CENTRE OF ATTENTION
Three industry experts take a look at the changing nature of shopping centres across the country.
The changing nature of shopping centres.
Should you buy a franchise located in a shopping centre? You’ve heard all the horror stories about high rents and seen franchise chains find alternatives to prime food court sites. So what’s happening to shopping centres?
Michael Haddrick, MD, Comac Retail Property Group, believes the Australian shopping centre landscape is changing rapidly as the rise of online services continues to literally “eat” into the traditional markets of many centres.
Haddrick observes that some medium sized centres are struggling to find a point of distinction.
He believes there is an answer and it lies in the booming services sector such as finance, travel, beauty and health.
This is a strategy that has proved highly successful and created a new class of super neighbourhood, he says.
Take Lutwyche in Brisbane. The Lutwyche– Wooloowin area has seen a fresh retail demand emerge with a significant influx of a younger demographic as a result of improved infrastructure and a spate of apartment block developments.
“When Comac advised on the $50 million redesign of the Lutwyche Shopping Centre in Brisbane it analysed the data and found 59 per cent of the retail spending in regional centres is on food, liquor, groceries (FLG) and food catering.
“When we studied the Lutwyche catchment further we realised the approach to fashion, food, parking and services needed to be changed.
“Cafes and restaurants have increased their presence
in the last decade to 14 per cent of the market but, in many instances, it is not the solution for medium sized centres,” Haddrick says.
The solution for the 20,000+sq m Lutwyche centre was the creation of a services precinct to capitalise on the boom in personalised businesses, and the reinforcement of the FLG sector.
Franchise brands at the Lutwyche centre include Tobacco Station, The Coffee Emporium, Snap Fitness, Michel’s Patisserie and Curves.
The poorly performing food court was reinvented, relocated and reduced to just five food businesses with a strong local flavour to add authenticity.
Haddrick says its new location, next to the new travelator leading to Coles, significantly boosted foot traffic.
“We expanded the community services component to draw people into the centre. Existing Commonwealth and Westpac banks and Australia Post have been underpinned by other services including finance, health, beauty and travel.
“The focus on health (such as optical and dental) and removal of fashion is very unusual for a centre of this size, but it is working very well.”
Comac continues to monitor other services that are expanding including audiology, laser treatment, plastic surgery and beauty such as day spas, that are evolving into shopping centre-ready services to cater for the boom in personal consumer demand.
James Coffey has been recently appointed to lead the new shopping centre leasing division of CBRE in New South Wales.
He has a background in planning, leasing and the delivery of mixed use retail. So in his view, where does food sit in the mix?
“In the current market food and beverage is very important, but what isn’t often discussed is the critical mass per property. A successful tenant makes for a happy landlord, so food makes for part of the mix, but an in-depth understanding of capacity plus supporting uses needs to be a focus.”
Michael Sherlock is chief marketing officer at Sentinel Property Group. But his background as CEO of Brumby’s, and a former franchisee, gives him a unique perspective on the state of shopping centre retail.
“We are getting tenants in but it’s harder now,” he says. Property developers and centre owners have to create more precincts to develop shopping centres as destination spots. And that means eats and entertainment, he says.
At a recent centre unveiling in Cairns, Sentinel has put the spotlight on entertainment, with an outdoor screen and music designed to bring and keep families in the venue.
Add to this a marketplace that allows for food trucks and there’s a very different flavour to today’s regional shopping centre.
Another trend Sherlock has observed is the increasing presence of shoe stores and beauty salons.
“There are more specialists, and there’s a boom in the wellbeing trend. We’ve got more time on our hands so what are we going to do with it?”
Sherlock says an upcoming centre in Sunshine, Victoria will offer another slant on how to operate a destination shopping centre.
He is clear that what worked before won’t work now.
“Food courts are on the demise, rents are really intense. A lot of QSRs are opening in different zones. It’s interesting that some QSRs are going to drive-throughs.”
But that option has its own challenges, he points out.
“The rental area is the same but you have to allow for the queueing of cars, and that’s expensive and complex.”
When we studied the Lutwyche catchment further we realised the approach to fashion, food, parking and services needed to be
changed.