Retail Market Report 2000

Posted On Friday, 15 February 2002 15:57 Published by
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In a bid to gain insight into the real retail market in the Johannesburg CBD, JHI undertook a combined consumer/ retailer survey in early 1999. The project aimed to probe attitudes and opinions about the node, especially in the light of city-wide concern that the CBD is sinking into urban decay.


In a bid to gain insight into the real retail market in the Johannesburg CBD, JHI undertook a combined consumer/ retailer survey in early 1999. The project aimed to probe attitudes and opinions about the node, especially in the light of city-wide concern that the CBD is sinking into urban decay. The surveys divided the central city into five key nodes and targeted consumers and retailers in these nodes.

The findings of the consumer survey were that 65% of the shoppers interviewed reported a gross monthly income of less than R3,999, while 52% indicated their race group as black. This underpins the move towards goods aimed at lower-income, black shoppers and a growing preference for cash-based retail businesses.

The node listed as the most popular shopping destination for consumers, is that bounded by Sauer, Jeppe, Smal and Commissioner Streets: an area which includes the Eloff Street shopping node, the Smal Street Mall and pedestrianised Kerk Street Mall. From a transport perspective, the node is in close proximity to Park Station, the Noord Street taxi rank and the Eloff Street/Van der Bijl Square bus terminus. This node also shows the highest level of retailer satisfaction, with 62% of retailers surveyed wanting to stay in the area — not least because of the presence of the Retail Improvement District.

The retailer survey found that while crime was a primary concern for many shop-owners, 42% of those interviewed are optimistic about their future in the city centre — and several of these retailers also indicated their intention to expand within the central city, rather than relocate. Key advantages offered by the CBD included proximity to transport facilities, and the ongoing benefit of City Improvement Districts. On the other hand, 55% of retailers said that they would relocate out of the city centre if the opportunity arose.

Central business districts throughout the province are adjusting to changing consumer markets — and the resulting change in the demand for goods and services. Retailers which are typically emerging in city and town centres include cash lenders, furniture and white goods outlets targeting the lower-income markets and discount fashion chains.

As far as decentralized retail space is concerned, the regional malls like Sandton City, Cresta and Eastgate continue to do well and suffer few vacancies, not least because many of these malls are recognised as a destination in their own right.

On the East Rand, the node surrounding the East Rand Mall and along North Rand Road has evolved into a retail node with a wide variety of options: from the value centre, to retail warehouses, to the mall itself. It is understood that many of the outlets in this node are achieving excellent turnovers, despite the general slowdown in consumer spending. Part of the reason for this may be the node’s proximity to residential suburbs, its wide choice of destinations and its accessibility.

East Rand gross rentals for small premises in regional centres are approximately R185/m2, while in convenience centres, depending on the node and the tenant, gross rentals can start from around R30/m2.

The newly-opened Lakeside Mall in Benoni appears to be successful and is the first regional mall to be developed in this node. The mall may also provide a focal point for additional commercial development to occur close by.

On the West Rand, the focus of development attention continues to be the Ontdekkers Road strip and there is talk of additional retail development to the west of Westgate Shopping Centre, which has traditionally marked the farthest point of Roodepoort’s retail sector. Along this arterial, gross retail rentals start at around R55/m2 in convenience centres and tenants tend to be owner-operated businesses — like small pharmacies, home industry shops or dry cleaners. The question is whether or not this node is now developed as far as demand allows.

Additional commercial development towards Krugersdorp is expected to occur on a strongly demand-led basis, with the emergence of home offices sparking demand for the provision of retail and other services.

In the Florida CBD, demand for smaller space exists but much of the available supply is of large premises and brokers report that landlords will have to downscale rental expectations if they want to attract tenants. A major problem is reportedly lack of parking space. Home offices are in evidence along Goldman Street, with tenants arguing that security and parking facilities are key attractions for this type of premises.

There is also a view emerging that while there are deals to be done, the focus will move away from the traditional retail nodes. Potential in the former townships, and across the border into other African countries, is expected to be explored. On a less spatial level, the trend towards ‘shoppertainment’ continues and analysts will monitor the effects of on-line retailing with interest.

'Village' street-front shopping is becoming evident and is closely linked with a cafe-society type of entertainment component. Examples in Johannesburg include Parkhurst, which has developed as a vibrant, restaurant and antiques node; Grant Avenue in Norwood, and Melville, which is known for its galleries and decor shops, as much as for its sometimes off-beat restaurants and cafes.

Finally, a comment on convenience retail. For the past few years, and particularly as the macro-economy has slowed, developers and investors have tended to show a preference for convenience centres. There are concerns that the market in general is becoming saturated with this type of development and that catchment areas are becoming smaller as a result of the number of new centres being opened. Fast food outlets and drive-throughs are included in this concern and the potential for compromising turnover potential — even for other outlets in the same chain — should be considered.

In Pretoria CBD, a retail trend is emerging which is similar to that in the Johannesburg city centre. There seems to be a perception amongst tenants that crime levels are stabilizing. Shopping centres such as the Tram Shed and Sammy Marks Square are enjoying high occupancy levels and there is even the possibility of a hotel being developed at the latter centre. Smaller line stores in CBD shopping centres are achieving gross rentals in the region of R150/m2, while similar shops in prime decentralised malls are likely to achieve closer to R250/m2.

The eastern nodes continue to perform well, with key examples being Brooklyn Square and Brooklyn Shopping Centre. There is still a tendency towards convenience retail, but judging by the situation in Johannesburg this trend may begin to slow in the coming year. Menlyn Park Shopping Centre has been refurbished and expanded in recent months, which is in line with country-wide trends.

The north and north-eastern suburbs are also enjoying some retail activity, with the Kolonnade Shopping Centre in Montana being an example. Interestingly, this centre also offers shoppers a strong entertainment component, with an ice rink and games arcades included as part of the tenant mix.

In Centurion, there are plans for retail development in the Wierda Park area, particularly as the surrounding residential suburbs continue to expand. However, the west appears to be very quiet with little activity in evidence. This region should benefit from the proposed Mabopane—Centurion Development Corridor, which will enhance access and infrastructure along the western side of the greater Pretoria region.

Generally, the view is that it is a landlord’s market when it comes to prime, high-quality retail space, whereas in the market for lower-grade retail space, tenants are ruling the day.


On a national basis, Kwazulu-Natal ranks third place in terms of retail sales, after Gauteng and the Western Cape, and 1998 proved to be no exception. In fact, the Western Cape’s retail sales were 2,5% higher than Kwazulu-Natal — a relatively small margin. As depicted in the following chart, these three provinces account for about 70% of total retail sales in South Africa:

Looking at Durban specifically, it is interesting to note that in terms of retail spend, the city is about in line with Pretoria at the R12 billion a year level. This remains lower than Johannesburg or Cape Town, which each stand closer to the R18 billion a year mark.


Retail Sales in R/m





Cape Town




Source: BER

During the course of 1998, 74,926m2 of new retail space was brought on-stream in the province, with 29,168m2 of this in Durban itself, indicating that retail development was more widely dispersed throughout the province than was office or industrial construction. Areas such as Stanger, Margate, Tongaat and Umhlanga all saw retail development of more than 5,000m2 during the year.

Perhaps the most ambitious retail project being undertaken in the Durban area is Old Mutual Properties’ R1,4 billion Gateway Shopping & Entertainment Centre. The centre will offer almost 120,000m2 of shopping and entertainment facilities. Construction has begun and the centre is due to open for trade in late 2001. There has been some debate over the consumer market which will be attracted to the centre and, importantly, the impact of the centre on the existing La Lucia Mall — both of which the property market will monitor with interest.

Land-owner Moreland reports that the Umhlanga Gateway New Town Centre, of which the mall is a pivotal component, will combine the following land uses:

Total Area

142 hectares

Gateway Shoppig & Entertainment Centre

28 hectares / 199,000m2 retail

Area for New Town Centre

33 hectares / 360,000 bulk metres

Area for Business Park

24 hectares / 135,000 bulk metres

Area for Residential

14 hectares / 351 residential units

Land for Civic use

10 hectares

Source: Moreland

It is noteworthy that this development is facilitated by the fact that a single land-owner, Moreland, is involved which arguably allows for the pro-active planning of the Town Centre and its environs. The land owner is also committing R68 million to the improvement of bridge and road infrastructure, which will be completed before the Gateway Centre opens for business in late 2001.

The highest retail rentals being achieved in Durban, as in other South African cities, are still in the decentralised shopping malls. Shopping centres such as Musgrave and the Pavilion can see gross rentals as high as R200/m2. In the city centre, West Street remains a key retail strip and line shops are achieving around the R120/m2 mark for prime space, depending on size.

In Pinetown’s retail market, Sanlam Centre is expected to get a boost from its refurbishment and expansion, which will see the entry of Health & Racquet Club. Interestingly, the demographic shift which has taken place in recent years in Pinetown’s CBD is also evident in the centre, with black consumers reportedly constituting some 30% to 35% of traffic through the centre. Rentals for line shops at the centre range from R130/m2 to R180/m2, depending on the size and location of the store.

Hill Street in the Pinetown CBD, nevertheless, remains a tightly-held, institutional retail node frequented by mainly black consumers in the middle- to lower-income bracket. National retailers like Sales House, Jet and Edgars are represented along this strip, demand levels are reportedly high and the Hill Street taxi rank provides an important source of commuter traffic along the road.

Regarding the retail and entertainment sector in Durban, it is worth bearing in mind that two preferred applicants for casino licences have been announced in the marketplace — Three Cities’ R1,6 billion proposal for the Village Green site and Afrisun’s proposed R900 million development at Umdloti.


During 1998, 65,569m2 of new retail space was brought on-stream in the province. New development was widely dispersed, with projects in areas from George and Knysna, to Plettenberg Bay and Kuils River. Retail plans passed in 1998 amounted to 176,778m2 — of which 34,000m2 is located in Milnerton.

Another noteworthy point is that the retail sector in the Western Cape outperformed retail in both Gauteng and Kwazulu-Natal in 1998, despite the general downturn in property returns. The following table illustrates provincial total returns for retail property in 1997 and 1998:

Total returns: retail property







Western Cape






Rest of SA




Although the retail sector in the Cape Town city centre continues to perform relatively well, it has been noted that retail vacancies in the central city are on the rise. Some brokers have reported a high turnover of tenants, combined with increasing periods of vacancy between occupation. New tenants are often more likely to be service-providers than retailers, for example micro-lending operations.

New development of retail in the inner city is on the cards, with the recent announcement of the Clocktower Precinct at the Victoria & Alfred Waterfront. In addition to the office space mentioned earlier, the precinct will include 6,000m2 of new shopping space. The Waterfront remains a premier retail and leisure destination in the city. Another example is The Pinnacle development that includes a retail component of approximately 2,500m2 with tenants such as Spur and Panarotti’s.

Two tourism-related projects that are in the pipeline for central Cape Town and may have a positive effect on retail in the city centre, are the Table Bay Conference Centre and the Canal Tourism Precinct. Both are linked to SunWest’s Goodwood casino application.

The Table Bay conference centre is planned for the harbour end of Adderley Street, is expected to cost in the region of R140 million and will reportedly accommodate up to 2,500 delegates. The main feature of the proposed canal tourism project is a waterway to be constructed between the V&A Waterfront and the new conference centre. A new station for the famous Blue Train is also part of the plan to capitalize on the tourism potential of the ‘Graght’ (waterway), as is the introduction of waterbuses and water taxi’s.

In the decentralized retail sector, there has been some refurbishment and expansion activity. Constantia Centre has increased its gross lettable area and Woolworths has been signed up as a tenant, while Cavendish — refurbished recently — remains the premier decentralized shopping mall in Cape Town, reportedly achieving the highest gross retail rentals in the city.

Development of a R1,5 billion shopping and entertainment complex has already begun at Century City. Expected to open for trade in late 2000, the centre has a retail component of 121,000m2. The impact of this retail facility on other centres, such as N1 City and Tygervalley Shopping Centre, remains to be seen. Concerns have been expressed in the market that new retail development in the metropole is simply slicing a small cake into smaller pieces. Century City shopping and entertainment centre does, however, have the unique feature of being adjacent to Ratanga Junction theme park, which was opened in late 1998.

A question being asked country-wide is how much more retail development the market can successfully sustain and Cape Town is no exception. However, there are plans under consideration for retail development on the periphery of the metropolitan region, especially in nodes such as Brackenfell, Durbanville and Kraaifontein. Retail development has already occurred in nodes like Hout Bay and Noordhoek.

Existing retail space in the Tyger Valley node is set to increase, with the development of the Tygervalley Waterfront project. Local authorities expect that by 2015, about 180,000m2 of retail space will be justified in the municipal region and this would appear to preclude another regional mall in the short-term — although there is talk of a mall being proposed for Durbanville in the medium-term. The Tygerberg council has also emphasized that existing zoned land will have to be developed before additional land will be released for retail projects.

Mitchell’s Plain Town Centre is reportedly enjoying strong levels of retail trade and achieving comparatively high retail rentals. The node’s success is largely because of its proximity to both the taxi terminus and commuter train station, which ensure a high level of foot traffic and thoroughfare. Tenants range from nationals like Topics and Edgars, to Pick ’n Pay.

Publisher: JHI
Source: JHI

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