Uneven retail recovery as consumer spending stagnates

Posted On Thursday, 22 September 2011 02:00 Published by
Rate this item
(0 votes)
On the property front however, the retail sector continues to move through the recovery phase of the property clock

After a solid start to 2011, consumer spending has slowed noticeably in recent months, but on the property front, the retail sector continues to move through the recovery phase of the property clock, allowing for cautious optimism about the future. This is according to research recently released Broll Property Group, part of the CB Richard Ellis Affiliate Network.

Sanett Uys, GM of research and marketing at Broll Property Group says, “Traditionally demand for retail space starts to increase in the recovery phase of the property clock (a simple way of representing the cycles the property market goes through over time). In the process, the oversupply of space is reduced and there is virtually no new supply coming online. As the excess space is absorbed, the vacancy rate starts to decline, income starts to increase or move sideways and capitalisation rates remain stable or start to decline.”

“In South Africa we are seeing a slight decrease in retail vacancy levels, with new supplies of stock coming online, having increased by 4.33% in the first quarter of 2011 and 29% in the second quarter year-on-year. This is, however, from a low base,” Uys explains.

KZN saw 101 242m² of retail space coming online in Q2 of 2011, followed by Gauteng with 99 846m² for the same period. Gross street-front rentals for prime space in the major metropolitan cities have remained stable since Q1 2010. However, prime street-front space remains limited in the major CBDs in South Africa. Economists anticipate consumer spending to grow by only 4.4% in 2011, followed by 3.7% in 2012. However, there is good news for existing shopping centres.

“Shopping centre building plans that have been passed by councils across South Africa have followed an upward trend since March 2011. However, if we compare Q2 of 2011 with the same period in 2010, the total plans passed are down by about 17%. This indicates that the supply scheduled to come online going forward will be limited, giving current shopping centres an opportunity to decrease their vacancies even further.”

Centres under Broll management showed strong nominal retail sales growth for Q2 of 2011, with a growth rate of 8.37%. Top-performing merchandise categories were electronics, car services and repairs, travel stores, gyms and pet stores.

“There continues to be a gap for unique independent retailers that can enhance the tenant mix of centres,” Uys says.


Publisher: eProp
Source: BPG

Most Popular

Sectional Title Trustees and Homeowners Association directors face COVID-19 liability

May 22, 2020
Marina_Constas_BM_Law
The Covid-19 pandemic and South Africa’s lockdown regulations are impacting all aspects…

Deeds office reopen their doors to the public

May 09, 2020
Carlize Knoesen
The Department Agriculture, Land Reform and Rural Development has announced the reopening…

2020 Commercial Property Outlook –Why Property Price/Valuations Indices don’t tell the full story of market weakness during a deep recession

May 09, 2020
John LoosFNB
In a downturn, Property Market Values can deviate dramatically from the market…

Dipula drops vacancies by almost 30% and concludes R370m new leases for 29 Feb 2020 interim results

May 18, 2020
Izak_Petersen_mdos3o
South-African focused JSE-listed diversified REIT, Dipula Income Fund, today announced…

Development to bring residents closer to economic activities

May 19, 2020
Lindiwe Sisulu
Human Settlements, Water and Sanitation Minister, Lindiwe Sisulu, has declared 136…

Please publish modules in offcanvas position.