Overview of Retail Sub-Property Markets - Lusaka
The short pitch of Great East Road from Addis Ababa to Thabo Mbeki is clearly the prime area for retail in Lusaka and at 97,000m2, comprises almost 40% of the city’s total shopping centre space. The pitch is anchored by two of Southern Africa’s best shopping centres outside South Africa, the 44,000m2 Manda Hill and the 34,000m2 East Park, as well as the recently expanded Arcades Mall. East Park also is currently undergoing an extension, which will increase its commercial and retail GLA by a further 30,000m2. in multiple phases. We understand that ShopRite will be the anchor tenant for the first extension.
This area comprises 18,500m2 of shopping centre accommodation, with a further 16,000m2 under construction at Novare’s Pinnacle Mall and Napoli Group’s Woodlands Stadium Mall. Kabulonga and Woodlands are two of Lusaka’s key residential nodes, particularly in the high-mid end sector. Formal retail in these locations therefore, has a strong catchment, which extends further down to Leopards Hill and Sunningdale.
Makeni and the Kafue Road have a very strong formal retail presence including Makeni Mall (12,000m2), Cosmopolitan Mall (25,800m2) and Embassy Mall (9,000m2) all situated within 150 m of each other, on either side of the T2.
Rents average $22.00 – 25.00 per m2 in the prime shopping centres such as Cosmopolitan, Centro and East Park. Manda Hill as the best asset in the market, achieves rents over $32.00 per m2.
Good convenience centres achieve average rents in the $15.00-$18.00 per m2 while older, more poorly designed or maintained assets average rents closer to $10.00-$12.00 per m2.
Anchor tenant rents differ dramatically whether the developer provides a grey-box (“Shell & Core”) or handles the installation of the fit out. For instance, the standard ShopRite grey-box rent is $10.00 per m2, while the fit out included rent is $15.00 per m2 ( it should be noted that ShopRite has the most expensive fit out in the market).
In the super-prime shopping centres there is normally almost no vacancy and a long waiting list of interested tenants. On the other hand, in older, smaller, more run- down centres, we have seen vacancies as high as 50%, requiring a major investment program and repositioning by the owner to fill this again.
In line shops, fashion retailers are under pressure. Along with slowing discretionary incomes in 2016/17, the line shop rental has been falling and as a result there has been a significant decrease in the opening of new stores.
In early 2018, this trend seems to have reversed slightly, with line shops now selectively looking at opening new stores. In response, rentals seem to have firmed up, although not to the extent that they are increasing.