OFF CENTRE
Shopping centres are taking on a new look as the balance of tenancies shifts under pressure from the continuing evolution of online shopping.
While online shopping has presented challenges for regular retailers, pressure is also increasing on shopping centres and their retail tenants with competition particularly intense in the food and beverage sector.
The concentration on food and beverage retailers in the tenancy profiles of Australian shopping centres has driven up competitive pressures for existing traders, according to JLL’s latest centre manager survey.
Overall tenancy inquiries have increased, but 73 per cent of shopping centre have had weak or very weak interest from clothing and footwear retailers, according to the latest JLL retail centre manager survey.
This comes as centres look to adjust their offers with a focus on tenants whose offers cannot be replicated online, but the shift comes at a cost.
JLL’s Australian head of property and asset management Richard Fennell says competitive pressure on food and beverage (F&B) retailers has increased as landlords adjust their focus. “A number of centres are shifting their offering to food, services, entertainment and leisure uses and focusing on marketing initiatives to drive customer traffic.”
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Health, gyms, medical centres, other medical-related services and insurance are also becoming more predominant in shopping centres.
“In some centres, the number of F&B tenancies has begun to create competition for existing outlets, and the expanded offering from supermarkets has started to result in lower demand for speciality food retailers,” says Fennell.
Concern over the impact of increasing levels of competition on the fast-food sector has been growing, with health-food chain Sumosalad last year opting to put two of its leasing entities into administration amid a dispute with Westfield ANZ, the owner Scentre Group, regarding “elevated intensity” of competition.
Sub-regional specialty rents increased by 1.1 per cent last calendar year, says JLL, while neighbourhood centres reported a 1.2 per cent increase – up from a 0.9