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, writes Michael Haddrick, Managing Director at Comac Retail Property Group.
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 one 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 (+61 411 468 660) or michaelh@comac.com.au) or Brett Williams – General Manager (+61 478 312 407 or brettw@comac.com.au)