Mega-malls’ days are numbered

AMPLE development at the top end of the retail market, resulting in a well-serviced middle and upper class, is causing retailers and developers to set their sights lower.

Future development of massive shopping centres such as Sandton City and Canal Walk will be limited, but retailers like Edcon and Woolworths will tap into the lower end – through Super Mart and iSentials respectively – as some developers move into the townships.

And while there may not be room for major shopping centres, the development of regional and speciality centres continue apace.

Research by the South African Property Owners Association says “super regionals” or centres of more than 65 000 m2 were the weakest in the sector. It says this could be due to the demand for convenience, regional densification and traffic congestion.

Redefine chairman and retail property doyen Wolf Cesman says it would be difficult, but not impossible, to develop more big shopping centres, but they would be worthwhile only in select centres. South Africa does not have a surplus of major tenants, so a big centre would merely be a replica of nearby small and regional centres.

Cesman says that the new centres are still performing, and although new centres such as Canal Walk and Gateway were initially considered unsuccessful, they are now doing well as they were well located and have good tenants.

He agrees that township developments “have always been a challenge”. Residents from Soweto, for example, are shopping in the Johannesburg CBD or malls in the southern-suburbs.

Recent research from Europe shows that a visit to a centre is about more than shopping. Some people go just for coffee. “The essence remains that it should be a place where people can go and get everything under one roof, where they can compare a number of shops selling the same things, and where they have choice.”

Shopping centres supplement this offering with entertainment centres. Old Mutual Properties has a special division to find non-conventional revenue streams in its shopping centres. For example, more than 40% of Umhlanga’s Gateway shopping centre’s space is devoted to entertainment.

But retail property sources say the bulk of new development is at the lower end. This includes the mushrooming of value marts, often adjacent to big shopping centres, where retailers pay lower rentals and sell in bulk.

Old Mutual Properties retail executive Brent Wiltshire says more competition may well develop in the lower end of the market, given that there are millions of low-income South Africans.

“There are large emerging markets with a lot of buying power coming to the fore and these shoppers, who are strongly aspirational, need to be catered for.”

And there are significant opportunities to bring centres into the townships. Shoprite is the anchor tenant of a new development, the Bara mall, on the outskirts of Soweto. Bara mall, which is being developed by 60% black-owned Landmark, will have as its tenants 70% national retailers, including the major banks, and 30% local retailers.

Landmark development director Dennis Thobejane says the company has just closed on tenders and will start building early next month. The centre is already fully let with a significant waiting list.


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