Small outlets 'unsustainable'

Posted On Friday, 14 November 2003 02:00 Published by
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Concern has been expressed about the proliferation of smaller outlets by major retailers such as Woolworths in neighbourhood centres

November 14, 2003

By Roy Cokayne

Pretoria - Concern has been expressed about the proliferation of smaller outlets by major retailers such as Woolworths in neighbourhood centres.

Jim McLean, the managing director of Liberty Properties, said the concern was exacerbated by the opening of other small retail outlets such as shops at petrol stations.

McLean said he was horrified to see a Woolworths food outlet going into a petrol station in Sandton. "Unless both owners and retailers become more responsible, the industry will suffer as a whole," he told the Investment Property Databank/ SA Property Owners' Association property investment conference last week.

McLean added that a number of new centres had been created recently in an inappropriate manner relative to their market share, and this raised the question of oversupply.

As with other types of property, he said, retail suffered from the problem of rent levels that were often above the current market at the expiry of leases.  

"The suggestions for dealing with this are numerous. However, all are potentially threatening to sustainability and I therefore believe the answer should be to maintain the situation."

McLean said the retail sector was the most sustainable, in terms of financial rewards, of all the property asset classes. A shopping mall environment was where the best performance was achieved.

McLean said that with the recent lowering of interest rates and a strong possibility of another to come next month, he believed an even better performance in the retail environment could be expected next year, despite the lower inflation figures.

"This bodes well for keeping retail as the highest performing property asset class into the future," he said.

Publisher: Business Report
Source: Business Report

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