Centre revamps depress rents
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.