As foreign retailers pour in and sales pick up, major retail landlords in Australia are investing billions of dollars in makeovers of major shopping centres within their portfolios.
Shopping Centre Council figures reported in Fairfax Media Newspapers indicate that the existing floor space of major regional shopping centres in Australia will grow by more than 8.5 percent in 2016.
That follows earlier estimates from property services outfit CBRE, which suggested that around 600,000 square meters of new (and refurbished) regional shopping centre space will be added over the next two years as major redevelopments of Pacific Square in Queensland, Westfield Chatswood in New South Wales and Eastland in Victoria come online in 2016 followed by further redevelopments of the Narellan Town Centre south-west of Sydney and Chadstone Shopping Centre in Melbourne’s East in 2017.
Over that time, around 400,000 sqm worth of space will also be added in sub-regional shopping centres whilst more than 400,000 sqm will be added in neighbourhood centres.
Driving this in large part is a push by major landlords to put more focus upon landmark assets.
In December, for example, retail asset manager Vicinity announced it would offload between $750 million and $1 billion worth of its portfolio in order to beef up spending on new acquisition and development opportunities elsewhere within its portfolio.
The push is also being driven by a desire on the part of landlords to attract and cater for foreign fashion retailers such as H&M, Zara and Uniqlo.
Such retailers – who opened or leased 35 new stores around the country in 2014 and had opened or leased more than 30 as of September 2015 (according to CBRE) – are taking up large volumes of space in flagship locations and stores.
Moreover, it appears that expansion plans are not being held back by any fear of growth in online retail.
In the twelve months to November 2015, the $18.1 billion which Australians spent on retail purchases online was only 7.3 percent of what they spent at traditional bricks and mortar outlets – a proportion which falls well short of the double digits expected some years ago and which appears in any rate to have plateaued.
Whilst newsagencies and retailers selling books, music and cosmetics are no longer major drawcards, retailers are now drawing in customers through ‘experience’ outlets such as café’s sushi bars, nail bars and massage centres.
The aforementioned foreign retailers, as well, are helping to pull in shoppers.
One fear playing on landlord’s mind, however, revolves around concerns that expanded shopping centres will become increasingly attractive areas to tax.
According to the Fairfax report, SCCA’s members are worried they may be first in line as the current federal government considers levying increased values in property in order to fund infrastructure charges.