Cutbacks a risk to malls
The retail group’s restructuring efforts could place further strain on already struggling shopping centres
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
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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