1. ZORLU SANTRALLLC
SARIYER DISTRICT
34083 ISTANBUL TURKEY
TEL:+9054578970
Email:info@zorlusantral.tr
FEASIBILITY REPORT
TABLE OF CONTENTS
 EXECUTIVE SUMMARY
 INTRODUCTION
 DEMAND ANALYSIS
 SUPPLY ANALYSIS
 DEMAND GAP ASSESMENT
 DEVELOPMENT RECOMMENDATIONS
 FINANCIAL ANALYSIS
 IMPLEMENTATION STRATEGY
EXCECUTIVE SUMMARY
During the first three months of 2014, Koc group of companies was retained by the Istanbul City Authority to assess
the feasibility of incorporating 30,000 square feet of retail, commercial and hospitality in the development program of
the Zorlu Santral in Sariyer a district of Istanbul. Istanbul City Authority expressed a particular interest in locating a bus
route or a contribution to the ne metro line and a mosque in the development site. To quantify and describe demand
for religious and potential other transportation establishments, We delineated a trade area, conducted a demographic
analysis, surveyed residents and merchants, and quantified overall demand for these two. The larger study area is
bound by the third bridge under construction that leads to the Asian side of Istanbul (an area with a very high potential
growth rate and demand for a large commercial centre that includes supermarkets, banks, retail stores and auditoriums
for music and arts performances). The Primary Trade Area, encompassing roughly a ½-mile radius from the project
site, was assumed to supply about 80% of potential repeat customers, while households in the Secondary Trade Area
that owned a vehicle were assumed to shop at the new stores at the Prospect Zorlu Santral development site.
The demographic assessment revealed a fast-growing residential population, with a population in the Primary Trade
Area of more than 33,300 residents by 2010. Compared to all of the other parts of Istanbul, Trade Area residents tend
to be much younger, primarily middle class families that have university going students. At the same time, residents in
the Primary Trade Area tend to be far more affluent, i.e., 40% of households earn close to $15,000, while 45% are
considered to earn between $400 to $4000. Using population projections, which were adjusted and vetted by

2. comparing estimates with on the-ground data from the Istanbul Departments of Housing, Preservation and
Development and City Planning, and household expenditure estimates from the Consumer Expenditure Survey, We
projected the total potential demand for supermarket and other retail products and services. Table ES 1 summarizes
the results.
Summary of Expenditure Demand Potential for Combined Trade Area
Expenditures Total
Average total annual expenditures1 $ 60,778,915
Grocery Stores $ 20,967,297
Restaurants $ 32,724,193
Apparel/Clothing $ 20,904,481
Health & Personal Care(Pharmacy) $ 21,623,869
Entertainment $ 30,329,342
Other convenience $ 17,320,406
TOTAL (selected categories) $ 204,648,503
Overall, households in the combined trade area are expected to spend approximately $600 million in 2015 on all
retail goods and services, including automotive and home expenses, such as fuel and rent. About $200 million of
the $600 million will bespent on a typical array of retail goods commonly used by households,includinggroceries,
clothing, personal care products, as well as spending for entertainment and restaurants. The combined
expenditures relevant for a new supermarket, i.e., potential expenditures for grocery stores, is projected to be
approximately $53 million.
Intercept and mail surveys helped to characterize potential shoppers and to identify their preferences and
consumption behaviours.Socio-economic characteristics of interviewees reaffirmed results from the demographic
assessment,whileanswers to questions about home addresses and mode of travel data to and from supermarkets
confirmed the trade area delineation.
In terms of the preferred grocery store, 40% of respondents indicated thatthey shop at Migros superma rket thatis
a part of the Walmartgroup. The second most frequented store is the clothes store (Bershka) which is followed by
Kotton. Many residents supplement their local shopping by frequenting one of these stores, particularly when
shopping for items in bulk. Overall, the surveys indicated that there is a major outflow of expenditures from the
Primary Trade Area. Approximately 40% of survey participants indicated that they shop at a market outside of the
trade area.
Most residents are not satisfied with current supermarket and banking offerings. More than 27% of survey
participants would like lower prices and concentration of stores, banking and entertainment services, while 16%
complained about the poor quality of produce and meat at many of the area markets. A broader variety of goods
(15%) and better selection of products (12%) was also desired by many residents,while 14% of respondents would
likea concentration of services closer to where they live.Given the limited parkingoptions at local supermarkets,it
was expected that the lack of parkingwould be perceived as an issue.However, only 2% of respondents indicated
desire for better parking options.

3. DEMAND ANALYSIS
Trade Area
A trade area delineates a geographic area that generates the majority of repeat customers who frequent a certain
retail location or cluster.It is typically defined by distance,access,and neighbourhood or physical boundaries,and
by the location of retail competitors. Based on the behaviour of shoppers observed at reta il projects with
supermarkets in Istanbul, the primary trade area is not expected to extend beyond a ½-mile radius from the site.
This is the typical distancethatpeople are willingto walk when shoppingfor groceries or other everyday items, i.e.,
convenience goods. In addition,theZorlu Santral area is limited by major arteries such asthebosphorous which acts
as physical barrier and separate distinct neighbourhoods. The Primary Trade Area typically supplies 70 to 80 % of
the repeat customers to a store or retail concentration within the trade area. The remainder of the customer base
would come from the Secondary Trade Area, which in this caseprincipally extends aboutonemileeastof the project
site. Because of the extended distance,repeat customers from the secondary trade area would likely be limited to
those residents who own a vehicle and could more conveniently travel to the project site.
METHODOLOGY
To project potential demand for new retail products and services at the redevelopment site, we used a
combination of data sources. Current demographic projections were obtained from Sariyer municipality,
while data from the Istanbul bureau of statistics were used to identify recent trends and calibrate
demographic projections. Expenditure projections are based on the Consumer Expenditure Survey, a
Bureau of Labour Statistics programthatconsists of quarterly surveys to gather information on the buying
habits of Turkish consumers,includingdata on their expenditures, income, and consumption preferences.
We had initially used the data from the Istanbul Buyuksehir expenditure and sales projections but
discovered major discrepancies between data and on-the-ground information. Because of these
discrepancies, we developed a retail expenditure gap model from the ground up, based on consumer
expenditures reported by the Labour Statistics Bureau.The agency classifies and categorizes data based on
major regions,household income, or family size.Unfortunately most of these variables cannotbequeried
across the various categories.
Average expenditure patterns for low-income households in the Turkey were used as the starting point for the
analysis. Since the low-income household expenditures represent national averages, these expenditures were
adjusted to reflect the higher prices prevalent in Bebek and Istanbul City in particular.The average household size
was adjusted to account for the larger household size in the study area.
SUPPLY ANALYSIS
Market Trends
GENERAL OVERVIEW
To obtain an overview of the general market conditions in Sariyer,Weutilized commercial real estate sales data
from the “Istanbul HousingSales Report,2010,” published by The Hurriyet. The report indicates thatthe average
priceper squarefoot of retail buildings sold in Sariyer in 2010 was $188, based on the saleof seven properties;
this is about 45% lower than in Istanbul as a whole, which is about $272 per square foot. The sales volume is
relatively high (third highest number of sales in Istanbul—7 buildings),which suggests that Sariyer is a growing,
low-cost commercial market.

4. In addition,within a half-mileof the projectsite there are18 developments that are underway or areplanned to
be completed by 2015. Five of these buildings arecommercial,includingthe mixed redevelopment of the Zorlu
auditorium.
Table 5:
Rent Ranges and Vacancies North of Sariyer
Sales Category
Number
of Sales
Total Value
of Sales
Average Sale
Price
Total SF Sold
Average Price
per SF
Retail Buildings 7 $4,375,000 $625,000 24,910 $188
Commercial-zoned
Industrial Buildings 1 $250,000 $250,000 2,290 $109
Mixed Use
Buildings
1
5
$2,095,660 $419,132 22,783 $90
Notes: SF = Square Foot
1
Buildings with residential unitsand commercial use.No SF break-down was provided.
Rents and Vacancies
We contacted 12 brokers and developers who are active in the larger Istanbul area to better understand current
rent ranges and vacancy level.In addition, wereviewed a study aboutthe Sariyer corridor conducted in 2010 for the
Sariyer Business Improvement District (BID).1
In general, real estate professionals believe that the area north of Sariyer is currently underserved by retail
businesses and that leasingactivity/turnover is low.There is a large discrepancy in market conditions between the
Sariyer corridor and the less bustling retail area north of Sariyer. Rents on Sariyer range between $24 per square
foot at less desired locations and $50 per squarefootathigh traffic corners .Rents north of Eastern Sariyer aremuch
lower and typically range from $12-26 per square foot.
Businesses predominantly leasetheir space,as indicated by 11 out of 14 merchants surveyed by AKRF, compared
with just one merchant who owns the space. To determine vacancies, AKRF searched the HUD USPS database.
The search indicated vacancies of 7.7%for commercial properties north of Eastern Parkway and 10.8% for Pitkin
Avenue, somewhat higher than vacancies recorded through AKRF’s retail inventory in the area.
Retail Inventory
To better understand current retail conditions in the immediate area of the proposed project, AKRF inventoried all
stores in the Primary Trade Area. Overall, 450 stores were recorded, of which 222 were located south of Eastern
Parkway and 232 north of Eastern Parkway. Duringthe inventory effort AKRF recorded the types of stores, names,
and vacancies in the ¼-mile study area.

5. Supply Projections
Since residents in the immediate vicinity of the redevelopment site will generate the vast majority of sales at a
potential new supermarket, supply projections focused on supermarkets in the Primary Trade Area. To quantify
supermarket supply conditions, AKRF and G. Lamont Blackstone conducted a supermarket survey in the vicinity of
the project site and identified those markets relevant to the analysis, inspected each store and developed profiles
for each market, including square footage, variety and selection of product offered in the store, attractiveness of
the displays, cleanliness of the stores, and the general look and feel of the market.
Future Supermarket Space Demand
To quantify future supermarket spacedemand, AKRF considered two scenarios.The firstscenario assumes that
the capture rate would be lifted to the current level of 56%. The second scenario assumes thatthe capture rate
would increase to 65%, reaching a level that is typically observed for local supermarket trade areas. To reflect
the potential sales-per-square-footrange, $500 and $650 were used to calculateupper and lower limits for the
two scenarios.
Increasingthecurrent expenditure rate back to its current level 56% would resultin additional demand of between
10,700 and 14,000 square feet.