By Aimee Chanthadavong
Regional shopping centres are so far the biggest winners in construction and return when it comes to development activity in the Australian retail sector, according to CBRE’s third quarter Australian Retail Market View.
The report has predicted during 2014, retail completion will total 1.5 million square metres nationally. It anticipated that 198,000 square metres will be refurbished regional centres with another 408,035 square metres of new or refurbished space still to come to the market — the highest level of activity in over a decade.
So far the 41 regional centre developments currently in development pipeline are mostly owned by Westfield, Stocklands or Federation Centres.
“Given that large international retailers are focusing primarily on high street and prime regional centre locations, it is no surprise that owners are rolling out aggressive development plans, in an effort to attract best retailers to their centres,” the report said.
“Not only will refurbished developments attract the best global retailers, but it is also thought that given the increased foot traffic and higher sales environment of a regional centre that domestic retailers will follow suit.”
To improve the attraction of regional shopping centres, new concepts such as creating a ‘community feel’; strategic dining and entertainment plans; night time economy; and increased mixed use style formats are being implemented.
The report also suggested a recovery of the retail real estate sector will come to fruition by mid-2014 based on improving consumer sentiment coupled with lower interest rates despite increased occupancy costs.
“We anticipate that with both positive housing fundamentals and increased discretionary spending, we should see some yield beyond second half 2014,” the report said.
“Given the preference for regional retail assets, we may see some divergence in both the occupancy and investment markets from secondary assets, that is, sub-regional centres.”