Mall of Africa still rising

SA’S BIGGEST: BUT FACES STIFF COMPETITION FROM SMALLER RIVALS COUNTRYWIDE

Mall of Africa, South Africa’s biggest shopping destination, hasn’t yet matched the trading densities of its entrenched, smaller rivals, but the residential and office developments rising around it have yet to come in to play.

Nearly one year after opening, just how well is the Mall of Africa trading? Developer and manager Attacq stated in February that “trading densities exceeded expectations”.

The country’s largest single-phase shopping mall, which opened on April 28 2106, achieved more than 1.1 million visitors a month last year, it said.

Critical metric

In what could be considered rather limited disclosure, Attacq said

a monthly average trading density of R2 777/m2 was achieved.

Trading density, which measures turnover per square metre, is a critical metric for retail. Expansions aside, this is how stores and shopping malls grow: by attracting more shoppers (and better quality range and tenants).

On a headline level, Mall of Africa is lagging direct super-regional rivals like Sandton City, Canal

Walk and even Eastgate. However, these figures need to be seen in context: the Mall of Africa is a brand new development.

One (albeit not 100% precise) comparison, based on publicly disclosed data, is with Rosebank Mall, which underwent a major R1 billion redevelopment in 2013 and 2014. It is about half the size of Waterfall, with a total retail gross lettable area (GLA) of 62413m2 versus Mall of Africa’s 131 000m2 (although, based on Attacq’s reporting of its 80% share as at December 31, the primary GLA seems nearer to 123 000m2).

The Rosebank Mall achieved an average monthly trading density of R2 738m2 in the six months to December 31 2015.

This aligned almost perfectly with the reopening of the substantially bigger (and completely developed) mall. That reported trading density was a 33% increase on the prior period (when the centre was effectively a giant construction site). On an annualised basis, the trading density soon after reopening translates to R32856m2. One wonders just what expectations Attacq had set for Mall of Africa.

In a document, Liberty Two Degrees, with stakes in Sandton City, Nelson Mandela Square, Melrose Arch and Eastgate, provides tremendous detail on trading densities at its malls.

In the accessories, watches and jewellery category, Nelson Mandela Square achieved annual trading density of R253 052m2 (with 5.6% of GLA) while Sandton City reported a figure of R212 991m2 (only 2% of GLA).

Food services, which makes up 36% of GLA in Nelson Mandela Square, had a trading density of R55552m2, while in adjoining Sandton City, it was slightly lower at R52 802m2 (3% of space).

Surprisingly, few other property funds with large retail portfolios, including Growthpoint, disclose specific trading densities.

All Growthpoint will say about performance of the V&A Waterfront, in which it holds a 50% stake, is that it has the “best trading density compared to other super regionals in [the] country”. This would suggest it is easily over the R50 000m2 (annualised) mark.

For Attacq, key to growing and sustaining footfall during the week at Mall of Africa will be the completion of office and residential developments in Waterfall. It says “trading is expected to increase as Waterfall City and its surrounds continue to densify, extracting further value from Mall of Africa in the years to come”.

Collateral support

The mega developments of new head office campuses for PwC (45 000m2) and Deloitte (43 000m2) will certainly help. These two projects alone will bring an additional 7 000-plus employees to within walking distance of the mall.