While extension projects are at an advanced stage at Highpoint in Melbourne’s western suburbs and Fountain Gate in the south east, work is now well underway on Emporium, the landmark city complex adjoining the Myer and David Jones department stores.
After selling the former Ringwood Market site to Costco for the American retailer’s second Melbourne store, Queensland Investment Corporation (QIC) has started preliminary works on a $500 million multi-use hub anchored by an expansion of the Eastland shopping centre.
When completed, Westfield Fountain Gate will be the second largest shopping centre in Australia by floorspace, with a total gross leasable area of 171,000sqm.
The biggest shopping centre in the country is, of course, Chadstone and it is keen to ensure that it retains that title, with planning approvals sought for a further 27,000sqm of retail floorspace as part of a $500 million mixed use residential, hotel, office and retail development.
Chadstone currently has 190,000sqm of retail floorspace and will expand to 117,000sqm if it obtains planning approvals for the project, which its owners hope to complete by 2015.
Although Melbourne is leading the country in shopping centre development projects, Western Australia is also poised for significant growth based on the strong state economic performance and a relaxation of floorspace caps on shopping centres.
Other states, particularly Queensland and NSW, could also see several retail projects that have been on the drawing board for a number of years started, after Westfield and AMP Capital have reviewed their joint venture partnerships.
Two major centres that may dust off their development plans as a result of the Westfield and AMP Capital portfolio review are Pacific Fair in Queensland and Macquarie Centre in Sydney.
Despite a series of retail chain collapses in the past 18 months that has led to shorter queues of prospective tenants and pressure on rents, owners of regional malls remain bullish about their prospects.
Michael Lloyd, a former director of Lend Lease Retail, claims regional centres have reason to be confident, with the largest shopping centres lifting their share of the retail dollar and maintaining floorspace demand.
Lloyd says Australia’s largest 63 shopping centres have generated sales of more than $30 billion in the past year, with estimated turnover per square metre growth of 15 per cent since 2005 and about 2.5 per cent growth in the past two years.
Sales per square metre in the top 63 shopping centres is currently around $6502, up from $5633 in 2005.
In 2005, according to Lloyd, there were 57 large centres with more than 40,000sqm of retail floorspace in Australia, and by 2011 the number had grown to 75 centres.
Sales per square metre for specialty stores was around $7000 in most of the larger centres, while 30 centres in 2011 posted average turnover levels of more than $10,000.
The top centre for specialty store sales per square metre is Westfield Sydney at $15,150; followed by Westfield Chermside in Queensland at $13,692; Garden City Booragoon WA, $13,345; Chadstone Victoria, $13,202sqm; Caneland Central QLD, $12,647; and Westfield Bondi Junction NSW, $12,442.
“What we are seeing are the effects of the big centres’ recent expansion, innovation, or refurbishment, coupled with expertise in leasing, marketing, and management, now boosting the larger operators’ turnover, which should continue as the new 2013 financial year unfolds, despite ongoing reports of the gloomy retail conditions,” said Lloyd.
“These centres are highly flexible. They have the ability to react very quickly to changing market demands and new retail concepts.
“This expertise and flexibility enables them to be at the forefront of new retail directions, whereas the competition outside major centres acts disjointedly with multiple retail property owners on the same strip having different objectives and strategies which usually come down to little more than constant rent increases.
“Even the regional and sub-regional shopping centres are improving their position, while many shops on the main strips continue to struggle under the weight of their landlords’ unrealistic lease agreements and high rentals,”he said.
Source: InsideRetail
