Mall anchor tenants may be cast adrift
Whether driven by a weak economy or new demands from shoppers, patterns are changing, writes
RETAIL mall owners may be scurrying around in the hunt for new anchor tenants as legacy businesses fall behind changing retail trends.
The 10- to 25-year leases that are usually given to anchor tenants when property developers establish a new mall form part of a model that is quickly becoming obsolete, and this may mean changing the face of the traditional anchor tenant.
Elaine Wilson, the divisional director for research at Broll Property Group, said although grocery and department stores were expected to remain anchor tenants, “certain tenants such as H&M will become more of a necessity for your larger centres”.
Wilson said anchor tenants would always draw feet to a centre due to their offering and size. “Although they are not necessarily the differentiation factor, they are generally a drawcard, while smaller tenants will always be important due to the different offerings they bring to a centre.”
She maintained that a centre could not be developed without an anchor tenant.
Wilson said that in South African malls, anchor tenants in the grocery category could be replaced only by a similar tenant, for example Pick n Pay for Spar, or Checkers for Woolworths Food.
But as consumers become more globalised, department stores as anchor tenants are quickly becoming sidelined and industry analysts will tell you that the arrival of global retailers looking for premium space has been the main topic of discussion by landlords when leasing retail space.
Keillen Ndlovu, head of listed property funds at Stanlib, said that for big malls, clothing retailers like Cotton On and healthcare retailers such as Dis-Chem were fast becoming the new drawcards.
Ndlovu said store closures or retail space rationalisation in South Africa were being driven by a weak economy, whereas in the US they were driven by a surge in online shopping – which comprises about 1% of total retail sales in South Africa compared to about 11% in the US.
“US malls are embracing more technology and food, beverage and entertainment offerings. In South Africa there’s big room to improve on this,” said Ndlovu.
Some industry analysts punt Cape Town’s V&A Waterfront as the mall of the new world, where there is an equal retail and residential mix and a theme park-like ambience.
With South Africa’s listed property sector now exposed to 25 countries, many property companies are looking to their international assets to find the next trend.
Andile Mazwai, CEOdesignate at Rebosis Property Fund, which owns malls across the UK, said: “This experience has given us a window into the future of malls. The trend is for malls to offer entertainment, interesting food offerings and socialisation over and above everything else.” While the group was revamping its mature malls in East London and Pretoria, it was also consolidating its assets, said Mazwai.
Rebosis’s Forest Hill City mall in Centurion and Baywest Mall in Port Elizabeth offer features such as ice rinks and Imax theatres.
As for what consumers are looking for when they go to a mall, Ndlovu said mall owners should embrace technology and social media. “Introduce more pop-up stores, up to a certain level of course. This helps to promote small and local businesses or start-ups and improves the offering at the same time.” — DDC