Com­mu­ni­ties show their sup­port for neigh­bour­hood con­ve­nience cen­tres

Weekend Argus (Saturday Edition) - - PROPERTY -

MOD­ER­ATE sales growth aside, South Africa’s re­tail sec­tor re­mains at­trac­tive to prop­erty in­vestors, in­clud­ing in­di­vid­ual buy­ers seek­ing niche op­por­tu­ni­ties such as neigh­bour­hood con­ve­nience cen­tres, says El­ton Hol­land, di­rec­tor of Ikon Prop­erty Group.

“The suc­cess of neigh­bour­hood cen­tres is pri­mar­ily driven by ease of ac­cess for con­sumers liv­ing or work­ing in the vicin­ity, as long as the ten­ant mix and prod­uct of­fer­ing is geared to suit their needs”.

He says a case in point is Moun­tain View Shop­ping Cen­tre in Gor­don’s Bay which was bought from a prop­erty fund by a lo­cal in­vestor for R27.75 mil­lion through Mike Dicky, Ikon’s se­nior in­vest­ment bro­ker.

“The lo­ca­tion of the cen­tre at the en­trance to the town from Sir Lowry’s Pass ide­ally serves lo­cal res­i­dents. Ini­tially a 7/11 store with a few small shops, then re­vamped in late 2012 and now best de­scribed as a neigh­bour­hood con­ve­nience cen­tre, Moun­tain View has a gross let­table area of 3 208m2.

“It is an­chored by an 860m2 Wool­worths store which has plans for ex­pan­sion in the cen­tre. Other ten­ants in­clude a gym that oc­cu­pies 534m2, a bot­tle store, a pet shop, a Crazy store, bil­tong and cloth­ing shops, a laun­dro­mat and a pop­u­lar lo­cal pub as well as two ATMs,” says Hol­land.

The owner of the cen­tre has sub­se­quently ac­quired an ad­ja­cent 4 600m2 va­cant site with the in­ten­tion of de­vel­op­ing a sec­ond ma­jor re­tail an­chor for Moun­tain View.

Says Hol­land: “The buyer has made a sound in­vest­ment – small neigh­bour­hood cen­tres are sought af­ter – par­tic­u­larly in a com­par­a­tively af­flu­ent area such as Gor­don’s Bay. I be­lieve the Pick n Pay fran­chise store down the road has the high­est trad­ing den­sity in the Western Cape, so there is se­ri­ous buy­ing power in this node. Set against the Hot­ten­tots Hol­land Moun­tains, pic­turesque Gor­don’s Bay is just 10 min­utes from Strand and Som­er­set West and 45 min­utes from Cape Town.

“Neigh­bour­hood cen­tres an­chored by Wool­worths Food, Shoprite and Pick n Pay Fam­ily are the bet­ter per­form­ing cen­tres with ini­tial net yields of 9 to 9.5 per­cent, whereas cen­tres with su­perette an­chors would need to show a net yield of at least 10 per­cent to at­tract in­vestor in­ter­est, un­less there is a pos­si­bil­ity to sub­sti­tute the cafe store for a na­tional re­tailer”.

Dicky says it’s im­por­tant to carry out due dili­gence tests on the line shops in neigh­bour­hood cen­tres as th­ese are of­ten small traders who may eas­ily fall into ar­rears, un­less they of­fer the neigh­bour­hood com­mu­nity an es­sen­tial ser­vice or com­mod­ity.

PRETTY SOUND: Gor­don’s Bay, where the Moun­tain View Shop­ping Cen­tre re­cently sold for R27.75 mil­lion.

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