Cen­tre re­vamps de­press rents

The West Australian - - PROPERTY - He­len Shield

The im­mi­nent multi­bil­lion-dol­lar re­de­vel­op­ment of Perth’s re­gional shop­ping cen­tres, which in­clude West­field In­naloo, Kar­rinyup Shop­ping Cen­tre and Gar­den City Boor­a­goon, has put down­ward pres­sure on rents with re­de­vel­op­ing cen­tre op­er­a­tors strug­gling to hold on to ten­ants.

The “in­ter­est­ing dy­namic”, iden­ti­fied by CBRE in its thirdquar­ter shop­ping cen­tre Re­tail Mar­ket Up­date, found ten­ants were flee­ing cen­tres with re­de­vel­op­ment plans in favour of the more cer­tain ten­ure and lease terms in cen­tres with no re­de­vel­op­ment plans.

“This has cre­ated some­what of a two-speed mar­ket for re­gional cen­tres with sig­nif­i­cant vari­ance be­tween the in­di­vid­ual cen­tres based on what their re­de­vel­op­ment plans are,” the re­port said.

How­ever, the re­port noted big international brands still favoured the prime re­gional cen­tres.

Anec­do­tally, there are con­cerns about how the shop­ping cen­tre own­ers will ul­ti­mately jus­tify the spend­ing of many hun­dreds of mil­lions of dol­lars ex­pand­ing their cen­tres in a mar­ket where re­tail­ers are liv­ing with the uncer­tainty posed by a post-Ama­zon world and stag­nant wages growth.

The CBRE re­port said re­tail­ers may de­cide to re­duce the size of their stores, putting land­lords un­der fur­ther pres­sure.

While most of the big ex­pan­sions were sched­uled for a 2019 fin­ish, “a de­gree of slip­page” in the fin­ish dates was an­tic­i­pated, CBRE said.

Re­tail cen­tres have re­tained their sta­tus as one of the strong­est per­form­ing com­mer­cial prop­erty as­sets de­spite the eco­nomic in­sta­bil­ity of the post­min­ing boom years.

An artist’s view of the re­vamped Kar­rinyup Shop­ping Cen­tre.

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