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Are we really facing the demise of shopping centres and retail?

Depending on who you speak with, we all have an opinion on the future of retail property and the pending goliath that is the internet and online shopping. Some believe Covid-19 has accelerated this impact and hastened the doom. 

This could be the case, but before we stand over the corpse of shopping centres and administer the last rites, we should consider the resilience of the industry and Australian’s ability to adapt and  overcome. 

We have experienced a 31-year undulating roller coaster ride within the property sector and by  extension the retail sector. You only need to go back to the early 1990’s when I first started working in Property Management at JLW. The State Bank of Victoria had collapsed along with the Pyramid  Building Society and AGC had significant property loans. The preceding Property crash of the late  1980’s resulted in a sell off property holdings off shore as banks looked clear their books.  

The banks thereafter refused to lend funds for retail property development and our major retailers  in Coles and Woolworths set up development arms to achieve their growth targets and new store  roll outs. Move forward and we faced the “Asian Meltdown” in 1997 which meant that those retail  assets that had been sent off shore in the early 1990’s were now able to be purchased back into  Australian ownership with the burgeoning funds accumulated from compulsory superannuation  introduced by the Keating Government in 1992. 

Through this tumultuous period good developments, landlords, tenants and indeed managing agents  continued to grow. You could also add in the Global Financial Crises that we have survived. 

This has been the last 31 years – lets now include a 1 in 100 year pandemic and see how traditional  retail copes with this curve ball that “will change retail forever”. Don’t assume change is always  negative, the ability of retailers/business to pivot has been remarkable. Food catering growth has  been phenomenal for those operators that were able to adjust and leverage third party retailers,  Uber Eats and Deliveroo. We’ve also seen growth in Supermarket and fresh food sales as we  rediscover the joy of cooking as a form of entertainment through lock downs. It is up to the industry  to adjust its modelling, turnover clauses and definitions accordingly to cater for the economic shift.

Importantly, the biggest change is not a change at all. We are social beings and crave interaction,  experiences and the tactile nature of retail. Covid has taught us to not take this for granted. A  discussion with your waiter – what a luxury! 

In order to survive in this market, Centres need to understand where they sit within their hierarchy and tailor Centres to suit your catchment. You need to know your demographic and lease, manage  and market your Centre with quality, experienced professionals like our team at Comac Retail  Property Group. We are your retail property management solution. 

Whilst the retail industry has had its struggles, our ability to adapt, survive and prosper through  challenging times is evident. 

Comac Retail Property Group are the retail experts and offer a complete retail property  management service. For a confidential discussion about how they can work with you to maximise  your asset value, contact:

Michael Haddrick – Managing Director
0411 468 660 or michaelh@comac.com.au

Brett Williams – General Manager
0478 312 407 or brettw@comac.com.au

Author: Michael Haddrick, Managing Director, Comac Retail Property Group

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