23/11/1999 - 21:00

Shopping centre futures look cloudy

23/11/1999 - 21:00


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NOW may be a good time to sell your shopping centre unless, like Westfield Carousel, you provide more than the mundane shopping experience.

Shopping centre futures look cloudy
NOW may be a good time to sell your shopping centre unless, like Westfield Carousel, you provide more than the mundane shopping experience.

This is a conclusion that could be drawn from the Property Council’s recent Future Directions forum.

Guest speaker, Property Council of Australia CEO Peter Verwer, said the prospect for shopping centres was not good.

“When you go to a shopping centre you want it to be an entertaining experience. All mundane shopping will be done over the net,” Mr Verwer said.

Only some gourmet shops and regional shopping centres such as Carousel would survive, he said.

Colliers Jardine research manager David Cresp believes shopping centre owners and retailers could be faced with reduced rental income and dwindling property values unless they took steps now to address the issue.

“E-commerce will certainly have a negative impact on the traditional retailing activities of shopping centres, but it also presents opportunities for shopping centres to provide a more vibrant retail experience,” Mr Cresp said.

He said some forecasters had gone as far as to suggest e-commerce would be “the beginning of the end” for traditional shopping centres.

Chesterton International research analyst Matthew Wells said the major retail centres would still have a future if they also offered entertainment and recreation.

He said shopping centres such as Westfield Carousel would have an advantage over other smaller centres because it offered an experience rather than simply a service.

However, Mr Wells said he believed in the short-term – around ten to fifteen years – shopping centres should be safe as it would take time to change people’s buying habits.

Mr Cresp said, to stay ahead of the pack, options such as changing shopping centre leases to include or capture some percentage of catalogue and e-commerce sales might be required, along with a focus on social and value-adding activities.

He said the recently launched Perth-based on-line retail provider Electrolley was a classic example of technology and grocery shopping combined.

Mr Verwer said grocery shopping in America was the fastest growing industry in terms of on-line sales and the trend was likely to be mirrored in Australia.

While e-commerce may threaten shopping centres in the long-term, over the short-term most property industry players and observers still believe the Perth retail property sector will out-perform both commercial and industrial property markets in the short-term.

A recent survey by the Australian Property Institute indicated 64 per cent of respondents believed the retail property sector would perform better than the commercial and industrial sectors over the coming year.

Around 50 per cent of respondents felt the retail property sector would be performing at it strongest in about two years’ time before losing its shine.

Only 26 per cent believe the sector will ‘out do’ other sectors in three years’ time.

The perceived strength of retail property is not unique to Perth. According to the survey, Hobart, Adelaide and Canberra also share a favourable outlook.

Mr Verwer also said the property industry stood to benefit in other ways out of the e-commerce revolution.

Rather than eliminating the need for stock storage facilities, as was first thought, e-commerce would increase the need for new buildings, he said.

Evidence of this is emerging in America with Amazon.com devoting $300 million to property investments for its warehousing.

In Australia, online company Wineplanet has also expressed interest in Sydney and Perth for its warehousing needs.

“All of this is a huge property story. This is not something that’s going to happen in five years time. It’s already happening,” Mr Verwer said.


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