Retail property investors are now getting far better returns from large, dominant malls than from smaller shopping centres, figures from the SA Property Owners Association (Sapoa) show.

Latest Sapoa Retail Property Trends Report released earlier this week indicate that smaller neighbourhood (5,000-12,000sqm), community (12,000-25,000sqm) and small regional shopping centres (25,000-50,000sqm) are taking strain as cash-strapped shoppers opt to spend their money at bigger malls.

According to the report small regional and community centres recorded negative growth in trading densities (turnover/sqm) of -2,4% and -3,1% respectively for the year to end-September 2009. In sharp contrast, super regional (>100,000sqm) and regional centres (50,000-100,000sqm) still managed growth of 4,1% and 3,1% respectively over the same time.

Super regional malls, with Sandton City (Johannesburg), Canal Walk (Cape Town), Menlyn Park (Pretoria) and Gateway Theatre of Shopping (Durban) as prime examples, have over the longer term proved to be the best performing sub-sector of the retail property market.

Sapoa figures show that shopping centres exceeding 100,000sqm have delivered growth in trading densities of an average 7,5%/annum over the past five years, compared to average growth of between 4% and 6% per annum for all other types of shopping centres over the same time.

In fact, retailers in mega-malls are currently still achieving double the sales turnover than that of their counterparts in community centres – an average R1,028/sqm per month compared to R538/sqm per month. The general view is that the recession has prompted the move towards bigger malls as these centres offer consumers the right critical mass to compare prices before they buy.

Jess Cleland of IPD’s Retail Performance Benchmarking Service notes that there has clearly been a shift in consumer lifestyle patterns over the past 18 months. Consumers are not only favouring bigger malls above smaller ones, but they are also spending their money differently.

Cleland says people are less inclined to buy large or luxury items, with a more conservative approach coming to the fore. Big-ticket, non-essential items like cars, motorbikes, travel, luggage, home furnishings/art/antiques and décor therefore count among the worst performing retail sectors for the 12 months to end-September. In fact, Sapoa figures show that trading densities for car and motorbike sales plunged more than 50%.

At the other end of the scale, necessities such as food and shoes held up well and were the only two merchandise categories to produce positive growth in trading densities. Supermarkets increased trading densities by 0,6%, whereas sweet shops and bottle stores declined by -14,8% and -20,6% respectively. Similarly, sales at food service businesses including restaurants, take-away outlets and coffee shops declined by -11,4%.

Cleland says these figures suggest that shoppers are opting for the more economical option of eating prepared food at home rather than dining out. Trading densities for video stores increased by 12,3%, faster than that of movies and theatres, which posted growth of 9,4% and 9,2% respectively, pointing to an increased preference for home entertainment. – Joan Muller

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