RetailPROPERTYSPECIAL REPORT Retail down turn more perfect storm than FEATURE rent recalcit rance Key takeaways

• Vacancies worsened Charter Hall and ISPT in close prox- by oversupply of imity to the historic arcade, with new shops redevelopments of Raine Square and transforming • Landlords willing their CBD offerings and luring ten- to invest are ants to shiny new premises. Outside of the city, billions have experiencing leasing been invested in recent years success upgrading some of the city’s big- gest shopping centres, with $350 • Opportunities Dan Wilkie million recently spent at Westfield [email protected] emerge in food and Carousel, and the ongoing $800 mil- beverage services WALK through ’s lion redevelopment of Karrinyup Piccadilly Arcade offers a Shopping Centre the state’s biggest • Centres evolving Aglimpse of the challenges construction project outside of the their offering currently facing Western Austral- resources sector. to meet specific ia’s retail sector. In the past two years, more community needs What was once a thriving shop- than 300 new tenancies have been ping arcade has been reduced to a created via new developments or thoroughfare connecting the Hay expansions of existing centres, Street and Murray Street malls, including DFO Perth at Perth with a mass exodus of tenants to Airport, Raine Square, Westfield allow for redevelopment works Carousel, Forrest Chase, and Man- contributing to a growing percep- durah Forum. tion that Perth’s CBD is no longer And according to the centre a vibrant or interesting shopping owners, most of which are ASX- destination. listed entities or superannuation However, the reality is that Pic- funds, those new shops are more cadilly Arcade’s offshore ownership than 95 per cent occupied. group has responded to a rapidly Lease Equity managing director evolving retail scene by investing Jim Tsagalis said the unprecedented in a major upgrade. investment in Perth’s biggest shop- COUNTER: Jim Tsagalis has pushed back on perceptions that landlords’ high rents have About $350 million has been ping centres had substantially created Perth’s retail challenge. Photo: Gabriel Oliveira invested by institutional funds increased competition to sign up RETAIL PROPERTY 2019 - RECENTLY COMPLE TED DEVELOPMENTS

Mandurah Forum DFO Perth Forrest Chase Raine Square Owner ISPT and Vicinity Centres/Perth Airpo rt ISPT Charter Hall Redevelopment cost New store additions $ $ 2018-19 62 350m 110 350m 113 N/A 40 Occupancy rate % 100 99 99 N/A 97 FEATURE Retail down turn more perfect storm than Landlords unwilling to budge on rents have been blamed for exacerbating rent recalcit rance Perth’s retail downturn, but leading leasing agents say the sector’s problems are substantially more complicated than the cost of tenancies.

tenants, which in turn contrib- Instead, Mr Tsagalis said a range hairdressers and beauticians, and uted greatly to the proliferation of of factors had converged to create There are quite a few wellness providers such as mas- vacant shops not just in the CBD, but what he described as the perfect sage therapists. also in high streets across the city. storm for retail property, with the factors happening at once; However, she cautioned new “What’s happening is the landlord state’s wider economy, albeit at the entrants to the market to be mind- is taking by far the greater risk, and nascent stages of recovery, one of the greedy landlord piece is a ful that they were not just following given the fact that those develop- the biggest contributors. a fad or a short-term trend. ments were kicked off prior to the “There has been a very sharp really naive take on it - Jim Tsagalis “If there was a new business out issues in the market, the plane has decline in the economy and there there looking to start, it’s about taken off and it needs to land,” Mr has been increased pressure “There are quite a few factors success, without a doubt,” Ms finding that niche and how you are Tsagalis told Business News. through a lot of listed companies, happening at once. The greedy Manifis told Business News. going to fulfil that space that isn’t “I won’t say that they give tenan- the miners and the like, to reduce landlord piece is a really naive “At the end of the day they still being met in the market at this point cies away, but they certainly find costs,” he said. take on it.” see retail as a solid investment, in time,” Ms Manifis said. very creative ways to lease them.” “That’s had a trickle-down JLL WA head of retail prop- which is evident in JLL’s manage- “Wellness is a huge trend, retail- Much of the commentary around effect, making people really pull erties Ann Manifis agreed that ment portfolio. ers are starting to play in that space; Perth’s retail struggles has focused their belts in. Perth’s retail problems could not “If they are doing their market it’s just whether they are able to on rents, and whether landlords “There has been a Royal Com- be entirely blamed on landlords, research and know what their get into that traditional brick and were willing to meet a changing mission in the banking industry, who she described as a cautiously consumers are responding to, they mortar shop at this stage. market of reduced retail spending. so there wouldn’t be a person optimistic bunch. are the ones who have success. “They need to make sure that But Mr Tsagalis said that analysis who either hasn’t been told by Ms Manifis said while many “But also if a vacancy does if they are wanting to go into that was too simplistic. their bank that they have to stop landlords had recognised the var- become available it’s about look- shopfront, they need to have a solid “It’s certainly not a question in spending or they can’t get finance ious headwinds affecting retail ing at that space not just how it plan behind them. It’s not just about our experience of landlords’ will- because the pool of funds being property, those who were willing is, it is what can be done with it opening a door and hoping custom- ingness to transact,” he said. lent has been reduced. to invest were experiencing leas- potentially. ers come. “In a general sense, landlords are “The number of new housing ing success. “At some of our assets we have “They need to have a plan behind all educated or aware of where the starts is around an all-time low, “The landlords we are working done some remixing or split up them, which includes an online pres- market is and the fact that the com- that has a negative multiplier with, without a doubt they tell us a tenancy or combined it with ence so they are able to deliver that mercial terms that need to be struck effect; then add to all of that, it’s a more challenging market, but others, to be able to get that right way as well. are not what they might have been when there was a change to the if we have a centre where land- outcome not only for the centre “The days are gone where you can previously. planning legislation to an activ- lords are investing in their centre but for the landlord as well.” make the assumption that you don’t “There certainly seems to be some ity centre platform, every major and understanding what’s hap- Ms Manifis said JLL had iden- need to do anything other than have quarters suggesting that landlords landlord, shopping centre-wise, pening with the market, knowing tified significant opportunity for a shopfront, because consumers can are not meeting the market, but jumped at it, there was a huge where it sits with its target demo- new retailers, particularly in food readily access information, so how that’s simply not the case.” uptick in supply. graphic and market, we are having and beverage and services such as we want to shop has changed.”

Mandurah Forum Westfield Carousel DFO Perth Forrest Chase Raine Square Owner ISPT and Vicinity Centres Scentre Group Vicinity Centres/Perth Airpo rt ISPT Charter Hall Redevelopment cost New store additions $ $ $ 2018-19 62 110 113 150m N/A 110 m 40 75m Occupancy rate % 100 99 99 N/A 97 FEATURE RETAIL PROPERTY

CHANGEMAKER: Matthew McNeilly says he believes the future of retail is around inclusion and a unique local offering. Photo: Gabriel Oliveira Shopping centres meet the market

The $270 million redevelopment of Fremantle’s Kings Square is indicative of the experiential emphasis retail property owners are embracing across the city.

Dan Wilkie tenants (see page 20), shopping thinking of experience first and locals to come along for the ride of Perth’s largest local shopping [email protected] centre owners are going to new foremost, and retail probably with us and they have been very centre owners, Hawaiian. lengths to establish an all-impor- hangs off that.” influential in what we are ulti- Hawaiian is the WHILE the owners of Perth’s tant point of difference. Mr McNeilly said the vision for mately looking to deliver down landlord of The Mantle, a mul- largest shopping centres are At Fomo, Sirona Capital Fomo was developed through an there,” Mr McNeilly said. ti-tenancy food-and-beverage collectively seeking to estab- managing director Matthew extensive program of consumer “It is very much an authentic space designed to be a business lish new high street shopping McNeilly said that meant build- behaviour research, to under- Freo experience; I didn’t want to incubator in the hospitality precincts around their redevel- ing anything but a typical big box stand not only the Fremantle land a spaceship in the middle of sector. oped malls, one local developer shopping centre. market but also the retail envi- Fremantle, because that would fail. One of the biggest success has tapped into the character of “That would have been the eas- ronment of broader Perth. “Different parts of the world stories from The Mantle is the Fremantle to ensure its project iest thing to do, but I’m not sure He said that research empha- need to be curated as such. wildly popular Short Order stands out in a rapidly evolving that that would have worked,” sised the need to do something “In Fremantle, it is pretty easy Burger, which draws hundreds of retail market. Mr McNeilly told Business News. different, eclectic and in keep- to define who goes there, who patrons on the weekend at Fre- Sirona Capital’s Kings Square “I don’t think that’s what the ing with people’s expectations lives there, who wants to visit mantle, and expanded to include redevelopment, the retail compo- Fremantle community is looking around what they would find in there, those sorts of things. a Perth CBD store in January last nent of which is known as FOMO, for and I don’t think the broader Fremantle when they visited. “We did a huge amount of work year. is part of about $2.5 billion in Perth community, when they As a result, Fomo will have a on all of that to understand them Hawaiian has sought to build shopping centre expansions or visit Fremantle, that that’s what strong focus on bespoke arti- first and foremost. Because that on the success of The Mantle new builds launched in the past their expectations are. sans and craftspeople and little is retail. If you don’t understand with its Sunshine Harvester three years across Perth. “They go to a shopping centre emphasis on franchises, unless your consumer, you’ve got no Works, located in an adjacent With such a high level of when they need to go to a shop- they have a tailored local model. chance whatsoever.” warehouse property. development activity produc- ping centre, but when they go to “We have always been strongly A different approach to tenan- Sunshine Harvester Works, ing significant competition for Fremantle they are very much minded to get the Fremantle cies has also been adopted by one designed by local architecture RETAIL PROPERTY FEATURE $ 2.5bn SHOPPING CENTRE EXPANSIONS/NEW BUILDS IN PERTH PAST THREE YEARS firm Post, will include perma- nent and temporary food stalls focused on giving startup hos- pitality businesses or food truck operators an experience of a fixed tenancy, without the risk of a long-term lease. Hawaiian chief executive Russell Gibbs said the concept in place at The Mantle and Sun- shine Harvester Works was not too dissimilar to co-working spaces in the commercial office market. “By providing space to people ACTIVATION: Lendlease recently installed an interactive play space themed on the African Savanna at Lakeside in the early part of their business Joondalup Shopping City. Image: Lendlease development or evolution who aren’t prepared to take a longer lease or commit capital, and by “We have a deep understand- Vicinity Centres regional gen- giving them the opportunity to [W]hen they go to Fremantle ing of our customers, who they eral manager of development, try their wares in that space, then are, what they want from a visit Brad Osborne, said the group was maybe over time we can incubate to the centre and we work hard increasingly aware that consum- them and move them into a more they are very much thinking of to give them what they want,” ers were demanding personalised traditional retail environment,” Lendlease acting head of retail, interaction with brands to com- Mr Gibbs told Business News. experience first and foremost, and Marco Ettore, told Business News. plement shopping experiences. “So far it’s worked really well. I “The experiential initiatives “Around 95 per cent of total do think the retail environment that work best in our shop- retail sales in Australia were is going to change. retail probably hangs off that ping centres are tailored to our captured by retailers with a “There are certain require- customers. physical store presence in the ments under the retail tenancy - Matthew McNeilly “For instance, a big segment past 12 months, and only 5 per act that require five-year leases, of Lakeside Joondalup’s cus- cent was captured by pure-play but I think tenants are more opportunity to become the new smaller, but they are visiting tomers are families, so the online retailers,” he said. interested in taking shorter term village square,” he said. more frequently.” initiatives that have worked for “This data is clearly telling as long as they can have the secu- “Which is why you can see the Hawaiian general manager of that Centre include its Where’s us that the future is about rity if things work out well. Hawaiian centres now moving shopping centres Scott Green- Wally and African Safari activa- connected retail and consum- “And I think landlords, if they more towards food and bev- wood said the landlord’s focus tions, and school holidays and ers are demanding a seamless are given that flexibility, would erage tenancies and meeting was also not distracted by the Christmas sensory sessions for omnichannel experience across also embrace a shorter-term areas, whether that be a kids ever-increasing challenge of families with children with spe- physical and digital. growth story.” playground or just somewhere online shopping. cial needs.” “This demonstrates that the Outside of Fremantle, Hawai- to sit. “We believe that there’s an Mr Ettore said Lendlease also consumers who bought online ian has embraced a philosophy “I really do believe that the evolving role for shopping utilised social media to tap into did not have a preference for an of connecting people through its expansion of the big centres centres to become a natural the online shopping phenome- online-only experience, but one retail assets, Mr Gibbs said. really plays to the advantage extension of the local residents’ non, providing information of that required some sort of phys- Hawaiian’s portfolio is mainly of the smaller neighbourhood lifestyle,” he said. their offerings and connecting ical interaction with the brand/ comprised of what is known in centres. “We’re not just a place to shop, directly with consumers on retailer. the industry as neighbourhood “They become a convenient but a place to dine, gather, play platforms such as Facebook, “This means that physical shopping centres, which are option, and it’s really important and learn. We regularly activate Instagram and Twitter. space will continue to have a generally anchored by a major to be out in the local community our centres with interactive Vicinity Centres, Western Aus- very key role in the future, for supermarket and feature a suite and constantly surveying them activities and events that build tralia’s biggest retail landlord omnichannel services such as of specialty retailers that provide and finding out what’s impor- our shopping centres as com- with a portfolio that includes click and collect but also for the essential services. tant to them, and convenience munity hubs and deliver an the state’s largest mall in West- next generation of retail, par- Mr Gibbs said the wave of is definitely important to them. experience that you just can’t get field Carousel, has similarly ticularly at destination centres major redevelopments at Perth’s “That may be picking up by shopping online.” adopted online initiatives to – experiences, services, entertain- major shopping malls presented something that they’ve ordered At the big end of town, ASX- draw customers to its centres. ment, gamification.” opportunity for owners of online or it may be dropping in listed multinational Lendlease smaller centres to really tap into to pick up something for a meal has focused on enhancing the Sirona Capital community needs. each night. experience of shoppers at Lake- SEARCH “For the small centres of the “What we are seeing is peo- side Joondalup Shopping City There are 127 results from our index of 99,988 articles, type that we own, I see the ple’s basket sizes are getting through market research. 9,887 companies and 36,261 people FEATURE RETAIL PROPERTY

SEARCHENGINE WA’s LARGEST SHOPPING CENTRES ...your key to WA business RANKED BY GLA (M2)

Westfield Carousel. Photo: Gabriel Oliveira

Change No. of from Year Gross Lettable Special- previous est. in Area (GLA) ity Rank year Company name Senior executive and title WA in m2 Owner/Manager Shops Notable clients David Jones, , H&M, Uniqlo, Target, Kmart, 1 — Westfield Carousel Mr Chris Barton 1972 110,000 Scentre Group 269 Woolworths, Coles, Mecca Maxima, JB HiFi, Rebel, Best & Regional Manager, WA Less, Hoyts, Cotton On Mega, JD Sport, Reject Shop Lakeside Joondalup — Ms Gemma Hannigan 1994 99,400 (a) Lend Lease Funds Management Limited 330 Myer, Target, Kmart, Woolworths, Coles, Big W, Farmer 2 Shopping City Centre Manager (b) Lend Lease Property Management Jacks, Aldi, JB Hi Fi, Rebel, Best & Less, H&M Westfield Whitford — Mr Daniel Ramsdale 1978 85,094 (a) Scentre Group and GIC Real Estate 314 Target, Big W, Coles, Woolworths, Bunnings, JB HiFi, 3 City Centre Manager (b) Scentre Shopping Centre Management (WA) Rebel, Lincraft Galleria Shopping — Mr Mike Barrington 1994 81,454 (a) Vicinity Centres and Perron Investments 195 Myer, Target, Kmart, Woolworths, Coles, Aldi, Greater 4 Centre Centre Manager (b) Vicinity Centres Union Garden City — Mr Benjamin Davis 1972 72,221 (a) AMP Capital Investors 188 Myer, David Jones, Coles, Woolworths, Kmart, Zara, 5 Booragoon Centre General Manager (b) AMP Capital Shopping Centres Apple, Nespresso (a) Commonwealth Bank Group Super/Future 6 — Ms Alison Broadbent 1980 69,366 Fund/CPPIB 195 Harris Scarfe, ALDI,Target, Big W, Kmart, Woolworths, Shopping Centre Centre Manager (b) CBGS Coles. Ace Cinema, Best & Less Ms Jacqueline McKenzie (a) ISPT Core Fund and Vicinity Centres David Jones, Kmart, Target, Big W, H&M, Woolworths, 7  Mandurah Forum Centre Manager 1983 64,000 (b) Vicinity Centres 202 Coles

Mr Aaron Bennett (a) Vicinity Centres (50%) and Private Investor (50%) Target, Kmart, Coles, Woolworths, Best & Less, Rebel, 8  Centre Manager 1971 62,399 (b) Colonial First State Property Management 181 JB HiFi Karrinyup Shopping — Mr Tim Richards 1973 59,874 (a) UniSuper 180 Myer, David Jones, Big W, Woolworths, Nespresso 9 Centre Centre Manager (b) AMP Capital Mr Chris Barton (a) Scentre Group 10 — Westfield Stirling Regional Manager, WA 1967 47,780 (b) Scentre Shopping Centre Management (WA) 171 Target, Kmart, Coles, Woolworths Belmont Forum  Mr Shane McLean 1974 47,772 (a) Perron Group 131 Big W, Kmart, Coles, Woolworths, JB HiFi Home, Aldi, 11 Shopping Centre Centre Manager (b) JLL Best & Less. Cockburn Gateway  Ms Alexandra McAuliffe 1999 47,535 (a) Perron Investments 156 Woolworths, Coles, ALDI, Big W, Target, Best & Less, JB 12 Shopping City Centre Manager (b) JLL HiFi, Cotton On, City Beach. The Square  Ms Allana Edwards 1978 42,961 (a) Perron Investments 109 Woolworths, Kmart, Coles, Big W, Best & Less, Aldi 13 Mirrabooka Centre Manager (b) JLL Ms Christine Johnston (a) ISPT Core Fund 14 — Forrest Chase Centre Manager 1989 41,300 (b) JLL Woolworths, JB HiFi, Goodlife Health Club, Myer Shopping — Ms Andrea Smith 2001 37,216 AMP Capital 106 Coles, Kmart, Woolworths, Target 15 Centre Centre Manager Ms Roisin McDonagh Woolworths, Best & Less, Big W, Coles, Red Dot, Reject 16  Ellenbrook Central Centre Manager 2005 36,500 Vicinity Centres 80 Shop, Aldi, Petstock, First Choice Liquor

Mr Glenn Page (a) SCA Property Retail Trust Big W, Woolworths, Coles, Best & Less, Dan Murphy, The 17  Kwinana Marketplace Centre Manager 1972 32,945 (b) Knight Frank Australia 78 Reject Shop

Mr Tim Rankin 18 — Warwick Grove Centre Manager 1974 32,243 Vicinity Centres 91 Kmart, Coles, Woolworths, ALDI 19 GET THE FULL LIST ONLINE businessnews.com.au/List/shopping_centres 172 All information compiled using surveys, publicly available data and contact with industry sources. Other companies may be eligible for inclusion. If you believe your company is eligible, please email: [email protected] WND: Would Not Disclose, NFP: Not For Publication, N/A: Not Applicable or Not Available. RETAIL PROPERTY FEATURE

SEARCHENGINE WA’s LARGEST SHOPPING CENTRE OWNERS ...your key to WA business RANKED BY SIZE OF TOTAL AREA (M2)

Belmont Forum. Photo: Perron Group

Change from No. previous Size of Total of WA Rank year Company name Area in m2 centres Shopping centre names

Galleria 50%, Ellenbrook Central, Warwick Grove, Rockingham Shopping Centre 50%, Maddington Central, Karratha City 50%, Dianella Plaza, Mandurah 1 — Vicinity Centres 271,698 12 Forum 50%, Livingston Marketplace, DFO Perth 50%, Victoria Park Central, Halls Head Central 50% Primewest Albany Central, Primewest Busselton Home Depot, Primewest Melville, Bunbury Centrepoint, Cottesloe Central, Southern River Shopping Centre 2 — Primewest 237,505 18 & Showrooms, Primewest Northlands, Primewest Osborne Park, Primewest Gosnells, Primewest Gwelup, Erskine Central Shopping Centre, Primewest Cannington, Stirling Centre Bunbury, Broome Boulevard, Caversham Village, South Central, Tyne Square, 380-384 Scarborough Beach Road 3  Perron Group 209,429 4 The Square Mirrabooka, Cockburn Gateway, Belmont Forum, Galleria 50%

4  Scentre Group 199,560 3 Westfield Carousel, 50%, Westfield Stirling

Forrest Chase, Mandurah Forum 50%, Enex 100, Brighton Village Shopping Centre, Halls Head Central 50%, Banksia Grove Village, Beeliar Village, Lakelands 5  ISPT 147,588 9 Shopping Centre, Perth City Central

6  Lendlease 118,752 4 Lakeside Joondalup Shopping City 50%, Armadale Shopping City, Southlands Boulevard, Northgate Shopping Centre

7 — AMP Capital 109,216 2 Garden City Booragoon, Ocean Keys Shopping Centre

Wanneroo Central, Albany Plaza Shopping Centre, South Hedland Square, Kalgoorlie Plaza, Esperance Boulevard, Secret Harbour Square, Swan View Shopping 8  Charter Hall 101,262 8 Centre, Carnarvon Boulevard

9  SCA Property Group 100,766 7 Busselton Shopping Centre, Kwinana Marketplace, Treendale, Currambine Central, Kalamunda, Stirlings Central, Warnbro

Claremont Quarter 50%, Hawaiian's Forrestfield, Hawaiian's Noranda, Hawaiian's Bassendean, The Mezz, The Park Centre, Duncraig Shopping Centre, 10  Hawaiian 94,837 10 Newpark Shopping Centre, Hawaiian's Melville, Darling Ridge Shopping Centre

11 — Stockland 85,335 4 Stockland Baldivis, Riverton JV 50%, Bull Creek, Harrisdale

Floreat Forum Shopping Centre, West Leederville Shopping Centre, Kinross Central Shopping Centre, Champion Drive Shopping Centre, Ballajura Central, 12  APiL 77,788 9 Carine Glades Shopping Centre, Joondalup Gate, Byford Market Place, Flinders Square

13  UniSuper 59,874 1 Karrinyup Shopping Centre

14 — Erceg Management 40,107 6 Parks Centre, Springs Shopping Centre, Cale House Midland, 2nd Avenue Plaza, Lakes Shopping Centre, Alexander Heights Shopping Centre

15 — GPA and CGB 29,516 3 Waterford Plaza, Kardinya Park, Plaza Arcade

16 — Tah Land 24,200 1 Kingsway City Shopping Centre

Australian Unity Real — 24,357 3 Busselton Central Shopping Centre, Dog Swamp Shopping Centre, Woodvale Boulevard 17 Estate Investment Stargate Shopping Centre Port Kennedy, Stargate Shopping Centre Kelmscott, Stargate Shopping Centre Spearwood, Stargate Shopping Centre Waikiki, 18 — Carcione 20,600 5 Stargate Shopping Centre Atwell 19 GET THE FULL LIST ONLINE businessnews.com.au/List/shopping_centre_owners 44 All information compiled using surveys, publicly available data and contact with industry sources. Other companies may be eligible for inclusion. If you believe your company is eligible, please email: [email protected] WND: Would Not Disclose, NFP: Not For Publication, N/A: Not Applicable or Not Available. RetailPROPERTYSPECIAL REPORT SEARCH retail There are 7,365 results from our index of 99,988 articles, 9,887 companies and 36,261 people

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