Opportunities beckon as big names vacate centres
Shopping centres across South Africa are feeling the pinch as big box retailers close, leaving spaces which might prove difficult to fill.
But, these vacancies provide an opportunity for landlords to revitalise and improve a centre’s tenant mix, giving the centre a new lease of life, says Wilna Savio, Broll
Property Group’s portfolio executive. This can lead to stabilised, long-term leasing and even increased rentals. Smaller tenants usually pay higher rentals pro rata than big box tenants, so if spaces are subdivided, centre managers can charge more, according to the Broll SA Retail Snapshot for the second quarter of the year.
The shift also gives other large national and international retailers and well-established independents the chance to move into prime locations where they previously may not have had a presence.
Vacant premises can be used for a variety of temporary purposes until a permanent solution is found, enabling landlords to earn an income in the interim. These could include exhibition spaces, boutique gyms, children’s play areas, entertainment areas or food courts.
The closing down of big box retailers at some shopping centres is a cause for concern as it confirms the current tough trading market, so landlords need to become more proactive, says Savio.
“They need to focus on tenant retention and flexible lease scenarios as well as improved customer service if they are to retain customers and if retailers are to continue drawing feet to centres.”
Many struggling retailers are discussing leasing strategies with regards to tenant mixes and centre improvements. They are also looking at viable options for rent/space reduction, escalation rates and growth, and are also exploring innovative leasing deals.
In some cases, reducing shop sizes to be more affordable and improving trading densities have given some struggling retailers breathing space. Savio says this creates opportunities to relook at well-performing retailers and include value-add stores for bargain shoppers.
Several centres have increased the reach of their marketing campaigns through social media platforms such as Facebook, Instagram and Twitter to engage with customers.
“Marketing is often neglected, especially by smaller retailers. Landlords have now identified marketing campaigns, such as digital online paid-for advertisements, to assist retailers in marketing products and services, creating awareness and making them more accessible to customers.
“We actively engage with existing tenants to determine the cause of their poor performance. But tenants also need to reinvest in their businesses, improve service offerings and increase staff training to meet the demands of savvy customers who are cautious about spending.”