complex. "The BIG opening didn’t accelerate our plans; they are part of a long-term plan. Closing the movie theaters, which was part of the plan, happened almost five years ago, and we’ve had permits for the new indoor amusement park for years. All of our thinking is directly guided by the mall's strategy, which is based on an understanding of its location, target audience, and needs."

"BIG Glilot will be an impressive fashion mall, bringing the most perfect product it can. Even if it succeeds as predicted, we will know how to work alongside it, the way that companies in other industries know how to work alongside one another. We will be more on the side of experience, entertainment and recreation, a down-to-earth mall with good accessibility."

Ofer Mall Ramat Aviv say they don't view BIG Glilot as a competitor, and had no additional comment.

"The one that will be hardest hit will be the Seven Stars Mall," says Zeitan. "It failed three or four years ago to change its brand mix to become even more successful than it already was. The TLV Mall will be hit next. It will collapse completely because it is a so-called fashion mall that already suffers from low traffic. Anyone coming from Netanya or the Sharon region won’t want to get into Tel Aviv traffic jams. They won’t go to the TLV, they’ll go to Glilot. The Ramat Aviv Mall won’t lose as large a share as the Seven Stars Mall, in my opinion, but it will also lose a certain volume of customers."

The Arena complex in Herzliya, as mentioned, has already been affected, to some extent by the expected opening of BIG Glilot, and many claim that the departure of fashion brands, such as Factory 54, has been the final nail in its coffin. Arena's decline began a long time ago, as proven by its acquisition by the Reality Investment Fund back in 2016 for NIS 335 million, about NIS 230 million less than its purchase price. "A lot of mistakes were made concerning the management of Arena, and the Israeli consumer has no patience for such situations," says the source. "Initially, there was a lot of hype about the place, which brought in crowds of consumers never before seen in our country, especially on Fridays and Saturdays. But it didn’t correct errors as it moved along, which is why it ended up where it did."

The decision that hurt BIG and dozens of stores

The path to the BIG Glilot’s grand opening event on February 27th has been anything but a smooth one. Originally, the opening date was November 21, 2024, or about three months ago, but BIG management decided to postpone it, mainly due to the war. The decision was not easy, as it affected dozens of store owners who were already preparing for opening in November. In a letter sent by BIG CEO Hay Galis to store owners, he stated, "The current postponement, which hurts us all in the short term, will pay off in the long term. We believe that customers will be captivated from the very first moment, when we open at a more appropriate time."

The postponement primarily hurts BIG itself, which is losing rental income and management fees from which it could have benefited over the course of these three months. Although a few stores have already begun operating in the complex, significant income will only come when the complex is fully operational. The enormous investment in the complex, about NIS 1.7 billion, is also certainly weighing heavily on BIG's pocket.

At the beginning of last January, the complex officially received its occupancy permit (Form 4) from the Ramat Hasharon Municipality for 44,000 square meters of commercial space. Office space is expected to open at a later stage, around the second quarter of this year, according to the company's latest estimates.

The BIG Fashion Glilot project is located on a 44-dunam area (11 acres) adjacent to Highway 6 and the Cinema City complex, in the Ramat Hasharon business and leisure district (10th quarter). Its construction is based on a plan approved in 2018 and a revised plan approved a year ago. The plans include two main uses: 46,500 square meters of commercial space, mainly in a building that will open at the end of March, and 160,000 square meters of office space, half of it above the commercial building itself.

The numbers presented in BIG's reports and capital market presentations help to understand the complex’s potential from the company's perspective. As of the end of 2023, BIG operated 307,712 square meters of commercial space, so BIG Glilot adds 14%. The fair value of the complex stood at NIS 801 million at the end of 2023, and in September 2024 it had already crossed the one billion threshold to NIS 1.049 billion.

BIG's data indicate the average rent from contracts in centers under development, including anchor stores, is NIS 157 per square meter. Factoring in the 44,000 square meters of commercial space in the Glilot complex, all of which has been leased, this amounts to monthly income of NIS 7 million and NIS 83 million per year from rent. These calculations are based on a per square meter price that reflects the average of new contracts in all BIG centers under construction and development, so the final number may be different. In the first nine months of 2024, BIG centers in Israel produced revenue of NIS 5.816 billion, which will jump significantly once the new complex is fully operational.

"If the access problem isn’t solved, it won’t be easy"

But despite its great potential, if BIG Fashion Glilot has one major and glaring disadvantage, it is its location. Although situated in a place with excellent access to Highways 2 and 5, these roadways are congested, especially mid-week, and public transport to the area is not very good at present.

In the future, the Green Line light rail will run nearby, but is not expected to open until 2029, when the closest station to the complex will be a long walk away. As part of the Gush Dan metro project, a Glilot Transport Center will be built near the BIG complex. It will include an underground light rail station and possibly even a railway station - advocated by the Ramat Hasharon municipality - but implementation of either plan will take at least a decade.

On Saturdays, there is a solution offered to public transport users: "Na'im Busofash ," bus routes operated by local authorities on weekends and holidays free of charge. Four lines stop at Cinema City Station, within walking distance of BIG Glilot, and also reach Tel Aviv, Herzliya, Kfar Saba and Hod Hasharon.

And what about parking? The construction of BIG Glilot came, among other things, at the expense of the large above-ground parking lot used by the Cinema City complex located to its south. However, the new complex will provide 4,000 parking spaces, mostly underground, recognizing that most visitors will drive as long as no suitable alternative is available.

"The advantage of opening BIG Glilot on Saturday is enormous," says the same source, "but not all consumers are looking to buy clothes on Saturday, and not everyone can afford a long walk to the complex, certainly not in the July-August heat, and even more so when it comes to older people. There are other shopping centers open on Saturday, including in the central region, so this factor doesn’t always lead to success. The Herzliya Arena complex is a good example. It suffered from the same problem: access. In the first weeks, customers will be forgiving, they will want to see the glamour, and will come in droves, but if the access problem continues over time, it won’t be easy. BIG Glilot needs to bring in 35,000 people a day to make a profit, and for this to happen, it will have to find a solution."

Conversely, Ben Shahar claims that access should not pose a challenge. "When IKEA was thinking about where to open their first store in Israel, the first place they looked at was this area of Glilot; there is maximum purchasing power here, almost infinite, an area that easily serves a million people or more. People will be willing to drive 20 minutes even from the Kfar Saba and Ra'anana areas, and will learn to navigate. 4,000 parking spaces make this beast of a complex accessible, and it will be even more accessible in the future.

"Our expectation is for visitors to make large volume purchases. Daily revenue could reach NIS 100-150 million. This place can be successful even without the weekend, but on Saturdays, and especially on Fridays, it’s expected to work very strongly. The sign of success will be when all 4,000 parking spaces are occupied - and that will happen, because ours is new retail message that will be a strong magnet."

"The security guards undergo advanced training "

Security is another topic, perhaps a side-note to the upcoming opening, but certainly relevant to every visitor to the new complex. Security firm Moked Emun was chosen to safeguard the complex, and the security array has been operational since August 2024. Speaking with "Globes," Rami Magnezi , CEO of Moked Emun’s security division, notes that, "Security is in accordance with the operational requirements dictated by the terrain. In an open space, identifying unusual events is more complex than in a mall. Control at the BIG Glilot complex is executed via two channels: one - advanced technological means, control rooms and analytical cameras that operate 24/7 and watch over the mall's visitors; and two - security guards who move around the space in EZ Raider ATV vehicles . These security guards undergo more advanced training to improve their ability to identify unusual people in a crowd.

"Not every individual vehicle that enters will be inspected, but security guards patrol both the shopping complex and the parking lot, so there is an equal level of security in the upper and underground areas." In response to our question, Magnezi noted that currently, according to security directives, the stores do not have security guards at their entrances, but stores of selected chains in the complex are protected by security system technologies.

Published by Globes, Israel business news - en.globes.co.il - on February 16, 2025.

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