“I always say shopping is cheaper than a psychiatrist.” Tammy Faye Bakker
It could be that shoppers are gradually showing an inclination and increasing ability to manage their debt. Benefiting from the declining interest rates may also be a driving force. Regardless, shopping malls continue to demonstrate a suppleness in the face of pressures like increased fuel prices, electricity hikes and municipal rates increases.
Despite discretionary spending being under pressure, the retail categories of household goods, textiles, pharmaceutical and clothing remain well supported, said Johan Engelbrecht, director retail management for JHI Properties to Denise Mhlanga of Property24.com recently.
It seems that retail nodes where there is a sustainable flow of consumers, sales are performing well. Retail sales turnover for centres run by JHI for example report increases on average of seven per cent over the past year.
South African Shopping Centres Continue to Flourish.
JHI has renewed capital investment with the extension of Greenstone Shopping Centre near Edenvale. The shopping centre opened its new extension in December 2011 with fully let space of nearly 6 400 square metres. A new Edgars has dominated the launch and has been a great success with shoppers.
Rather than hold back or wait and see, JHI Properties intends to advance its retail business unit over the next few years and increase its portfolio of managed retail centres, including elsewhere in Africa. A revamp of the Kolonnade Mall in Montana, Pretoria North is on the cards for example.
Engelbrecht revealed that JHI has opened an office in East London since they intend to invest in an area of great expansion which stretches from Mthatha to Port Elizabeth.
The Cavaleros Group, that brought us Sheffield Business Park has made some significant investments into shopping malls of late. The property investment company spent R20 million making over Bedfordview’s Village View shopping centre. The intention has been to keep the centre fresh and relevant, vital in the world of competing shopping centres. Apart from the overall refurbishment, three new restaurants plus a Steers and Nandos will enhance the dining appeal of the centre.
Across the way in Norwood, Cavaleros Group owns the Norwood Mall. The mall sees some major reconfiguration taking place this year. An 1 800sqm Food Lover’s Market has been added to the upmarket retail mix. In the interest of improved flows and greater variety Mr Price Home, Rage, Crazy Store, Bata and Step Ahead are trading from new stores. Food Lover’s Market will open in August joining Norwood Mall’s collection of anchor tenants: Woolworths, Dis-Chem and Pick n Pay.
160 retail centres were developed nationally and are flourishing in townships and rural areas of South Africa between 1962 and 2009, covering about 2 million square metres of retail floor space and generating about R34 billion worth of business sales with an added 54 300 permanent jobs to the national economy since the 1980s.
In rural areas there are other dynamics involved. Rural shopping centres these days are benefiting from the Government social grants. South African Property Owners Association (Sapoa) report revealed that consumer spending is up 30 per cent in the last four years. Naturally new shopping malls need to be strategically placed in order to avoid overtraded areas.
Marc Wainer of Redefine Properties says “I believe this is an ideal time to develop since interest rates and building prices are at very competitive levels.” He warns that this will not last indefinitely as contractor order books will start to fill up.
With this in mind no doubt, Twin City Developments is developing a new community shopping centre, Elim Mall in Limpopo at a cost of R202 million. Twin City Development owns retail developments like Blue Haze Mall in Hazyview, Twin City Mall in Burgersfort and Twin City Mall Bushbuckridge. Phase one of Elim is to launch by April 2013 with nearly 50 shops.
More than 80% of shoppers within the centre’s catchment area currently shop in other towns. They will now have the convenience of a shopping centre within reach of their own community.
Nedbank is financing the development to the tune of R175 million. The gross lettable area (GLA) is 18 627 square meters with Shoprite as main anchor with a 3500 square meter store accompanied by a 2300 square meter Boxer store. Other features include a KFC drivethrough, an Engin garage and a 72 bay taxi rank.
Clearly Twin City has looked well into the future having purchased the adjacent land enabling it to extend up to 4500 square meters of GLA.
Also eyeing non metropolitan areas for investment is the Dipula Income Fund who already own the Blouberg and Nquthu Plazas which continue to flourish. The JSE listed company is investing R330 million into three shopping centres as it intends to advance its portfolio exposure to low-income households and spread its geographic base. The three malls are: the 6 000 square metre Randfontein Station Shopping Centre in Gauteng, the 14.700 square metre Bushbuckridge Shopping Centre in Mpumalanga and the Plaza Shopping Centre in Phuthaditjhaba in the Free State.
The purchases will raise Dipula’s portfolio to 181 properties with a total GLA of over half a million square meters. Retail property makes up 57% of the portfolio.
Investec Property plans to develop the 25 000 square metre new regional shopping centre to be known as Endaweni in Diepsloot Extension 10 at a cost of approximately R275 million. Endaweni Shopping Centre will be one of two centres, which will serve Diepsloot and its surrounding communities. Endaweni will link retailers directly to a community of about 150 000 people. The plan of the centre is such that it not only contains a range of national tenants but also accommodates a large quantity of restaurants, which are expected to be a major draw-card for the local communities. The mall is due to open in September 2013.
In November this year Limpopo’s Lephalale Mall’s first phase is due to open. Lephalale Mall is located at the corners of the main arterial Nelson Mandela Road, Apiesdoorn Avenue and Onverwacht Road, on the western edge of Onverwacht’s new CBD in a major residential growth node. It will serve residents of the established Ellisras town, Maropong and the surrounding areas.
The Lephalale Mall is a joint venture between Moolman Group and Uniqon (Pty) Ltd. The mall and surrounding node will ultimately consist of 70 000 square metres of retail and other commercial space once fully developed. The growing coal mining and power generating activities in the area are the driving forces behind Lephalale’s growing economy. The Waterberg Coal Field in Lephalale is one of the largest coal fields in South Africa. Lephalale Mall itself will be a catalyst in the area’s economic development, as it grows with its market, and attracts local spending.
The Moolman group was also party to a venture with Resilient Property and Flanagan & Gerard Property Development & Investment in Polokwane, Limpopo. Another South African shopping centre destined to flourish, The Mall of the North opened in April 2011. It recorded exceptional performance during its first year and continues to receive attention from retailers seeking to open stores at the mall. Driving its performance is its exciting retail mix of 180 shops with anchor retailers including Pick n Pay, Checkers, Edgars, Woolworths and Game, as well as a Ster-Kinekor cinema complex. Its tenant mix is constantly monitored against shopper trends.
Mall of the North won the South African Property Owners Association Innovative Excellence Award in Retail Property Development. It also won the prestigious Spectrum Retail Design Development Award from the South African Council of Shopping Centres.
Which brings us back to the city. Cape Town and surrounds in particular. Few new malls have been built of late but there is much upgrading and refurbishment. N1 City, Tyger Valley Centre, The Blue Route Mall, Cavendish Square, Somerset Mall, Canal Walk and the Promenade in Mitchells Plain have expanded or been given multimillion-rand upgrades.
Work on Tokai’s Blue Route Mall will be completed in October at a cost of R83m. The upgrade expands the centre by 8 000m2 to 56 500m2. Upgrade construction on the northern suburbs’ 25-year-old Tyger Valley Centre started last March. The centre is being extended by 8 000m2 to 90 000m2 at a cost of R450 million.
Some analysts are suggesting that the market is marking time, that there is a consolidation in the retail property sector. However refurbishments and expansions continue and nothing seems to be stopping shopping malls opening and flourishing in rural areas. So either there’s still lot of people out there with money to spend or, in the words of Tori Spelling: “Bad shopping habits die hard.”
While most of the world has been tightening belts, trimming off fat and slashing budgets, in shopping mall land it seems to be full steam ahead, regardless of the current economic climate.
In November 2011 Sandton City expanded by 30 000sqm to 215 000sqm, 144 000sqm being retail space. Its Edgars store was upgraded as the flag ship store for Edcon to 12 000sqm. Throw in another 58 new retailers and by year end Sandton City had mushroomed like never before. Reinventing itself again, keeping its image fresh and exciting attracting names like Lacoste, Paul & Shark, Guess, Lacroix and Nina Ricci as well as Hugo Boss and a host of other glittering international brands.
Sandton city continues to be a catalyst for retail growth for the whole of Sandton CBD which itself is in the middle of a mini construction boom. However one may spare a thought for the Village Mall, which is scheduled for demolition next year. This is to make way for the first of a four phase redevelopment on the site scheduled to begin in 2012.
The Liberty Promenade Shopping Centre in Mitchell’s Plain, Cape Town was formally launched by Liberty Properties this year, following a refurbishment investment of over R500 million, adding 24000sqm, an increase of close to 30% in the complex’s retail real estate.
Middelburg Mall saw an increase in GLA (gross leasable area) from 34 000sqm to 43 000sqm this year. It now stands at 95% let ahead of its 2012 opening, so no white elephant here. The mall will open with a mix of 94 stores including Checkers, Woolworths, Edgars, Pick n’ Pay and Game. Expansion potential has been built into the mall in anticipation of a GLA increase to as much as 50 000sqm. So more expansion is on the way.
Bryanston/Sandton gets yet another shopping centre in the new Nicolway Shopping Centre, which opens for trade in Sandton in April 2012. It will be home to three supermarkets and a range of handpicked restaurants and coffee shops, with an emphasis on quality and personal service. With direct access from William Nicol Drive, the 23 000sqm centre will offer South Africa’s first new-concept Woolworths supermarket, a Food Lovers Market and a Checkers.
On the other side of Sandton, in response to demand from both retailers and shoppers, the successful Pan Africa Shopping Centre in Alexandra will expand by 2 500sqm. The expansion began in December and is scheduled for completion by early 2012. Pedestrian and vehicle counts show that more than 10 000 people use the area daily, along with some 1500 taxis. The expansion will bring new retailers – including Mr Price, Truworths and Clicks – into the mall, to join the other 60 stores already trading.
Right on the doorstep of a recently completed R50 million sectional title residential development, the R360 million Protea Glen Shopping Centre is described as the only retail destination in this area of mushrooming residential developments. Retailers are moving quickly to secure space in the 30 000sqm development. The centre will have a selection of 90 stores when it opens for trade on 27 September 2012. A second phase is already planned. A 3500sqm Shoprite and a 3500sqm Pick ‘n Pay will anchor the new centre.
Resilient Property Income Fund, one of the largest retail property investors in the Mpumalanga and Limpopo provinces, started development in October this year, on the new Burgersfort Mall regional shopping centre, scheduled to open in April 2013. The mall is situated on the main intersection of the R37, which runs between Polokwane and Burgersfort and the R555, which links Steelport to Burgersfort. The first phase of the centre will comprise of some 40 000sqm, with expansion potential of up to 75 000 sqm. It is to be anchored by Edgars, Game and Shoprite. The company’s investments include, amongst others, shopping centres in Mussina, Tzaneen, Thohoyandou, Mokopane, Nelspruit and Polokwane. It is also the major owner and co-developer of the recently opened Mall of the North shopping centre, which is currently the largest centre in the far northern part of the country.
The Mall@Carnival has recently turned the East Rand upside down with the opening of Phase 2, which moved Mall@Carnival into a Super Regional Shopping Centre with a GLA of approximately 72 000sqm. The Phase 2 was opened on 22 September and is already trading well above expectations.
Bay City West Mall is a new regional mall concept for Port Elizabeth. The mall will encompass a retail mall, office parks, residential nodes, private schools with associated sporting facilities, hotels, a hospital complex, motor city, a light industrial precinct and a lifestyle centre. The first phase is the retail mall, construction has begun with completion expected to be in March 2013.
Bridge City, in Durban’s Kwamashu/Phoenix intersection has been trading since Oct 2009. But phases of this urban renewal project continue to be built which includes, among other things, residential apartments, a hospital, a magistrates court and government offices. This October saw the completion of Bridge City’s underground railway station situated beneath the mall. The development which is being linked to a bus and taxi hub will be an intermodal transportation facility easing road congestion and providing convenient transportation for about 613,000 residents in the surrounding areas of lnanda, KwaMashu, Ntuzuma and Phoenix.
Other high profile refurbishments/extensions include: Elim in Limpopo gets a 50 store centre next year, Tokai’s Blue Route mall is being redeveloped to create 56 000sqm of retail and entertainment space by next year including a Checkers/Hyper. The Grayston Mall in Sandton is having a multimillion rand facelift. The grand opening of The Greater Edendale Mall was on the 29th September this year, it has hit an astonishing foot count of 1.2 million people. Then there’s Diepkloof Square Community Centre, a project set in the heart of one of Soweto’s most affluent arears, Diepkloof Ext3. It includes 39 shops with Pick n’ Pay as anchor. Overport City in Berea, Durban is to get a R100million upgrade. The Ballito Bay mall seems to be rising above its bitter wrangling with competitors and community and is finally reaching its completion.
This year also saw the landmark purchase of Cape Town’s V&A waterfront. SA’s largest listed property fund, Growthpoint Properties and Public Investment Corporation announced in February this year, that they had bought, in equal proportions, 100% of Lexshell 44 General Trading for R9.717 billion. A hard act to follow. On a much smaller scale Fountainhead Property bought a 25% stake in Centurion Mall for more than R751million. Investec Property Fund, which listed on the JSE in April, said to be on an acquisition trail, announced on 25 October this year, that it had bought retail complex Great North Road Plaza in Musina for R145m. The 86 shop South Coast Mall also went on auction later in the year for an undisclosed amount.
Space prohibits further tabulation of the many other developments on the shopping centre front. Sufficient to say that although Shopping Mall development both new and upgraded is a long term strategy, it’s clear that there is a great deal of confidence in the future of retail in South Africa. Record prices for large malls and high occupancy rates in many centres reveals optimism about where to invest in the future. One may be tempted to say: “Economic Slow-down, What Economic Slow-down?”