Is retail on the rebound?

An uptick in consumer confidence is starting to translate into better retail trading figures among mall owners

Last year was arguably one of the toughest SA retail landlords have yet seen.

Mall owners faced increased competition from new shopping centres that continue to open across SA, and consumer spending came under renewed pressure amid lingering political and economic uncertainty.

However, latest sales turnover, vacancy and letting figures reported by a number of Jse-listed property funds suggest there was somewhat of a recovery in retail trading conditions towards the end of 2017.

Developer Attacq, which owns a number of shopping centres across SA, last week reported trading density (sales/m²) growth of a healthy 11% in December (year-on-year) at its flagship Mall of Africa at Waterfall City in Midrand.

That compares to growth of 2% for 2017 as a whole; 4,952 m² in new lets and right-sizing of existing tenants were concluded at the mall, which is one of Gauteng’s largest new retail offerings.

Attacq’s Mooirivier Mall in Potchefstroom notched up trading density growth of an equally robust 9% for December, comfortably ahead of the 4% recorded for 2017 as a whole. Spending at Brooklyn Mall also seemingly recovered late last year, with trading density growth coming in at 3% for December against an overall drop of 7% for 2017 as a whole.

Hyprop Investments, which owns a R28.4bn portfolio of SA shopping centres including Canal Walk and Somerset Mall in the Western Cape, as well as Rosebank Mall and Clearwater Mall in Gauteng, last week reported trading density growth of an average 2.1% for the six months to December.

That’s down from 3.5% a year earlier. However, redevelopment and extension projects at Canal Walk and The Glen in the south of Johannesburg contributed to the fund’s overall weaker trading performance.

Hyprop CEO Pieter Prinsloo says some malls reported an uptick in trading density growth for the six-month period, including Capegate in Cape Town (+8.7%), Rosebank Mall (+5.4%) and Clearwater Mall (+4%).

Hyprop’s retail vacancy — another key metric used to gauge the strength of the retail trading environment — dropped markedly, from

1.9% to 0.9% in the six months to December.

Prinsloo says the lower vacancy rate is due mainly to the re-letting of a significant portion of the Stuttafords store closures at Clearwater

Mall, Rosebank Mall and Canal Walk. Swedish fashion retailer H&M, among others, signed leases at Canal Walk and Rosebank Mall.

The former Hifi Corp store at Capegate was also re-let while Nu Metro cinemas were reintroduced at Woodlands Boulevard in Pretoria.

Prinsloo says most new lettings only started to generate income from November, which will have a positive impact on rental income in the six months to June.

Liberty Two Degrees (L2D) last month reported a marked turnaround in trading density growth (turnover/m²) in most of its shopping centres in the fourth quarter of 2017. The company owns stakes in Sandton City, Nelson Mandela Square, Eastgate and Melrose Arch in Johannesburg, Midlands Mall in Pietermaritzburg, Botshabelo Mall in the Free State and Promenade Shopping Centre in Mitchells Plain, Cape Town.

Sandton City and Eastgate achieved trading