RETAIL remains the best performing asset class in Australia and Western Australia is leading the way, according to a recent CB Richard Ellis report.
RETAIL remains the best performing asset class in Australia and Western Australia is leading the way, according to a recent CB Richard Ellis report.
The report found that retail property in WA had outperformed the nation in the Statebased retail property markets during the past 24 months.
Driven by increased numbers of eastern States-based retailers entering the market, WA’s strong economic performance and centre promotion, many shopping centre owners are in the enviable position of having a waiting list of potential tenants.
In the past 24 months all the major regional centres (centres sized between 50,000 square metres and 85,000sq m) have expanded and many have been able to increase rentals.
But it’s not just the big centres that are doing well – many retail centres smaller than 50,000sq m are undergoing expansions and facelifts.
Redevelopments include Whitford City, which is undergoing an $83 million expansion that includes 72 speciality shops and three restaurants. A total of $23.3 million is being spent on Prime Retail Group’s Heart of the Park Shopping Centre in Victoria Park, while Kelmscott Village Shopping Centre is undergoing a $35 million centre extension.
One of the first centres to be extensively redeveloped is the Floreat Forum, which will launch its new look this month.
The centre’s management recently injected $45 million into improvement of the 1960s-built shopping centre.
The centre will be expanded from 13,000sq m to 19,500sq m, the number of specialty stores will be increased, car parking facilities will be upgraded and an outdoor forum will be added.
According to Floreat Forum general manager Drew Pannowitz, the centre has remained virtually unchanged for almost four decades.
Mr Pannowitz said the redevelopment project was designed to make the centre more relevant to a changing community.
“It is simply an issue of evolution and, while changes to the centre are significant, the same community atmosphere remains unchanged,” he said.
The increase in retail space coming onto the market has put downward pressure on the retail tenant market.
The past year’s reduced retail spending and store profitability has made new tenants more difficult to find and eased rental growth in the short term.
CB Richard Ellis has tipped speciality vacancy rates to appear first at subregional shopping centres (10,000sq m to 30,00sq m), which are located near expanded major regional centres. To compete, the pressure is on these centres to become more competitive in the food retail and convenience market.
CB Richard Ellis property analyst Andrew Woodley-Page said that, in the past 18 months, neighbourhood shopping centres (up to10,000sq m) had reinvented themselves with a new focus on convenience.
Mr Woodley-Page said these centres had disposed of retail tenants such as beauticians and drycleaners and replaced them with stores supplying pre-prepared foods.
He said because retail property was such a good asset, owners held onto their properties and were choosing to reinvest funds in improvements to their centres.
