Paarl will have to fight to survive regional shopping centre

Posted On Friday, 24 May 2002 10:01 Published by
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Regional shopping centres have plucked the hearts out of Somerset West and Nelspruit. Now it is Paarl's turn. And George is after that.

But don't blame the developers. Do-nothing town-centre property owners are just as culpable, as are local authorities who combine greed and naiveté, and retailers who expand at any cost.

Growing platteland populations have lured developers to these towns. They are armed with research showing more cashflow to the region and the promise of extra rates and taxes. Retailers and authorities have welcomed them.

But opponents say these regional centres are key rural transitions that destroy the social fabric of towns. They are reminiscent of poet William Blake's 'dark satanic mills' of 19th Century England.

'Nelspruit is thriving,' argues developer Pat Flanagan (former MD of Colliers RMS) of Flanagan & Gerrard, who has had a hand in most of the centres. And based on the boomtown's broad economic statistics, he is almost certainly right.

But tell that to Morné Flewin, Realty One's commercial property specialist in Nelspruit. 'We never thought it would affect us like this,' he says. 'Shoppers have abandoned three midtown centres for Riverside Mall, which is 5 km away.' Between them, 50 shops stand empty, more elsewhere. Prime retail rents have dropped from R65/m² to R40/m², or less, in two years, compared with R200/m² and more at Riverside.

It's worse in Somerset West. Local agent N Hodge & Co's Peter Hodge says there are 70 empty shops. This despite Woolworths, Pick 'n Pay and other nationals keeping duplicate shops there. Retailers can rent a pitch next to Woolworths at R30/m², the same rate they paid eight years ago. This is because, says Hodge, 'Somerset Mall has sucked out all the A-grade tenants'.

But these centres might have died anyway. If Paarl's Lady Grey Street property owners lose their tenants, they must carry much of the blame themselves, says Syfin chairman Johan Pauw, who lives in Paarl and developed N1 City near Cape Town. 'They have done nothing to keep up with shopping trends and have allowed the area to deteriorate,' he says.

SA Council of Shopping Centres president Paul Simpson says Paarl is smaller than Somerset West, so retailers will not have the option of one shop at each node. 'They must choose between the CBD and the mall.'

Why not make a mall in the middle of town? Flanagan says town centres have too many disparate owners who are notoriously unable to co-operate with one another. Besides, shopping habits are undergoing a 'normal market shift', dividing in two with lower-income pedestrian shoppers taking over the centres and motor car-based shoppers frequenting the malls.

But Simpson and Pauw say Lady Grey Street can become Paarl's main retail centre again. Somebody needs to unite the owners.

'Luckily, Paarl has Dennis Minitzer,' notes Simpson. A local property owner, Minitzer has spent a year with professionals - including Stauch Vorster, architects for SA's biggest shopping centres - persuading the owners and retailers to turn Paarl centre into the desirable destination that Somerset West and Nelspruit failed to do.

Minitzer's team plans to build a roof over a pedestrianised Lady Grey Street, to upgrade buildings and parking, and to create an informal market nearby, 'at a fraction of the mall's cost'.

Flanagan argues that spending R220m on Paarl Mall's 35 000 m² is justified. It will bring employment at a relatively low capital cost. 'Large industries spend billions creating jobs at R3m a time. We spent R144m on our Richards Bay centre to create 600 jobs at R240 000 each.'

The mall will also help Paarl retain shoppers it would have lost to Century City and other more southerly centres. 'We are building a special offramp from the N1 so it will be easy for shoppers from Franschhoek, Worcester and other towns to get to us,' says Flanagan. 'It will increase the gross local product and broaden the rates base.

'It is all about choices - by owners to upgrade their properties, by retailers to find the best location, by customers to shop where they can best shop and by capital going where it gets the best return,' says Flanagan.

Simpson warns that retailers are not convinced all the malls work. They have not yet seen the promise of the research in the performance of Rustenburg's Waterfall Mall, for instance. 'As a result, chain stores will need persuading to move into Paarl Mall.'

Paarl council planning chief Sharon de Gois justifies the decision to approve Paarl Mall because it is conditional on the developers - Flanagan & Gerrard, Spire Properties and Corovest-NIB - producing a plan to ensure the CBD's survival. 'I have not seen such a condition,' says Flanagan.

Publisher: Financial Mail
Source: Financial Mail

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