George Wragge, NSW Director of Retail Leasing at Colliers International.
At the end of 2016, Colliers International made five predictions on which trends would dominate the retail leasing landscape for the following year. As 2017 starts to wind down, it's time to look back on the year that was and see which of these projections came true, and take a look at what is in store for the year to come.
1. Food and beverage operators will continue to drive growth in the sector
The use of food concepts as anchors and traffic drivers for shopping centres has certainly grown in relevance over the past 12 months, with many Landlords using new concepts from well known, established operators to anchor down aspects of their centres. The best example in the past 12 months has been the addition of The Grounds to The Galleries. It is also well accepted that as a category represented in the shopping centres, food and beverage has increased from 10% of the GLA to closer to 30% of the GLA. This poses the question to Landlords as to how they can be mindful with respect to cannibalisation of usages. A recent example is Sumo Salad who successfully challenged Westfield about replication of usages, which led to an erosion of their turnover disproportionality by the increase in rent they were required to pay. This is a hot topic at present and a ‘watch- this-space’ for the next 12 months as retailers look to challenge landlords and their perception of saturated food precincts.
2. Under performing mixed-use developments will be in the spotlight
Over the past 5 years there has been a massive 464% increase in new and available retail floor space coming on line. This is a direct result of the housing market shortage driving the need for mixed use developments. Landlords are increasingly looking at the opportunity rather than the requirement, and forward-thinking developers are unlocking additional value in their buildings through differentiating their building and creating an identity, iin an increasingly competitive residential and commercial marketplace.
3. Fresh food demand will increase
The ‘paddock to plate’ movement is gaining further momentum and the slow food movement is very much at the fore of many consumers and restauranteurs considerations. Technology and its application to traceability of food is enhancing the consumers ability to discover where their food was grown, harvested and delivered to the place of sale. Using mobile technology to scan codes and give a short video outlining the background of produce will soon be a critical component in the consumers decision making process to ensure that what they are eating has been raised/grown in an ethical way.
4. Food and beverage operators will move beyond the CBD
Continued population growth and a growing sophistication of the average consumer palette, is strengthening reasons for operators to pursue retail opportunities in areas of increasing densification outside of the core CBD. Online mediums such as Uber eats and Deliveroo are allowing for concepts to penetrate the wider market as fine dining restauranteurs move into more casual dining concepts. The use of dark kitchens to facilitate the online demand is increasing in relevance and one that retail centre landlords need to be mindful of in order to remain relevant in an ever-increasing world of convenience-based online shopping.
5. Entertainment will become key to consumer engagement
Entertainment and leisure precincts are gaining momentum off the back of the increasing presence of food, and as landlords strive tostrive to remain relevant. Cinemas specialising in kiddie friendly screenings and fitted out in a way that is more conducive to prams and young children, along with screenings showing reruns of classics orientated towards an elderly demographic is one strategy of where entertainment is working to underpin a physical requirement for consumers to frequent centres. This strategy is just one way entertainment will evolve to being a significant draw card to the modern day centres.
What we can expect from the year ahead…
1. Dark kitchens and an increase in the prevalence of Uber eats and delivery-based food retailing
2. Retailers blending their usage and looking to offer a more holistic offering
3. Landlords looking to increase value proposition through tech mediums and physical building to secure/retain tenants
4. Supermarkets ramp up online, click collect and delivery to remain competitive with Amazon
5. Automotive industry will push further into mainstream retailing