Food the key to shopping centre survival: survey
Food retailers are cementing their place as a key part of retail landlords’ strategies, while refurbishments have also been crucial to make shopping centres attractive to tenants and customers, JLL research has found.
As vacancy rates edged up and rental growth appeared soft or negative, retail property remains a tenants’ market, according to the JLL survey of centre managers.
Vacancy rates in subregional malls lifted to 3.8% in June from 3% in December, while neighbourhood centre vacancy rates rose to 3.3% from 2.6%, the research found.
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Specialty rents in subregional centres rose 2.4% for the year to June — higher than in the past two surveys — but specialty rents in neighbourhood centres fell 0.9%, with the report concluding the sector is a “tenants’ market”.
The figures come amid concerns over the outlook for retailers and retail landlords, given cautious consumers and weak wages growth, as well as the rise of online commerce and the looming entry of Amazon in Australia.
Centre managers continue to report the difficult tenants face against the major supermarkets
Several retail landlords have been remixing their offerings in response, shifting away from apparel and towards experiences that cannot be bought online, such as eateries or beauty salons. Westfield Corporation co-chief executive Steven Lowy this week backed retail as being “all about experiences”.
Tenant inquiry was driven by food retailers in the first half, JLL says, including takeaway food and beverage retailers and specialty stores.
“Attracting a quality food and beverage offer continues to be a major strategy for shopping centres, particularly food catering/dining precincts,” the report says.
“A quality fresh food offer is also a desired strategy, but centre managers continue to report the difficult tenants face against the major supermarkets. Creating a niche offer is critical to success.”
Centre managers are approaching the retail challenges by refurbishing centres, which managers says has helped drive customer traffic and sales in malls where they have been undertaken. Overall centre turnover rose 0.7% in subregional centres in the year to June, and 0.3% in neighbourhood centres.
Centres still in need of refurbishment are linked with higher vacancy levels.
This article originally appeared on www.theaustralian.com.au/property.