Cut­backs a risk to malls

The re­tail group’s re­struc­tur­ing ef­forts could place fur­ther strain on al­ready strug­gling shop­ping cen­tres

Financial Mail - - BETWEEN THE CHAINS -

SA mall own­ers are brac­ing them­selves for a sharp rise in va­can­cies be­cause of the pos­si­bil­ity of the Ed­con group slash­ing its re­tail foot­print by up to 500,000 m² — a third of its ex­ist­ing space.

That’s more than three times the size of Sand­ton City, one of SA’S largest malls at 147,940 m².

As it stands, Ed­con oc­cu­pies around 1.5m m² through its Edgars, Jet, CNA and Board­mans brands, mak­ing it one of SA’S largest oc­cu­piers of re­tail space.

Rede­fine Prop­er­ties chief op­er­at­ing of­fi­cer David Rice said at the com­pany’s in­terim re­sults pre­sen­ta­tion last week that Ed­con would va­cate around 20,000 m² in Rede­fine’s re­tail port­fo­lio this year.

Rede­fine is one of SA’S largest land­lords and owns 80 re­tail cen­tres across SA, in­clud­ing Cen­tu­rion Mall and Maponya Mall in Gaut­eng and Blue Route Mall and Ke­nil­worth Cen­tre in Cape Town.

Rice said the mar­ket ex­pected Ed­con to re­duce its SA foot­print by a third, po­ten­tially clos­ing up to 500,000 m² of re­tail space as leases come up for re­newal.

That would no doubt fur­ther in­crease va­can­cies, which have risen sharply over the past 12 months, in malls across SA.

Rede­fine’s re­tail va­cancy is up from 3.3% to 4.4% in the year end­ing Fe­bru­ary. A sim­i­lar trend has been re­ported by fel­low listed


mall own­ers Growth­point Prop­er­ties, Hyprop In­vest­ments and Lib­erty Two De­grees fol­low­ing last year’s demise of Stuttafords as well as the clo­sure of stand­alone stores by in­ter­na­tional fash­ion brands Mango, Nine West and River Is­land.

Mall own­ers have also ex­pe­ri­enced a marked slow­down in trad­ing den­sity growth (sales/m²), another im­por­tant met­ric used to mea­sure the strength of con­sumer spend­ing.

“Re­tail­ers are no longer afraid to give up space,” Rice said.

“There’s def­i­nitely . . . a big push­back from ten­ants against rental in­creases and an­nual es­ca­la­tions, es­pe­cially from the national re­tail­ers.”

How­ever, he said some of the va­can­cies might well be mopped up by in­ter­na­tional re­tail­ers, who are still keen to en­ter SA.

They in­clude French-based DIY brand Leroy Mer­lin and sports brand De­cathlon, both of which have re­cently signed leases with Rede­fine.

In re­sponse to ques­tions from the FM, Van­nie Pil­lay, Ed­con Group cor­po­rate af­fairs ex­ec­u­tive, con­firmed that the group had em­barked on a “store port­fo­lio

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