Developers shopping around for new development opportunities should consider putting a shopping centre in their basket.
According to Gary Mortimer, Senior Lecturer in Marketing at the QUT Business School, changing consumer habits has left a number of suburban shopping centres on the shelf, as department stores – once drawcard anchor tenants – move to more profitable locations.
The emergence of outlet shopping and ‘homemakers’ centre’ precincts has given consumers greater variety and choice, while residents in inner city suburbs, with a higher density of apartments and units, are foregoing the weekly shop to pick up groceries on the way home from work.
That means a number of suburban shopping centres built in the 1960s and 1970s are sitting under-utilised in prime locations, close to public transport and other social amenities.
While the idea of mixed use development with volumetric lots on the ground floor is not a new concept – most high rise development now include retail and commercial space on its lower levels — Dr Mortimer suggests that where suitable, large parts of the existing shopping centre structures could be retained with retail space consolidated.
“When a department store pulls out, a shopping centre manager might typically say, ‘oh we’ll just add more retail’, but this results in diluting the tenancy mix which means reduced income for everyone,” he said.
“One of the trends I saw when I was last in the United States was these shopping centres were being converted to a combination of retail and residential. It makes a lot of sense for an underutilised shopping centre to give over, for example, 40% of its retail space and for that to be turned into residential.
“That could take the form of demolishing some of the existing structure and adding an eight to 10 storey apartment building or, if it’s suitable, convert the existing structure to part retail and part residential.”
Dr Mortimer said shoppers were expecting more from their retail experience and this was a trend likely to continue as consumers have increased choice in where they shop and are likely to do so more frequently.
“Gone are the days of the weekly shop,” he said. “Australians shop two and a half times a week. People who live in places like Nundah, Highgate Hill expect a great range of amenities – a cafe, a green grocers, a small supermarket, a hairdressers, a restaurant and they want it within walking distance of where they live.”
Priscilla Hyde, general manger of SSKB Developer Consultancy says Dr Mortimer’s suggestion has real merit.
“This is a smart way of helping to rejuvenate an area which is a desirable place to live and has an established community and infrastructure,” she said. “Redeveloping a shopping centre site as a mixed use development has the added advantage of being a relatively large single parcel of land, so a developer doesn’t need to amalgamate several blocks on separate titles.
“Regardless whether part or all of a shopping centre is redeveloped for residential, an important factor to consider is an effective Building Management Statement as well as an effective sinking fund forecast – particularly if the retained building is old with plans to reuse existing plant and equipment.”