JLL’s Retail Centre Managers’ Survey, taken in August across 109 JLL-managed retail shopping centres nationally, showed Shopping Centre managers managers appear to be less positive about the future trading prospects of the centres they manage compared to six months ago, according to JLL’s bi-annual Retail Centre Managers Survey.
Conducted in August, the survey questions 109 JLL managed shopping centres across Australia.
In the February survey, 63 percent of respondents said they expected some turnover growth in the year ahead, but by the August survey this figure dropped to 51 percent.
JLL Head of Property and Asset Management Australia, Richard Fennell, said, the stalling of the positive trend seen over recent surveys highlights the continued challenges faced in the retail sector.
“The economy remains quite fragile with below trend economic growth, and customers remain quite conservative with their spending habits. Sentiment amongst our Centre Managers is now back at around the same levels recorded in late 2013 and early 2014. It’s still positive – just not as positive,” said Mr Fennell.
“One of the concerns being highlighted by centre managers as impacting their turnover performance going forward related to competition from new or upgraded centres. The growth in new retail supply was relatively strong in 2013 and 2014 and is expected to remain high between 2015 and 2017.
“Centre managers were also less positive with regard to economic outlook than in the previous survey. The response to the impact of exchange rates and fuel prices on sales turnover was negative following a neutral response in February.
“The devaluation of the Australian dollar is now starting to place pressure on prices of imported goods, which may potentially reduce sales volumes (but increase overall sales value).
“On the positive side, the potential impact of online retailing has consistently reduced as a factor in future trading prospects. While there is some pressure on sectors of the market from overseas online retailers, it is not seen as a major concern for smaller convenience based centres.
“The main sources of online sales in the grocery sector are the bricks and mortar supermarkets, with sales still reflected through their bricks and mortar stores,” said Mr Fennell.
The latest JLL survey did find a modest improvement in vacancy rates in both sub-regional and neighbourhood centres over the last six months.
Director, Strategic Consulting at JLL, David Snoswell, said the vacancy rate for sub-regionals declined from 2.8 percent in December 2014 to 2.2 percent in June 2015 – the lowest reading since September 2013.
The average vacancy rate across neighbourhood centres was 3.9 percent- the first time the reading has dipped below four percent.
“While tenant enquiry levels were weaker in the latest survey compared to the February result, the actual result is only the fourth positive reading from the 13 surveys that have been conducted since 2011 and is a marked improvement compared to the negative sentiment throughout 2013,” said Mr Snoswell.
“Tenant enquiry remained positive for the third survey in a row with a net balance of five percent, a relatively good result given that eight of the first nine surveys had negative readings.”
Food retailers, both food catering and speciality food retailers, remained the main source of tenant enquiry across JLL’s managed retail centres.
The latest survey found there was a reasonable level of interest in clothing and footwear within the larger sub-regional centres but smaller centres have seen some rationalisation away from clothing retailers.
Kiosks continue to attract some interest, providing a lower cost option for small mum and dad retailers and start-up businesses as well as some national chains.