Review of Illawarra retail centres Final report Department of Planning & Environment June 2014
140005-Final report (retail)-140630
This report has been prepared for Department of Planning & Environment. SGS Economics and Planning has taken all due care in the preparation of this report. However, SGS and its associated consultants are not liable to any person or entity for any damage or loss that has occurred, or may occur, in relation to that person or entity taking or not taking action in respect of any representation, statement, opinion or advice referred to herein.
SGS Economics and Planning Pty Ltd ACN 007 437 729 www.sgsep.com.au Offices in Canberra, Hobart, Melbourne and Sydney
140005-Final report (retail)-140630
TABLE OF CONTENTS
EXECUTIVE SUMMARY I Retail market i Retail hierarchy ii Retail demand and supply ii Implications iii
1 INTRODUCTION 1 1.1 Introduction 1 1.2 Strategy and policy review 1 Illawarra Regional Strategy 1 Illawarra Discussion Paper 3 Local Government strategies 3
2 RETAIL AT A GLANCE 5 2.1 Regional drivers of growth and change 5 2.2 Retail centres 8 2.3 Retail hierarchy 10 Regional Cities 10 Major Regional Centres 11 Major Towns 12 Town Centres 13 Neighbourhood Centres 14 2.4 Summary of floorspace supply within the Illawarra region 14 Method for estimating retail floorspace 14
3 RETAIL MODELLING 16 3.1 SGS retail gravity model 16 3.2 Model inputs 17 Resident retail expenditure 17 Visitor retail expenditures 21 Turnover by centre 23 Travel time matrices 25 3.3 Future floorspace requirements 25 3.4 Supply analysis 27 Planned floorspace 27 Gap analysis 28 Capacity 28 3.5 Summary 29
REFERENCES 30
Review of Illawarra retail centres
EXECUTIVE SUMMARY
SGS was commissioned by the Department of Planning & Environment (DP&E) to conduct a study of retail centres in the Illawarra region, to inform the development of a new Illawarra Regional Growth Plan. This included determining trends and drivers in the retail market, identifying capacity and supply blockages, and projecting future requirements for zoned land. The key objective of the retail centres study is to provide an evidence base to inform policy decisions about retail centres, particularly centres hierarchy, roles of centres and management of proposals for out of centre retailing.
Retail activity is based on expenditure in the system, itself based on local population. As such, this type of study links closely with an assessment of housing and population changes. Commercial investment responds to different drivers, with locational choices based on factors such as broad changes in the economy and land attributes such as visibility and accessibility. Commercial prospects are therefore better considered as part of a study into the economy and employment trends rather than housing, and an assessment of the commercial market in the Illawarra has not been included in this work.
The Illawarra region includes the local government areas of Wollongong, Shellharbour and Kiama, as well as the Shoalhaven LGA which has recently been included in the region. Wollongong is the largest LGA and contains the regional centre for the region, Wollongong. The other major centres include Nowra, Warrawong, Dapto and Shellharbour city centre. Between 2011 and 2031 the population of the Illawarra region is projected to grow from 394,000 to 465,000.
The average unemployment rate in the Illawarra region (excluding Shoalhaven) is 2% higher than the NSW average and 17% of workers from the Illawarra region commute to Sydney for work. There are currently 136,000 people employed with the Illawarra region and a minimum of 24,250 additional jobs will be required over the next 20 years to respond to population growth and existing unemployment challenges2.
Retail market
The major trends currently affecting the retail market include the deregulation of shopping hours, development of larger supermarkets and discount supermarkets, demand for out-of-centre retailing premises (such as for bulky goods), increased diversification and stand-alone centres, discount department stores, needs for convenience shopping and increased popularity of electronic retailing.
The deregulation of shopping hours and increase in retailing hours of supermarkets has changed the ‘where’ and ‘when’ of consumer shopping habits, with demand drifting towards the weekend and the importance of smaller Neighbourhood Centres diminishing. In addition, development of larger supermarkets has led to the decline of local ‘corner’ stores, unable to compete with larger supermarkets that often offer lower prices for consumers.
Out-of-centre retailing continues to impact on existing retail centres and existing industrial uses.
Bulky goods retailing within industrial precincts can also place upwards pressure on rents, potentially forcing industrial land uses to relocate to cheaper areas.
Certain retail forms appear to be doing well. Retail centres are increasingly diversifying through the continued development of stand-alone centres, including large indoor shopping centres such as Westfield, while factory outlet and discount department store retailing is now considered a permanent part of the retail landscape and a potential threat to the viability of neighbourhood centres. In addition, the development of convenience shopping has been an emerging retail trend, with convenience stores servicing consumers who make frequent trips and purchases of small amounts of food items.
2 NSW Government, 2013, from The Illawarra over the next 20 years: a discussion paper. These figures were prepared by the NSW Government before the inclusion of Shoalhaven LGA in the Illawarra region.
Review of Illawarra retail centres i
Online shopping in Australia is becoming more prominent. Internet retail expenditure in Australia tripled from $40 billion in 2004-05 to $143 billion in 2009-10. This trend is likely to intensify, with implications for land use in centres (with potential for reduced demand for traditional retail space, and increasing demand for light industrial zoned space to accommodate the warehousing and logistics operations that support this business model). Alongside online retailing, existing shopping centre developments are also faced with increasing competition from new developments such as Stockland Shellharbour and GPT West Keira.
On the demand side, high unemployment in the region and the resulting reduced expenditure has been a notable constraint on the retail market, while on the supply side, the high costs associated with development are unlikely to change in the short term, affecting the retail market in major centres in particular.
Retail hierarchy
Shellharbour’s role has been growing in recent years, with an increasing population, catchment area and employment as well as good retail and service provision. However, Wollongong remains the Illawarra’s only regional city, with major tertiary education and health facilities, strong public transport and infrastructure provision, and a key role in providing higher order business, civic, recreation, community and entertainment uses. As such, Wollongong will continue to be the main driver for economic growth and employment in the region. SGS believes the current status of both centres to be appropriate given their different roles and functions, with significant overlap only likely in the retail sector.
The Innovation Campus (iC), developed in 2008 to provide a regional hub for knowledge-based industries, provides commercial office space in addition to supporting retail. Although it has a unique competitive offer that provides a strong economic benefit to the region, in practice it appears to attract not just research and development uses, but also general commercial uses that might otherwise locate in the Wollongong CBD. It is important that strategies and plans support the iC without jeopardising the role and function of Wollongong CBD, ensuring it remains an attractive location for commercial uses in line with its position in the centres hierarchy.
From a strategic perspective, the Department of Planning and Environment may want to consider downgrading Unanderra from Major Town status due to its changing role and function, relatively low level of retail provision, limited opportunities for local population increases and the surrounding competitive offer. Further studies at a local level are likely to be required to provide a more detailed assessment. No other changes to the existing hierarchy are considered appropriate for further investigation. We have assumed that in the revised hierarchy for the newly defined Illawarra region (which includes Shoalhaven LGA), that Nowra is a Major Regional Centre and Ulladulla a Major Town. These rankings are in line with their previous status in the South Coast and befitting of the role and function they serve, and the retail floorspace each offers.
Retail demand and supply
The SGS Retail Gravity Model distributes the available retail expenditure using a gravity distributional mechanism. The model looks at the likelihood or propensity of a particular person to gravitate towards a retail centre within a defined retail system and estimates how much of a person’s retail expenditure will be spent at a particular centre.
Overall, the results show a relatively close match between the likely floorspace demand for the Illawarra, and the future supply in terms of current and planned retail floorspace. There is a substantial amount of development capacity in the existing zoned areas if required, with further increases in retail floorspace unnecessary. However, future zoning studies may want to consider how to encourage retail uses in areas where undersupply is projected under the high demand scenario (such as Warrawong); while undertaking ongoing assessments of the impact of a change in pace of trends such as online retail on the demand side.
Figtree has been highlighted as a centre where there may be some constraints in terms of meeting demand; however, real estate agents anticipate that increased competition in and around Wollongong mean its role is likely to change to that of a neighbourhood centre in future.
Review of Illawarra retail centres ii
TABLE 1. SUMMARY OF FLOORSPAC E DEMAND ESTIMATIONS (SQUARE METRES), 203 1 Centre Demand forecasted – 2031 Current plus Level of over/under Centre capacity planned supply if high Lower range Higher range floorspace demand Albion Park* 28,000 m² 38,000 m² 37,000 m² -1,000 m² 38,422 m² Corrimal 26,000 m² 35,000 m² 28,000 m² -7,000 m² 45,222 m² Dapto 34,000 m² 46,000 m² 37,000 m² -9,000 m² 526,480 m² Fairy Meadow 34,000 m² 46,000 m² 35,000 m² -11,000 m² 67,312 m² Figtree 31,000 m² 41,000 m² 33,000 m² -8,000 m² 2,047 m² Gerringong 7,000 m² 9,000 m² 7,000 m² -2,000 m² 112,028 m² Helensburgh 7,000 m² 9,000 m² 7,000 m² -2,000 m² 57,834 m² Kemblawarra 57,000 m² 76,000 m² 58,000 m² -18,000 m² 48,642 m² Kiama 16,000 m² 22,000 m² 17,000 m² -5,000 m² 231,552 m² Nowra 53,000 m² 72,000 m² 57,000 m² -15,000 m² 644,094 m² Oaks Flat 6,000 m² 8,000 m² 6,000 m² -2,000 m² 46,339 m² Shellharbour City Centre 60,000 m² 81,000 m² 100,000 m² 19,000 m² 328,802 m² Shellharbour Village 5,000 m² 6,000 m² 5,000 m² -1,000 m² 47,866 m² South Nowra 20,000 m² 27,000 m² 20,000 m² -7,000 m² 113,412 m² Thirroul 10,000 m² 14,000 m² 11,000 m² -3,000 m² 55,173 m² Ulladulla 36,000 m² 48,000 m² 38,000 m² -10,000 m² 297,067 m² Unanderra 15,000 m² 20,000 m² 16,000 m² -4,000 m² 85,090 m² Warilla Grove 23,000 m² 32,000 m² 25,000 m² -7,000 m² 84,106 m² Warrawong 51,000 m² 69,000 m² 56,000 m² -13,000 m² 427,185 m² Wollongong 73,000 m² 98,000 m² 95,000 m² -3,000 m² 516,048 m² Woonona 17,000 m² 23,000 m² 18,000 m² -5,000 m² 88,823 m² Total 609,000 m² 820,000 m² 722,000 m² -114,000 m² 3,863,044 m² *Albion Park Rail (including its strips) and Central Business Park at Oak Flats have been added Source: Cordell Connect, 2013; Shellharbour City Council, 2006; Shellharbour City Council, 2008; Shellharbour City Council, 2011; and Australand, 2013; and SGS Economics and Planning calculations
Implications
Across the Illawarra, our modelling has showed that there is sufficient current and planned floorspace to accommodate the anticipated levels of demand for retail floorspace if using the lower range demand estimates, and mostly low levels of undersupply in the test case of higher demand, which when considering floorspace alone, could be accommodated given capacity in each centre. In general, then, it would not be recommended to encourage further increases above the current and planned supply of floorspace. The DP&E might want to consider how retail proposals currently in the early planning or assessment stages align with these results, which might throw a different light on the economic impact assessments supporting proposals for additional retail in centres estimated as being oversupplied with retail floorspace in future.
There are implications for retail centres from the region’s employment market, with the relatively high unemployment rate lowering affected households’ incomes and dampening their retail expenditure, and likely to impact on consumer confidence more generally. Also, there is a relatively high proportion of workers commuting to Sydney – a sixth of the workforce – and many of them will do some shopping near work, for example for clothes in their lunch breaks or groceries before heading home. Since the retail modelling is based on local resident populations, a net outflow of these residents for work may imply a small overestimate in the projected floorspace requirements, and it should be kept in mind that further reductions in the Illawarra’s employment self-containment rate could affect local retail centres. The DP&E should keep an eye on any changes to employment in the region that could affect retail demand in future and factor these into future plans, noting that the recent Illawarra Discussion Paper has already acknowledged the need to increase the number of local jobs by 2031.
According to local real estate agents, competition in the local retail market is likely to increase in coming years with the addition of retail floorspace in Stockland Shellharbour and GPT development in West Keira. These will change the market in the Illawarra, strengthening the attraction of the two largest centres of Wollongong and Shellharbour City Centre, and potentially affecting the viability of developments in smaller centres such as Figtree and their future role in the retail hierarchy. These large malls may also provide a viable local alternative to Illawarra residents who
Review of Illawarra retail centres iii
might currently travel to Campbelltown, Miranda or Sydney CBD for shopping, and thereby reduce the amount of their expenditure escaping beyond the region.
On the demand side, residential growth is also likely to change the role of the existing centres, for example with greenfield development at West Dapto anticipated to strengthen Dapto centre. Tourism provides an additional source of retail expenditure for the region (estimated by SGS at over $640 million per year), with the majority flowing to Shoalhaven and Wollongong (47% and 37% of total visitor expenditure respectively). A change in visitor numbers, average expenditure, or destinations could impact on the retail hierarchy in the region.
Availability of land for bulky goods developments could become an issue in future, with current estimated floorspace for this retail type in the region of around 112,000 square metres and expected demand in 2031 for an additional 17,000 square metres. Estate agents contacted during consultation suggested there may be a general perception of a lack of appropriately zoned land for bulky goods.
It is important to resist increasing pressure for these uses to locate on out-of-centre industrial land, to avoid major and significant inconsistencies with the DP&E’s centres policy and to send a strong message on the importance of in centre retailing. The NSW Government’s Right Place for Business and Service Policy document (Department of Urban Affairs and Planning, 2001) clearly prescribed that when it is not realistic for bulky goods outlets to be in centres, they should be located in one or two regional clusters and existing clusters should be reinforced. This reduces trip generation, adds to customer choice and can improve the ‘pulling power’ of these businesses. Having defined bulky goods precincts benefits both businesses and customers.
SGS modelling shows that significant retail capacity exists in current zoned land, and so theoretically it should be possible to locate new bulky goods developments in these areas. However, there may be few, if any, suitable sites that address the specific needs of this form of retail, namely large and flat sites with good transport connections. The DP&E should consider a land audit and strategic assessment to identify suitable sites for bulky goods retail, which would provide guidance for developers, a position for the DP&E when responding to proposals, and limit costly challenges in relation to development on land not zoned for retail uses. Criteria such as transport access, site size and characteristics, potential for amalgamation, and supply of existing retail floorspace in this category in particular locations should be considered. This might show a need to zone a new bulky goods cluster (which would have implications for planning of major infrastructure).
More broadly, there are significant changes affecting the retail market across Australia, such as growth in online retailing and demand for out of centre developments. The effects of a continuation of these trends on demand for retail floorspace has been captured in SGS modelling, but if the pace of change accelerates or there are new trends emerging in the industry, it would be prudent to undertake further retail modelling to understand how this will affect the market, and the associated implications for the DP&E’s planning of retail centres. Local councils should be encouraged to promote town centre patronage and retail development where possible to limit the potential adverse effects of trends in the sector. For example, they might examine parking provision and costs and the impact on visitation, encourage development of markets, invest in public domain works to improve centre streetscapes, and consider the potential to provide rates concessions to new businesses.
Review of Illawarra retail centres iv
1 INTRODUCTION
1.1 Introduction
SGS was commissioned by the Department of Planning and Environment (DP&E) to conduct a review of the retail centres in the Illawarra region. This included determining trends and drivers in the commercial market, identifying capacity and supply blockages, and projecting future requirements for zoned land.
1.2 Strategy and policy review
Illawarra Regional Strategy The Illawarra Regional Strategy was prepared by the then Department of Planning in 2007, and includes the three local government areas (LGAs) of Wollongong, Shellharbour and Kiama.
The Strategy established a centre hierarchy for the region (refer to Table 2 and Figure 1) and identifies a number of strategies for accommodating population and employment growth within the region to 2031. The focus is on concentrating growth within these centres.
TABLE 2. ILLAWARRA REGION C ENTRE HIERARCHY Centre type Locations
Regional City Wollongong Major Regional Centres Warrawong, Shellharbour City Centre and Dapto (emerging) Major Towns Kiama, Corrimal, Figtree, Warilla, Albion Park, Unanderra (emerging) and Fairy Meadow (emerging) Towns Examples include: Helensburgh, Thirroul, Woonona, Shell Cove and Gerringong Villages Examples include: Coledale, Bulli, Keiraville, Mt Kembla, Shellharbour and Jamberoo Source: Adapted from Department of Planning, 2007
Subsequently, the Illawarra region has been expanded to include Shoalhaven LGA.
Review of Illawarra retail centres 1
FIGURE 1. ILLAWARRA REGION STRUCTURE PLAN
Source: Department of Planning, 2007
Review of Illawarra retail centres 2
Economic development and employment growth
In terms of economic development, the Strategy identifies that the major sectors of employment in the Illawarra region include:
manufacturing retail education health and community services education construction.
The Strategy notes the potential for employment growth in centres, and the importance of focusing this growth in the commercial centres consistent with their role in the commercial centres hierarchy. These centres need to be linked by transport corridors to ensure support of their respective roles and functions.
Growth of port operations is anticipated as an important source of employment and activity for support areas, such as finance and retail – many of which will be located in centres. Major employment and retail opportunities will continue to be provided in Wollongong, developing its status as an internationally competitive regional city.
The Strategy is based on a base figure of 100,765 jobs in the Illawarra region in 2006, with expected growth of 30,000 new jobs by 2031. These jobs are expected to accommodate growth in employment to support population growth, reduced unemployment and a reduction in the proportion of Illawarra residents commuting to Sydney. To accommodate this target, the Strategy indicated that 270 hectares of land was to be secured and protected.
The key employment lands within the Illawarra region include:
Wollongong CBD Port Kembla University of Wollongong Illawarra regional Airport Kembla Grange Shellharbour City Centre Kiama Town Centre Tallawarra.
Employment capacity has been identified for Wollongong city centre of 10,000 new jobs alongside 8,400 jobs within Kembla Grange and West Dapto. Urban land releases are expected to include commercial, retail and industrial uses.
Illawarra Discussion Paper In August 2013, the then Department of Planning and Infrastructure released the Illawarra Discussion Paper which will inform the development of a new Illawarra Regional Growth Plan. The paper provides a number of updated targets, trends and strategies for the Illawarra region. The Discussion Paper is for a twenty year timeframe, to 2031.
The paper provides a snapshot of the Illawarra region, as at 2011. Notable points are that:
between 2006 and 2011, the population of the Illawarra grew from 277,980 to 288,100 people there are currently 136,000 people employed with the Illawarra region 17% of workers from the Illawarra region commute to Sydney for work the average unemployment rate in the Illawarra region is 2% greater than the average for NSW a minimum of 24,250 additional jobs will be required over the next 20 years to ‘increase local employment, respond to unemployment challenges and respond to population growth’ (DP&I 2013) there are 1,104 hectares of vacant industrial land in the region.
Local Government strategies A number of local government strategies have been considered throughout this study and include the following:
The Wollongong Retail Centres Study was undertaken by Hill PDA in 2004 to identify the current and potential retail centres hierarchy in Wollongong LGA.
Review of Illawarra retail centres 3
The Wollongong City Economic Development study was undertaken by Buchan in 2005 with a focus on identifying opportunities for industry expansion and encouraging investment in Wollongong CBD. The Wollongong LGA Economic Development study was undertaken by Buchan in 2006 with a focus on identifying opportunities for industry expansion and encouraging investment in Wollongong LGA. The Wollongong Economic Development Strategy 2013-2023 was undertaken in 2013 by the Council’s Economic Development Advisory Board comprising councillors and industry representatives to identify priorities, goals and actions for Council in supporting economic activity. The Wollongong Employment Lands Study was undertaken by Hill PDA in 2006 to analyse the existing supply of commercial and industrial lands in the LGA, to identify land use planning options to deal with any land capacity issues, and to promote future employment generating land uses in the region. The Shellharbour retail and commercial centres study was undertaken by Hill PDA in 2008 to recommend a retail and commercial centres hierarchy which would inform strategic and statutory planning in Shellharbour LGA. The Shellharbour Employment Lands Study was prepared by Hill PDA in 2009 to provide a vision for the sustainable management and development of employment lands in Shellharbour LGA. Shellharbour LGA Employment Land Forecasts – Demand/ Supply Analyses was developed by Shellharbour Council in 2009 to make conclusions and recommendations on the adequacy of forecast future employment lands for workers living in Shellharbour in 2031, based on a preferred and conservative methodology. The Kiama Retail Study was undertaken by Hill PDA in 2007 to assess the extent and type of latent and forecast retail demand generated by Kiama. Town Centre studies for Warrawong, Figtree and Unanderra, prepared and exhibited by Wollongong City Council in 2013.
Review of Illawarra retail centres 4
2 RETAIL AT A GLANCE
2.1 Regional drivers of growth and change
The retail sector has been experiencing significant shifts over the past few decades; perhaps more than any other industry aside from manufacturing. These changes include the expansion and predominance of regional and super- regional centres with entertainment functions, numerous full-line supermarkets and department and discount- department stores. Additional trends have included:
deregulation of shopping hours development of larger supermarkets and discount supermarkets demand for out-of-centre retailing premises, particularly for bulky goods increased diversification and stand-alone centres discount department stores needs for convenience shopping increased popularity of electronic retailing.
Deregulation of shopping hours
The deregulation of shopping hours, particularly the increase in retailing hours of supermarkets, has changed the ‘where’ and ‘when’ of consumer shopping habits. Consumer demand has drifted towards the weekend and smaller neighbourhood centres have diminished in importance. The hierarchal distinction between centres has been blurred as supermarkets trading in major centres now compete against traditional convenience stores in local centres. Deregulated trading hours provide benefits for consumers, including greater convenience and product choice, greater competition between retailers (potentially leading to lower retail prices), and higher retail employment.
Development of larger supermarkets and discount supermarkets
The development of larger supermarkets has been a trend occurring alongside the deregulation of shopping hours. This has contributed to the decline of local ‘corner’ stores, which are often unable to compete with larger supermarkets that may offer considerably lower prices for consumers. Discount supermarkets including Aldi and Bi- Lo have been introduced in centres of all sizes to supply price-conscious consumers with additional options; as a result, competition for retail expenditure has increased.
Demand for out-of-centre retailing premises, particularly for bulky goods
Out-of-centre retailing continues to impact on existing retail centres and industrial uses. In particular, bulky goods retailing within industrial precincts can place upwards pressure on rents and reduce the area’s viability for traditional uses. Additionally, industrial land users often prefer to be located in an area which has an ‘industrial image’, and increased traffic volumes stemming from bulky goods retail customers might affect access and efficiencies of industrial businesses. The location of retailers in out of centre locations also has the potential to undermine nearby centres.
From a strategic land use perspective, bulky goods retail should be located in or adjacent to centres to support the existing retail hierarchy and minimise trip generation. The NSW Government’s Right Place for Business and Service Policy document (Department of Urban Affairs and Planning, 2001) clearly prescribes that when it is not realistic for bulky goods outlets to be in centres, they should be located in one or two regional clusters and existing clusters should be reinforced. This reduces trip generation, adds to customer choice and can improve the ‘pulling power’ of these businesses. As such, having defined bulky goods precincts benefits both businesses and customers.
In the Illawarra region, estate agents mentioned concerns in relation to the availability of land for bulky goods developments. Currently, the existing bulky goods developments are concentrated around King Street in Warrawong (in Wollongong LGA), although generally there is limited development occurring, potentially due to a shortage of appropriate land. Real estate agents suggested Kembla Grange as a potential location for bulky goods, although
Review of Illawarra retail centres 5
were most likely influenced by an application from DFO to locate in this area, which for a range of reasons was not supported by the Department of Planning and Environment.
Increased diversification and stand-alone centres
Retail centres are increasingly diversifying through the continued development of stand-alone centres, including large indoor shopping centres such as Westfield shopping centres covering in excess of 70,000 square metres. These stand-alone centres incorporate food, entertainment, clothing retailing, large supermarkets and department stores, and in some cases have become destinations through offering community facilities such as child care centres and libraries.
Discount department stores
Factory outlet and discount department store retailing is now considered a ‘true’ and permanent part of the retail landscape. Already a huge success in the US and UK, factory outlet retailing in Australia is now ranked as the fastest growing retail format (ACRS, 2008). The factory outlet concept was traditionally utilised to clear surplus stock and faulty goods at heavily discounted prices, essentially achieved through eliminating the middle man (the retailer) and therefore enabling the manufacturer to pass on savings to the consumer.
Many major factory outlets are located on federally-owned airport land (there are 22 federal airports in Australia). This has led to competing retailers objecting over lax zoning restrictions, given that this land is regulated under the Commonwealth Airports Act 1996 and therefore is exempt from state/territory and local government zoning laws. Once a factory outlet development has been established in this space, it can charge tenants reduced rental rates, again savings that can be passed onto the customer via discounted merchandise.
The battle between the factory outlet and the shopping centre has led to court action over zoning permits. For instance, Westfield lodged several appeals against DFO developer, Austexx, and in 2004 the group successfully contributed to the closure of the Orange Grove centre in south west Sydney. Despite continual opposition from traditional retail developers, expansion of the factory outlet format is not likely to cease.
Need for convenience shopping
The development of convenience shopping has been an emerging retail trend. Convenience stores provide a stocking service for consumers who make frequent trips and purchases of small amounts of food items. This service is particularly provided by petrol stations, which offer a limited range of groceries and are often co-located with fast food chains such as McDonalds.
Increased popularity of electronic retailing
Online shopping in Australia is becoming more prominent. The increasing penetration of the internet into everyday lives, first via computers and more recently via mobile phones and tablets, has propelled the growth of this industry. Increasing internet accessibility and broadband speeds are likely to further contribute to this trend.
The Productivity Commission’s report, Economic Structure and Performance of the Australian Retail Industry (Productivity Commission, 2011, p. 73) suggested that domestic and overseas online sales accounted for 6% of total retail spending in Australia in 2010. Although this represents a small portion of total retail sales, growth in retail spending has been strong since 2004 (Figure 2), having tripled from $40 billion in 2004-05 to $143 billion in 2009-10, and growing at twice the rate of conventional retail. Comparatively, online sales in the United Kingdom account for between 5% and 8% of retail sales (of which 23% is through mobile devices), while in the United States they account for between 9% and 11%.
Review of Illawarra retail centres 6
FIGURE 2. VALUE OF INTERNET CO MMERCE IN AUSTRALIA, 2003-04 TO 2009-10
Source: Productivity Commission, 2011.
The majority of online retail sales in Australia are for books, music, DVDs, clothing, sporting goods, electrical and electronic goods and cosmetics. Online retailing is a significant threat to stores that sell these goods. It has been estimated that over half of the retail industry in Australia could be regarded as trade exposed, but smaller and non- perishable items are more likely to be purchased online from overseas (Productivity Commission, 2011, p. 73).
The varying effects of the online retailing trend by commodity type are likely to have implications for land use in centres. In particular, there may be reduced demand for traditional retail space in town centres (such as for bookshops and department stores), and an increase in demand for land in light industrial areas to accommodate warehouses and logistics operations that support online retailing. This should be monitored over time and changes to policy made where required. Examples may include permitting greater flexibility in commercial areas to respond to changing land uses, facilitating and encouraging temporary uses such as ‘pop up’ shops, and potentially rezoning land in town centres to residential uses if there are significant and ongoing issues with vacant tenancies.
Increased competition from development in Wollongong
Alongside online retailing, existing shopping centre developments are also faced with increasing competition from new developments, which provides additional choice for consumers but may affect the role of particular centres in the retail hierarchy. For example, Stockland Shellharbour and the current GPT development at West Keira have created increased competition for the Westfield shopping centre developments in Warrawong and Figtree. These large high quality developments are also likely to provide a viable local alternative for residents who otherwise travel to Campbelltown, Miranda or Sydney CBD for retail choice, thereby reducing escape expenditure outside the Illawarra.
Role of infrastructure
Infrastructure plays a particularly important role in influencing the location of retail development, particularly public transport and major road infrastructure. Access to public transport or major road infrastructure is particularly important for retail developments and centres to succeed. Similarly, a lack of infrastructure has resulted in increasing costs for developers of shopping centres and bulky goods centres.
Local perceptions regarding the future economic environment
In terms of the future outlook for the Illawarra region, the existing trends and threats to retail centres are expected to continue. Online retailing will continue to threaten bricks and mortar retail; however, there is likely to be increased demand for industrial land to accommodate warehouses for the importing and exporting of goods.
High unemployment in the Illawarra region and, as a result, reduced spending, has been a constraint on the retail market and this is expected to continue to threaten retail unless the unemployment rate is reduced.
Review of Illawarra retail centres 7
The narrow supply of land available, which may be the case for bulky goods in particular, will continue to restrict development unless centres are identified and the appropriate land is zoned. With West Dapto expected to accommodate a large proportion of future residential development in the Illawarra region, the precinct has been identified through consultation with local real estate agents as a potentially significant location for the development of bulky goods sites nearby or surrounding the precinct.
The high costs associated with development are expected to continue to affect retail development in the Illawarra region, particularly within major centres.
2.2 Retail centres
Figure 3 illustrates the major centres within the Illawarra region. Currently these centres represent more than 90% of the Illawarra’s retail floorspace; more than 600,000 square metres3.
3 SGS Economics and Planning estimations based upon employment.
Review of Illawarra retail centres 8
FIGURE 3. MAIN RETAIL CENTRES WITHIN THE ILLAWARRA REGION
Sources: Kiama Municipal Council, 2007; NSW Department of Infrastructure Planning and Natural Resources, 2004; NSW Department of Planning, 2007; Shellharbour City Council, 2008; Wollongong City Council, 2004 and SGS Economics and Planning
Table 3 contains the centre hierarchy for the Illawarra region. The DP&E has not yet considered the position of centres in the Shoalhaven LGA in the hierarchy of the Illawarra. Based on the retail floorspace in Nowra and Ulladulla and these centres’ roles and functions in the newly delineated region (in particular, the services and
Review of Illawarra retail centres 9
facilities they accommodate to service their catchment areas), we have suggested in this analysis that Nowra be designated a Major Regional Centre, and Ulladulla a Major Town. This is consistent with their categorisation under the former South Coast hierarchy.
TABLE 3. MAJOR CENTRES WITH IN THE ILLAWARRA REGION Centre Centre type
Wollongong Regional City Dapto Major Regional Centre Shellharbour City Centre Major Regional Centre Warrawong Major Regional Centre Nowra Major Regional Centre (suggested) Albion Park Major Town Corrimal Major Town Fairy Meadow Major Town Figtree Major Town Kiama Major Town Unanderra Major Town Warilla Major Town Ulladulla Major Town (suggested) Gerringong Town Helensburgh Town Oak Flats Town Shellharbour Village Town Thirroul Town Woonona Town Sources: Kiama Municipal Council, 2007; NSW Department of Infrastructure Planning and Natural Resources, 2004; NSW Department of Planning, 2007; Shellharbour City Council, 2008; Wollongong City Council, 2004 and SGS Economics and Planning
2.3 Retail hierarchy
The Illawarra Regional Strategy: 2006-2031 (NSW Department of Planning, 2007) uses the following retail hierarchy:
Regional City Major Regional Centre Major Town Town Centre Neighbourhood Centre.
These are discussed in detail below. From a strategic perspective, the Department of Planning and Environment may want to consider downgrading Unanderra from Major Town status due to its changing role and function. No other changes to the existing hierarchy are currently considered appropriate for further investigation, although we have assumed that in the revised hierarchy for the newly defined Illawarra region (which includes Shoalhaven LGA), that Nowra is a Major Regional Centre and Ulladulla a Major Town. These rankings are in line with their previous status in the South Coast and befitting of the role and function they serve, and the retail floorspace each offers.
Regional Cities Regional Cities are a focal point where large, growing regions can access jobs, shopping, health, education, recreation and other services4.
Shellharbour’s role as a retail destination has been growing in recent years, with an increasing population, catchment area and employment as well as good retail and service provision. However, Wollongong remains the Illawarra’s only regional city, with major tertiary education and health facilities, strong public transport and infrastructure provision, and a key role in providing higher order business, civic, recreation, community and entertainment uses. As such, Wollongong will continue to be the main driver for economic growth and employment
4 NSW Department of Planning, 2009
Review of Illawarra retail centres 10
in the region. We believe the current status of both centres to be appropriate given their different roles and functions, with significant overlap only likely in the retail sector.
Wollongong Central is an indoor mall in Wollongong and contains a number of major tenants including Myer, David Jones, Rebel Sport and Best & Less. The total area of Wollongong Central is almost 40,000 square metres5. SGS estimates that the whole Regional City of Wollongong contains around 77,000 square metres of retail floorspace, which is an increase from the 68,700 square metres identified in 2007 (Leyshon Consulting, 2007).
Wollongong Central is currently undergoing major expansion with a new extension on West Kiera Street, which will provide an additional 80,000 square metres of gross floor area (including car parking and other non-retail uses)6, of which 18,000 square metres will be for retail uses7. The most recent available data shows turnover for Wollongong Central of $170.6 million8 between October 2011 and September 2012 (while partly under refurbishment). SGS has estimated a turnover for the entire centre of around $400 million in 20129, with major tenants outside Wollongong Central including Woolworths and ALDI.
The Innovation Campus (iC) is located close to Wollongong CBD and was developed in 2008 to provide a regional hub for knowledge-based industries, particularly those with linkages to the university. It provides commercial office space in addition to supporting retail and has a unique competitive offer that provides a strong economic benefit to the region. However, in practice it appears to attract not just research and development uses, but also general commercial uses that might otherwise locate in the Wollongong CBD (with the campus itself noting that ‘rent on iC’s commercial office space is also sharply competitive compared with other space available in Wollongong’10).
From a planning perspective, strategies and plans should support the iC without jeopardising the role and function of Wollongong CBD, recognising its status as the Illawarra’s regional city and importance in providing higher value employment opportunities and other uses. The Innovation Campus should be encouraged to take advantage of the opportunity to attract tenants in specialised fields that build on its proximity to the university and its research functions rather than commercial uses that could otherwise be located elsewhere.
Major Regional Centres A Major Regional Centre has a concentration of medium to higher density living, business, employment, professional services, department stores, specialised shops, associated warehouses, transport logistics and bulky goods operations. A Major Regional Centre is a focal point for subregional road and transport networks and servicing for a number of districts.
There are three Major Regional Centres within the Illawarra region, namely:
Dapto Shellharbour City Centre Warrawong (includes Kemblawarra).
Nowra is suggested for inclusion in this list as a Major Regional Centre.
The Illawarra Regional Strategy identified factors to revitalise and therefore consolidate Dapto as a Major Regional Centre, given residential growth in West Dapto and significant expansion of employment land at Kembla Grange in 2006 supporting its role. Expansion and redevelopment of the $60 million Dapto Mall was completed in 2007, and the centre now provides 23,000 square metres of retail floorspace including Woolworths, Coles and Big W as major tenants11.
5 Property Council of Australia, 2012 6 Cordell Connect, 2013 7 The Leading Light, GPT, viewed 14 January 2014 at
Review of Illawarra retail centres 11
Warrawong, which includes Kemblawarra bulky goods precinct, is an important commercial and retail centre. Kemblawarra has been gradually improved and expanded over the years with more businesses moving into the business park.
Shellharbour City Centre has grown rapidly over the last 30 years. It plays an important role servicing the southern part of the Illawarra region. Stockland Shellharbour, an indoor mall within the Shellharbour City Centre, is in the final stage of upgrading and has established a new city square and a plaza entrance. The extension will result in a significant increase from around 39,000 square metres in 2011 to 75,000 square metres. There is also an ALDI and retail strips along Holm Place and Lamerton Crescent, in addition to cinemas, a new civic hub, tavern and so on.
According to the Illawarra and South Coast Retail Centres Study14, Nowra has 48,000 square metres of retail floorspace. Around 30% of this floorspace is supermarkets, while discount department stores occupy around 21%. There are a considerable number of specialty stores occupying a total of 15,000 square metres. The study notes that retail in Nowra is generally performing well, particularly Nowra Mall which at the time of the investigation had the strongest RTD of any indoor centre in the Illawarra and South Coast region. The reported RTD in 2013 was $14,88415. There are opportunities for expansion due to growth in both the resident population and tourism. There is also a bulky goods centre four kilometres away at South Nowra with 20,000 square metres of floorspace.
Major Towns Major Towns are shaped by shopping and business centres that serve the district including warehouses, transport logistics and bulky goods, health and professional services mixed with medium density residential in the centre servicing surrounding areas16.
The Major Towns within the Illawarra are:
Albion Park Corrimal Fairy Meadow Figtree Kiama Unanderra Warilla (includes Warilla Grove).
We suggest that Ulladulla also be classified as a Major Town now that Shoalhaven LGA is part of the Illawarra region.
Albion Park is a centre whose urban footprint has been widely spread; comprising more than four kilometres. As such, this study separates the centre into:
Albion Park (corner of Tongarra Road and Terry street) Albion Park Rail (North part of the Princes Highway) Centre business (located in the corner of East West Link and Princes Highway and includes the strip part located at the south of the Princes Highway — See Figure 3)
Corrimal’s retail activities are concentrated in two enclosed shopping centres. The traditional retail strip along the railway line covers approximately 11,800 square metres. The total floorspace at Corrimal is nearly 30,000 square metres (Wollongong City Council, 2004). The reported Retail Turnover Density (RTD or turnover per square metre) was $13,251 for Stockland Corrimal, one of two enclosed shopping centres in the town (Shopping Centre News, 2013).
Fairy Meadow is located alongside of Princes Highway and is popular with tourists and surfers, due to its closeness to the beach. Estimated floorspace at Fairy Meadow is around 35,000 square metres, which includes the major new 13,000 square metre bulky goods development that recently opened at 91-97 Princes Highway. Another new development in the area is the ‘Ambience’ shopping precinct, comprising 5500 square metres of retail space (including a Coles) in addition to commercial and residential units17.
16 NSW Department of Planning, 2007 17 Illawarra Mercury, August 2013, at
Review of Illawarra retail centres 12
Figtree is located south-west of Wollongong and has a Westfield Shopping Centre, with an average turnover rate of $8,702 per square metre. This centre has a significant lower RTD compared to the Stockland Corrimal ($13,251)18.
According to the Kiama Retail Study19, Kiama has almost 25,000 square metres of retail floorspace. Around 27% of this floorspace is specialty non-food retail, including a high proportion of clothing stores, and 20% relates to food retail (cafe/restaurant/takeaway). The study highlights that this is due to the increasing popularity of Kiama as a tourist destination. The seaside town attracts more than 600,000 day-trip visitors every year and more than 260,000 overnight visitors (Destination NSW, 2012). For the purpose of the retail modelling, vacant, commercial and personal services floorspace was excluded.
According to the Illawarra and South Coast Retail Centres Study20, Ulladalla is a Major Town Centre located about 55 kilometres south of Nowra on the Princes Highway. Estimated floorspace is about 28,000 square metres, including supermarkets, discount department stores and specialties. The centre services a population of about 18,000 in the surrounding southern Shoalhaven LGA. There is some inflow of tourists particularly during school holiday and Easter periods but it was suggested in 2004 that retailers were not taking full advantage of these opportunities21.
Unanderra is an emerging Major Town Centre straddling the Princes Highway, around six kilometres south-west of Wollongong. It is one of the region’s smallest Major Towns with an estimated retail floorspace of around 15,000 square metres. The centre is anchored by a Woolworth supermarket. From a strategic perspective, there are signs pointing to a potential downgrading of the centre, including its proximity to Wollongong City Centre and Westfield Figtree, the limited opportunities for an increase in population in the town’s catchment area, and the relatively low level of retail floorspace provision (lower than the 20,000 to 40,000 square metres suggested as appropriate for a Major Town Centre in the Wollongong Development Control Plan 2009). However, this recommendation would need to be supported by local intelligence and an understanding of Council’s plans for the centre.
Warilla comprises an enclosed stand-alone box shopping centre (Warilla Grove) and an old retail strip. The retail turnover within the strip has been weakened since the completion of Warilla Grove and Stockland Shellharbour. For the purpose of this study, the old retail strip at Warilla and Warilla Grove are amalgamated, being located within the same travel zone as defined by the NSW Bureau of Transport Statistics (BTS).
Town Centres Typically, Towns Centres have small to medium concentrations of retail, health and other services, with lower density residential. The Illawarra region has the following Town Centres:
Gerringong Helensburgh Oak Flats Shellharbour Village Thirroul Ulladulla Woonona Shell Cove (planning stage).
In total, they contain an estimated retail floorspace of over 65,000 square metres, an average of around 13,000 square metres per centre (not including the planned development at Shell Cove). Most are anchored by a supermarket, with 34% of the retail floorspace in the Illawarra’s Town Centres designated to supermarket uses22.
Shell Cove is a greenfield development around one kilometre south of Shellharbour Village, expected to house 10,000 residents when fully developed. A master plan that considers around 6,000 to 7,000 square metres of commercial floorspace has been released23.
18 Shopping Centre News, 2013 19 HillPDA 2007, Kiama Retail Study 20 HillPDA 2004, Illawarra and South Coast Retail Centres Study 21 HillPDA 2004, Illawarra and South Coast Retail Centres Study 22 SGS Economics and Planning calculations 23 Australand, 2013
Review of Illawarra retail centres 13
Neighbourhood Centres Typically, Neighbourhood Centres provide retail and community facilities to meet the day-to-day shopping needs of the local population and workforce. Neighbourhood Centres across Australia have been confronted with steeper competition, and those in the Illawarra have not been an exception. Neighbourhood Centres have been excluded from the retail modelling (see more details in section 3).
2.4 Summary of floorspace supply within the Illawarra region
Method for estimating retail floorspace For all the aforementioned retail centres, the retail floorspace has been sourced from:
Shopping Centre News (2012 and 2013) Shopping Centre Council Database (2010) Cordell Connect Construction Database Illawarra and South Coast Retail Centres Study (2004) Various retail studies prepared for the relevant councils.
Where SGS was unable to source the floorspace from the above sources, retail employment figures from the ABS Census (Place of Work) and a series of floorspace per job benchmarks were used to estimate the amount of retail floorspace within that centre.
The ABS Place of Work data provides employment data by 4-digit ANZSIC industry at the Destination Zone (DNZ) level. Using the retail employment data within the relevant DNZs, the jobs by retail category in each centre have been estimated24.
The benchmarks used to convert jobs to floorspace are provided in the table below. These ratios have been developed by SGS, using land audit data from previous studies and employment figures from the 2011 Census.
TABLE 4. ASSUMED BENCH MARKS – FLOORSPACE PER JOB Retail categories Floorspace per job
Supermarkets & grocery stores 37.1 m² Other food 48.3 m² Hospitality & services 14.7 m² Clothing 37.6 m² Household goods 97.4 m² Other retail 47.9 m² Departments stores 118.0 m² Sources: Australian Bureau of Statistics, 2013;; and SGS Economics and Planning calculations
Table 5 shows the estimated retail floorspace by centre. By far, the largest centre is Warrawong with more than 110,000 square metres of retail floorspace (which includes Kemblawarra), followed by Wollongong Regional Centre and Shellharbour City Centre.
24 A concordance between the retail land-use category and 4-digit ANZSIC industries: http://www.abs.gov.au/AUSSTATS/[email protected]/Lookup/8501.0Explanatory%20Notes1May%202013?OpenDocument
Review of Illawarra retail centres 14
TABLE 5. ESTIMATED RETAIL FLOORSPACE BY CENTRE AND COMMODITY TYPE Centre Food Clothing Bulky goods Non-bulky Other retail Hospitality Total household goods Albion Park 4,792 m² 188 m² 0 m² 974 m² 2,395 m² 894 m² 9,243 m² Albion Park Rail 435 m² 0 m² 0 m² 4,576 m² 1,006 m² 630 m² 6,647 m² Central Business & Park Albion Park Tongarra 420 m² 237 m² 0 m² 11,595 m² 33 m² 1,250 m² 13,536 m² Corrimal 16,510 m² 2,333 m² 0 m² 2,933 m² 2,633 m² 3,432 m² 27,842 m² Dapto 10,637 m² 6,169 m² 0 m² 7,102 m² 9,249 m² 3,460 m² 36,617 m² Fairy Meadow 7,818 m² 1,392 m² 16,360 m² 2,269 m² 2,802 m² 4,783 m² 35,424 m² Figtree 8,781 m² 7,633 m² 0 m² 7,046 m² 7,761 m² 2,114 m² 33,335 m² Gerringong 3,003 m² 893 m² 0 m² 1,253 m² 996 m² 1,119 m² 7,265 m² Helensburgh 4,146 m² 671 m² 0 m² 671 m² 671 m² 942 m² 7,100 m² Kemblawarra 0 m² 1,092 m² 34,100 m² 16,253 m² 4,958 m² 1,397 m² 57,800 m² Kiama 4,704 m² 1,504 m² 0 m² 2,921 m² 4,551 m² 3,460 m² 17,139 m² Nowra 14,236 m² 3,000 m² 1,400 m² 7,190 m² 21,538 m² 9,837 m² 57,201 m² Oaks Flat 1,101 m² 293 m² 0 m² 2,764 m² 1,616 m² 435 m² 6,210 m² Shellharbour City Centre 15,111 m² 12,870 m² 16,500 m² 6,235 m² 7,734 m² 5,266 m² 63,716 m² Shellharbour Village 507 m² 1,278 m² 0 m² 375 m² 375 m² 2,340 m² 4,875 m² South Nowra 0 m² 0 m² 20,000 m² 0 m² 0 m² 0 m² 20,000 m² Thirroul 5,218 m² 1,046 m² 0 m² 1,046 m² 1,046 m² 2,350 m² 10,707 m² Ulladulla 6,100 m² 3,000 m² 0 m² 1,700 m² 17,200 m² 10,057 m² 38,057 m² Unanderra 4,469 m² 366 m² 0 m² 7,737 m² 1,812 m² 1,301 m² 15,686 m² Warilla Grove 16,103 m² 2,081 m² 1,870 m² 592 m² 2,204 m² 2,547 m² 25,398 m² Warrawong 16,054 m² 10,778 m² 11,600 m² 6,563 m² 10,690 m² 400 m² 56,084 m² Wollongong 7,716 m² 22,057 m² 10,300 m² 11,299 m² 18,583 m² 7,066 m² 77,022 m² Woonona 8,285 m² 1,131 m² 0 m² 1,322 m² 1,322 m² 5,525 m² 17,585 m² Total 156,146 m² 80,014 m² 112,130 m² 104,416 m² 121,177 m² 70,606 m² 644,489 m² Figures have been rounded; therefore, they may not add. Sources: Kiama Municipal Council, 2007; NSW Department of Infrastructure Planning and Natural Resources, 2004; Shellharbour City Council, 2008; Wollongong City Council, 2004; HillPDA, 2004; and SGS Economics and Planning calculations
Review of Illawarra retail centres 15
3 RETAIL MODELLING
3.1 SGS retail gravity model
The SGS Retail Gravity Model distributes the available retail expenditure using a gravity distributional mechanism. The model looks at the likelihood or propensity of a particular person to gravitate towards a retail centre within a defined retail system and estimates how much of a person’s household goods retail expenditure will be spent at a particular centre based on two opposing forces:
An attracting force – if all retail centres were at your doorstep, people will still have a preference to visit one centre over another. This is a result of the amount of floorspace (as shoppers tend to enjoy greater variety and choice), the quality of the retailers, the price, the supplementary businesses (for example cinemas, entertainment) and so on.
A detracting force – this is generally represented as how far away the centre is. Given the associated costs of travel (all other things equal between two centres) a shopper will try and shop at the closer centre.
These two forces determine the market pull of a particular centre which is then used to determine how much of each resident’s retail expenditure (that is, market share) will be spent at that particular centre. For a group of residents within the same Travel Zone (TZ), the market pull of a centre is calculated as follows:
As described above, the “attractiveness” measures of a wide range of factors that make a shopper prefer one centre over another. All these factors are captured in the actual current performance of the centre.
The market share, or per cent of expenditure that is likely to be spent at a particular centre, is then calculated as follows:
As opposed to making assumptions to try to directly calculate the relative “attractiveness” of each centre, the ‘attractiveness’ of a centre is determined within the model, using the estimated retail turnover as a basis and working backwards to find the ‘attractiveness’ value at the present time.
The model inputs and outputs, in the context of the current study, are summarised in Figure 4.
Review of Illawarra retail centres 16
FIGURE 4. MODEL INPUTS AND OUT PUTS
Retail expenditure
• Resident expenditure • BTS population forecasts • Per capita expenditure forecasts • Visitor expenditure
Market pull by centre Simulated retail environment Attracting force • Estimate market share and • Retail floorspace by type catchment area of each centre • Forecast future floorspace • ‘attractiveness’ factors Retail Gravity (estimated by the model) demand Model • Assess under/over-provision of Detracting force floorspace • Assess economic impact of • Car travel time matrix from TZ retail proposals to each centre
Retail turnover by centre
• Retail floorspace by type • Retail turnover per square metre
Source: SGS, 2013
Neighbourhood Centres have been excluded in the SGS Retail Gravity Model; moreover, it is assumed that Neighbourhood Centres capture 6.5% of the total retail expenditure. The SGS Retail Gravity Model includes only those centres previously listed in Table 3 on page 10 of this report.
3.2 Model inputs
Resident retail expenditure The Illawarra’s estimated resident population and expenditure per capita are taken into consideration to estimate the residents’ retail expenditure.
Population
Table 6 shows the estimated population for the Illawarra region by LGA from 2011 to 2031, based on DP&I’s 2010 Interim Population Projections, which was used by BTS to prepare their Small Area Population Forecasts. According to these forecasts, the resident population of the Illawarra is forecasted to grow at an Annual Average Growth Rate (AAGR) of 0.83% from 2011 to 2031. This is slower rate than the observed growth rate (1.1%) in NSW from 2006 to 201125.
TABLE 6. ILLAWARRA’S POPULATION BY LGA, 2011 -2031 Year Wollongong Shellharbour Kiama Shoalhaven Illawarra region
2011 205,600 68,600 21,000 99,173 394,373 2016 214,100 72,100 21,700 106,162 414,062 2021 222,200 74,500 22,800 112,829 432,329 2026 230,000 76,500 24,000 119,145 449,645 2031 236,800 78,800 24,800 124,960 465,360 AAGR (2011-2031) 0.71% 0.69% 0.83% 1.2% 0.83% Figures have been rounded; therefore, total figures may not add. Source: NSW Bureau of Transport Statistics, 2013; and SGS Economics and Planning calculations
25 Australian Bureau of Statistics, 2013; and SGS economics and Planning calculations
Review of Illawarra retail centres 17
It is worth noting that new population forecasts to 2041 were released by the Department o in 2014. The revised forecasts are unlikely to have a significant total impact on subsequent retail modelling for the Illawarra region as a whole, given that the difference between the two sets in 2031 is only about 15,000 people, or 3% (with no variations above this level in any given five year period). A comparison of the two forecasts in Table 7 shows that total retail demand is likely to be slightly lower than SGS estimates.
TABLE 7. UPDATED POPULATION PROJECTIONS 2011 2016 2021 2026 2031
2010 forecasts (a) Kiama 21,000 21,700 22,800 24,000 24,800 Shellharbour 68,600 72,100 74,500 76,500 78,800 Shoalhaven 99,200 106,200 112,800 119,100 125,000 Wollongong 205,600 214,100 222,200 230,000 236,800
Total 394,400 414,100 432,300 449,600 465,400
2014 forecasts (b) Kiama 20,800 22,000 23,150 24,300 25,450 Shellharbour 66,200 70,650 75,350 79,950 84,250 Shoalhaven 96,200 99,800 103,000 105,850 108,150 Wollongong 202,050 210,350 218,250 225,750 232,450
Total 385,250 402,800 419,750 435,850 450,300
Difference (b – a) Kiama -200 300 350 300 650 Shellharbour -2,400 -1,450 850 3,450 5,450 Shoalhaven -3,000 -6,400 -9,800 -13,250 -16,850 Wollongong -3,550 -3,750 -3,950 -4,250 -4,350
Total -9,150 -11,300 -12,550 -13,750 -15,100
Difference (%) Kiama -1% 1% 2% 1% 3% Shellharbour -4% -2% 1% 4% 6% Shoalhaven -3% -6% -10% -13% -16% Wollongong -2% -2% -2% -2% -2% Total -2% -3% -3% -3% -3% Source: SGS Economics and Planning, 2013
However, some of the forecasts for individual LGAs have changed. The total difference between the forecasts in 2031 for Kiama LGA is 3%, for Shellharbour, 6% (again, with some variation), for Wollongong, just 2%. For Shoalhaven, however, the total difference between the population forecasts is 16%.
Retail turnover per capita
The retail turnover per capita for NSW residents at constant prices (base 2012), which is assumed to be equal to retail expenditure per capita within our modelling, is calculated using the following data:
Consumer Price Indexes — ABS Catalogue Number 6401; Population Projections, Australia — ABS Catalogue Number 3222; Population by Age and Sex, Australian States and Territories — ABS Catalogue Number 3201; and Retail Turnover, State by Industry Subgroup — ABS Catalogue Number 8501.11.
Developing a projection based on an extrapolation of the retail turnover (or expenditure) per capita in NSW, the estimated total retail turnover per capita per annum in NSW at 2031 is almost $11,500; which represents a 10% increase from 2011, or an Average Annual Growth Rate (AAGR) of 0.48 per cent. Figure 5 plots the observed and forecasted turnover (or expenditure) per capita by commodity type, whilst Table 7 presents these figures in detail.
Review of Illawarra retail centres 18
FIGURE 5. NSW’S RETAIL TURNOVE R PER CAPITA BY COMMODITY TYPE, 1983 -2036
Source: Australian Bureau of Statistics, 2013; and SGS Economics & Planning calculations
TABLE 8. NSW’S RETAIL TURNOVER PER CAPITA BY CO MMODITY TYPE, 1986 -2036 Year Food Clothing Household Other Hospitality Department Total Goods & Services Stores
1986 $3,185 $557 $1,089 $1,360 $1,092 $1,367 $8,649 1991 $3,337 $584 $1,064 $1,469 $1,118 $1,021 $8,594 1996 $3,894 $658 $1,285 $1,468 $1,326 $982 $9,612 2001 $4,007 $693 $1,318 $1,516 $1,271 $991 $9,796 2006 $4,280 $802 $1,647 $1,387 $1,353 $964 $10,434 2011 $4,127 $829 $1,782 $1,456 $1,378 $804 $10,377 2016 $4,297 $851 $1,805 $1,464 $1,469 $771 $10,658 2021 $4,353 $866 $1,939 $1,470 $1,537 $755 $10,920 2026 $4,402 $878 $2,073 $1,475 $1,606 $741 $11,176 2031 $4,446 $890 $2,207 $1,480 $1,674 $729 $11,425 2036 $4,486 $900 $2,340 $1,484 $1,742 $718 $11,670 Source: Australian Bureau of Statistics, 2013; and SGS Economics & Planning calculations
Review of Illawarra retail centres 19
Resident income profile
Income profiles by travel zone, which have been estimated using ABS census data, are used to calculate the variation of the previously calculated retail turnover per capita (see Table 8). The following table compares the household income profile of the Illawarra region with the Australian and NSW average.
TABLE 9. PROPORTION OF HOUSEH OLDS IN EACH WEEKLY INCOME BRACKET, 2011 Low income Second income Third income Fourth income Upper income
$0 - $599 $699 - $999 $1,000 - $1,499 $1,500-$2,499 > $2,500 Australia 23% 18% 17% 22% 21% NSW 24% 18% 16% 21% 21% Illawarra 30% 20% 16% 20% 15% Source: Australian Bureau of Statistics, 2011; Australian Bureau of Statistics, 2013; and SGS Economics and Planning calcualtions
It can be inferred from Table 9 that the income distribution of NSW households is similar to the observed distribution across Australia. However, the Illawarra region has a significantly different income distribution. In fact, the Illawarra region has a higher proportion of households in the low-income range; consequently, a lower proportion of wealthy households is presented. As a result, it is expected that the Illawarra region will have a lower retail turnover per capita than NSW or Australia as a whole.
Calculated retail turnover per capita – Illawarra region
The Illawarra region has a different retail turnover per capita than NSW as a whole. This step calculates the turnover’s variation of each travel zone within the Illawarra region against the NSW average. Resident’s income profiles and the National Household Expenditure Survey26 have been used to derive the Illawarra’s turnover per capita by travel zone.
SGS calculated the expenditure variation within the Household Expenditure Survey by retail type between Australia, NSW and the Illawarra region, which has been applied to the state retail forecast to derive local level projections.
Table 10 summarises the estimated turnover per capita for the Illawarra region in 2011 and compares it to the observed turnover per capita in NSW and Australia as a whole. As a result of a lower proportion of wealthy households in the region, the Illawarra has a lower retail turnover per capita ($9,622) than NSW ($10,377) and Australia ($10,980).
TABLE 10. RETAIL TURNOVER PER CAPITA 2011 – AUSTRALIA, NSW AND ILLAWARRA Area Food Clothing Household Other Hospitality & Total goods services
Australia $4,365 $1,105 $2,197 $1,869 $1,444 $10,980 NSW $4,127 $1,097 $2,050 $1,724 $1,378 $10,377 Illawarra $ 3,917 $ 988 $ 1,890 $ 1,585 $ 1,241 $ 9,622 Real Dollars, Base 2012 Source: Australian Bureau of Statistics, 2011; Australian Bureau of Statistics, 2013; and SGS Eocnomics and Plannig calcualtions
Total retail expenditure forecasts
Table 11 shows the projected retail expenditure (or turnover) by retail category in the Illawarra from 2011 to 2031. In the absence of finer grain data, it is assumed that the average expenditure patterns for NSW (estimated using the 2009/10 ABS Household Expenditure Survey) apply to the Illawarra. This suggests that around 57% of household goods expenditure is apportioned to retail bulky goods, based on the share of household goods expenditure on the following commodities:
Furniture and floor coverings Household appliances (it is assumed that 80% of household appliances expenditure is spent at bulky goods retailers)
26 Australian Bureau of Statistics, 2011
Review of Illawarra retail centres 20
Tools and other household durables27.
It can be inferred that the Illawarra’s total expenditure will increase from $3.7 billion to $4.9 billion, representing a 27% growth. Expenditure in household goods (AAGR 1.73%) and hospitality & services (AAGR 1.82%) have the highest estimated AAGR, which is a result of the forecasted growth of the turnover per capita (see Figure 5).
TABLE 11. RESIDENTIAL RETAIL E XPENDITURE BY COMMOD ITY TYPE IN THE ILLAWARRA – REAL DOLLARS (MILLIO NS), BASE 2012 Year Food Clothing Bulky goods Non-bulky Other retail Hospitality Total household & services goods 2011 $1,536 $386 $317 $422 $619 $484 $3,764 2016 $1,679 $409 $335 $446 $650 $542 $4,061 2021 $1,777 $431 $372 $494 $679 $592 $4,344 2026 $1,869 $451 $410 $544 $706 $643 $4,624 2031 $1,954 $470 $448 $595 $731 $694 $4,892 AAGR 1.21% 0.99% 1.73% 1.73% 0.83% 1.82% 1.32% Source: Australian Bureau of Statistics, 2013; and SGS Economics & Planning calculations
Market share by Neighbourhood Centres
SGS does not have accurate floorspace for local (or neighbourhood) centres, and as such, these centres are not taken into consideration within our retail model. Table 12 is based on the Australian Capital Territory (ACT) average market share, or capture, by the Local Centres (equivalent to Neighbourhood Centres in NSW) and commodity. It is acknowledged that there may be differences between the ACT and the Illawarra region, given socioeconomic differences in populations. However, the average population densities are similar, and the ACT figures are generally considered to be the best available. Consequently, it is assumed that the Neighbourhood Centres capture 6.5% of the total retail expenditure, which is equivalent to $245 million in 2011. This amount will be subtracted from the $3.7 billion previously calculated – see Table 11.
TABLE 12. MARKET SHARE BY NEIGHBOURHOOD CENTRES AN D COMMODITY TYPE, AUSTRALIAN CAPITAL T ERRITORY Food Hospitality Clothing Household Other retail & services goods
Local Centres 12.34% 8.85% 0.31% 0.02% 2.56% Source: ACT Government, 2013; and SGS Economics and Planning calculations
Visitor retail expenditures The Illawarra’s natural attractions are well supplemented by high-standard tourism services and facilities. The region provides a wide range of accommodation, restaurants, entertainment and conference facilities and the local governments of the region are continually seeking to encourage sustainable new developments28. It is therefore imperative to add visitor’s retail expenditure to the model; in fact, the Illawarra attracted more than $700 million from visitors in 201329.
Not all visitor expenditure ($705 million) is considered to be retail expenditure; for example, airfare tickets are not classified as retail. Therefore, SGS estimates of retail expenditure are based upon National Visitors Survey (NVS) and International Visitors Survey (IVS) both published by the Tourism Research Australia (TRA), as well as the LGAs profiles published by the Destination NSW but based upon TRA’s surveys. The estimated retail expenditure only includes ‘Food and Drinks’ and ‘Shopping’ categories, as described by TRA. Our estimation excludes expenditures in accommodation, transport, entertainment and tour packages. SGS estimates that the total retail expenditure within
27 However, this may be an underestimate of bulky goods expenditure, given that many ‘bulky goods’ retailers actually sell smaller items. For example, JB HiFi is often located in bulky goods centres but purchases from its stores would not be captured in any of these three categories. 28 IRIS Research, 2013 29 Destination NSW, 2013
Review of Illawarra retail centres 21
the Illawarra region is around $588 million. For future years, it is assumed that visitors’ expenditure will grow at an AAGR of 2.03%, which is the same rate of growth forecasted by TRA for Australia as a whole30.
SGS also estimates the likely distribution of the estimated retail expenditure across the different retail categories as described by the ABS31. Table 13 presents the results of those calculations. It shows that around $275 million (or 47%) of the visitor’s retail expenditure is located in Shoalhaven, $220 million (or 37%) is located in Wollongong, $71 million (or 12%) in Kiama and $22 million (or 4%) in Shellharbour.
TABLE 13. ESTIMATED VISITORS R ETAIL EXPENDITURE IN THE ILLAWARRA REGION, MILLION Area Food Clothes Household Other retail Hospitality & Total goods services
Kiama $ 2.57 $ 10.04 $ - $ 10.04 $ 48.79 $ 71.45
Shellharbour $ 0.80 $ 3.09 $ - $ 3.09 $ 15.18 $ 22.16
Shoalhaven $ 10.35 $ 33.97 $ - $ 33.97 $ 196.61 $ 274.90
Wollongong $ 7.46 $ 35.42 $ - $ 35.42 $ 141.68 $ 219.98
Illawarra $ 21.17 $ 82.52 $ - $ 82.52 $ 402.27 $ 588.49 Source: Destination NSW, 2012; Tourism Research Australia, 2013; and SGS Economic and Planning calcualtaions
In order to run our retail model, there is a need to distribute the estimated retail expenditure across travel zones within the LGA. For example, the estimated $71 million needs to be distributed across Kiama’s travel zones; therefore, the retail expenditure has been distributed using the following ratio:
Persons working within the accommodation sector in the travel zone
Persons working within the accommodation sector in the LGA
This method may have some degree of error but this is expected to be minimal. For example, a tourist visiting family or friends that live at Kiama Downs is likely to visit Kiama’s tourism attractions, such as the blowhole. As such, visitors are more likely to spend their money around the blowhole, located at the fringe of the town centre, rather than the local shop at Kiama Downs. In fact, there is a larger concentration of persons employed in the accommodation sector around the Kiama town centre than Kiama Downs.
Once visitors’ expenditure has been calculated by travel zone, this will be added to the residents’ expenditure (excluding expenditure at Neighbourhood Centres) and it will be one of our main inputs to the model. Table 14 summarises these calculations; which estimates residents and visitors expenditures in the Illawarra’s main shopping centres, listed in Table 3.
30 Tourism Research Australia , 2013 31 Australian Bureau of Statistics (2013) Retail Turnover, State by Industry Subgroup, Original Series — Catalogue Number 8501.11
Review of Illawarra retail centres 22
TABLE 14. ILLAWARRA’S RETAIL E XPENDITURE IN MAIN CENTRES BY COMMODITY TYPE, MILLION REAL DOLLARS, BASE 2012 Year Food Clothing Household Bulky goods Other Retail Hospitality Total goods 2011 $1,370.4 $465.6 $317.4 $421.7 $684.7 $898.5 $4,158.2 2016 $1,498.8 $497.6 $335.3 $445.5 $722.7 $999.7 $4,499.5 2021 $1,586.8 $528.6 $371.9 $494.1 $760.3 $1,099.0 $4,840.9 2026 $1,671.0 $559.7 $409.7 $544.3 $797.7 $1,205.0 $5,187.4 2031 $1,748.7 $589.9 $447.7 $594.8 $833.4 $1,316.8 $5,531.4 AAGR 1.0% 1.0% 1.4% 1.4% 0.8% 1.5% 1.1% Source: Australian Bureau of Statistics, 2013Australian Bureau of Statistics, 2013; and SGS Economics & Planning calculations
Turnover by centre Retail Turnover Density (RTD) is a figure of turnover per unit area of floor space, expressed as dollars per square metre per annum (that is, $/m²). These figures can be used to compare the performance of a retail centre or to convert retail expenditure for food and non-food items into supportable floorspace.
To estimate the retail turnover by commodity type within each centre, we have applied a set of different Retail Turnover Densities (RTD) to estimated floorspace – section 2.4. For the purposes of this analysis, and since observed RTDs are not available for the Illawarra’s main centres, a range of RTD benchmarks have been applied; these have been calculated using the following sources:
Shopping Centre News Magazines, including 2013 Big Guns, 2012 Little Guns and 2012 Mini Guns Shopping Centre Council Database, 2010 Urbis Retail Averages Consumer Price Index (CPI).
Once the turnover by centre has been calculated by multiplying a centre’s RTD against floorspace, an adjustment to the estimated turnover has been made to match expenditures by visitors and residents (as shown in Table 14). Overall, the estimated turnover is around 10% more than the estimated expenditure by residents and visitors.
Table 15 shows the estimated turnover by centre and commodity that is the result of multiplying the floorspace by each centre’s RTD.
Review of Illawarra retail centres 23
TABLE 15. ESTIMATED TURNOVER FO R MAIN CENTRES AT IL LAWARRA IN 2011 (MIL LION) Centre Food Clothing Bulky goods Non-bulky Other retail Hospitality Total household & services goods Albion Park $36.1 $1.0 $0.0 $3.0 $15.2 $9.0 $64.4 Albion Park Rail $3.5 $0.0 $0.0 $12.8 $6.1 $7.7 $30.2 Central Business & Park $3.4 $1.4 $0.0 $32.5 $0.2 $15.2 $52.7 Albion Park Tongarra Corrimal $210.7 $22.3 $0.0 $15.9 $28.9 $59.8 $337.6 Dapto $100.6 $41.2 $0.0 $25.9 $54.3 $54.8 $276.8 Fairy Meadow $58.3 $7.7 $61.5 $7.1 $17.7 $48.1 $200.4 Figtree $74.9 $46.1 $0.0 $22.7 $38.3 $30.3 $212.4 Gerringong $22.8 $4.9 $0.0 $3.9 $6.3 $11.2 $49.2 Helensburgh $35.3 $3.9 $0.0 $1.9 $4.1 $11.5 $56.6 Kemblawarra $0.0 $6.0 $128.2 $50.9 $31.4 $14.0 $230.6 Kiama $42.2 $8.7 $0.0 $8.2 $27.8 $42.2 $129.0 Nowra $131.8 $17.3 $5.3 $20.1 $131.6 $119.9 $425.9 Oaks Flat $9.4 $1.9 $0.0 $7.9 $9.6 $5.3 $34.1 Shellharbour City Centre $126.7 $79.2 $62.1 $19.4 $36.8 $75.5 $399.6 Shellharbour Village $4.1 $7.4 $0.0 $1.0 $2.3 $28.5 $43.3 South Nowra $0.0 $0.0 $75.2 $0.0 $0.0 $0.0 $75.2 Thirroul $44.5 $6.0 $0.0 $2.9 $6.4 $28.6 $88.4 Ulladulla $48.5 $16.6 $0.0 $5.3 $108.9 $101.1 $280.4 Unanderra $34.2 $2.0 $0.0 $24.2 $11.5 $13.1 $85.0 Warilla Grove $144.5 $12.3 $7.0 $1.8 $12.1 $32.4 $210.0 Warrawong $97.2 $44.3 $43.6 $13.7 $36.5 $3.9 $239.2 Wollongong $65.8 $128.6 $38.7 $31.8 $91.1 $114.1 $470.1 Woonona $76.2 $6.8 $0.0 $4.4 $7.5 $72.2 $167.1 Total $1,370.4 $465.6 $421.7 $317.4 $684.7 $898.5 $4,158.2 Real Dollars, base 2012 Source: Shopping Centre News, 2013; Australian Bureau of Statistics, 2013; Australian Bureau of Statistics, 2014; and SGS Economics & Planning calculations
Table 16 shows the adjusted RTDs by centre in 2011, which can be derived from Table 5 and Table 15. It is important to note that each RTD varies by centre; for example, we have used much higher RTDs for Corrimal than for the centre at Fairy Meadow.
Review of Illawarra retail centres 24
TABLE 16. AVERAGE RETAIL TUR NOVER DENSITY BY CENTRE IN 2011 Centre Food Clothing Bulky goods Household Other Retail Hospitality Centre's goods average
Albion Park $7,541.5 $5,517.4 n.a. $3,129.0 $6,330.9 $10,055.5 $6,965.1 Albion Park Rail $8,148.7 n.a. n.a. $2,799.3 $6,109.3 $12,183.7 $4,540.2 Central Business & $8,148.7 $5,764.6 n.a. $2,799.3 $6,109.3 $12,183.7 $3,892.0 Park Albion Park Tongarra Corrimal $12,759.3 $9,560.3 n.a. $5,421.8 $10,970.0 $17,423.9 $12,123.9 Dapto $9,457.0 $6,673.0 n.a. $3,651.3 $5,876.4 $15,828.9 $7,559.6 Fairy Meadow $7,453.0 $5,517.4 $3,760.7 $3,129.0 $6,330.9 $10,055.5 $5,657.4 Figtree $8,529.3 $6,040.0 n.a. $3,226.6 $4,938.8 $14,341.6 $6,371.2 Gerringong $7,577.1 $5,517.4 n.a. $3,129.0 $6,330.9 $10,055.5 $6,767.1 Helensburgh $8,510.1 $5,764.6 n.a. $2,799.3 $6,109.3 $12,183.7 $7,971.6 Kemblawarra n.a. $5,517.4 $3,760.7 $3,129.0 $6,330.9 $10,055.5 $3,988.9 Kiama $8,962.3 $5,764.6 n.a. $2,799.3 $6,109.3 $12,183.7 $7,524.3 Nowra $9,258.5 $5,764.6 $3,760.7 $2,799.3 $6,109.3 $12,183.7 $7,446.1 Oaks Flat $8,515.6 $6,504.7 n.a. $2,852.8 $5,968.7 $12,183.7 $5,494.2 Shellharbour City $8,382.5 $6,154.7 $3,760.7 $3,108.9 $4,754.4 $14,341.6 $6,271.7 Centre Shellharbour Village $8,148.7 $5,764.6 n.a. $2,799.3 $6,109.3 $12,183.7 $8,892.1 South Nowra n.a. n.a. $3,760.7 n.a. n.a. n.a. $3,760.7 Thirroul $8,518.8 $5,764.6 n.a. $2,799.3 $6,109.3 $12,183.7 $8,259.9 Ulladulla $7,946.2 $5,517.4 n.a. $3,129.0 $6,330.9 $10,055.5 $7,367.0 Unanderra $7,653.4 $5,517.4 n.a. $3,129.0 $6,330.9 $10,055.5 $5,418.2 Warilla Grove $8,970.9 $5,899.3 $3,760.7 $2,973.9 $5,477.6 $12,722.9 $8,268.8 Warrawong $6,052.4 $4,111.0 $3,760.7 $2,094.8 $3,417.1 $9,688.2 $4,265.9 Wollongong $8,525.4 $5,830.2 $3,760.7 $2,813.0 $4,903.7 $16,149.9 $6,104.0 Woonona $9,194.8 $6,058.8 n.a. $3,322.2 $5,665.8 $13,070.9 $9,504.1 Illawarra's average $8,776.4 $5,818.6 $3,760.7 $3,039.8 $5,650.3 $12,725.0 $6,451.9 Real Dollars, base 2012 Retail Turnover Density (RTD) is a figure of turnover per unit area of floor space, expressed as dollars per square metre per annum (i.e. $/m²). Source: SGS estimates based on various published retail data, 2013
Travel time matrices The travel time matrix is sourced from the Bureau of Transport Statistics and has been used in the Gravity Model to determine the travel time from the travel zone where the local resident lives to the retail centres.
3.3 Future floorspace requirements
Having estimated the catchment of each of the selected retail centres, we were able to forecast the growth in the retail expenditure or ‘pool’ available by centre. The projected retail expenditure by commodity type has been used in conjunction with the indexed RTDs32 and current actual floorspace to arrive at estimates of retail floorspace demand by commodity type for the main centres in the Illawarra region.
The following chart shows the demand for retail floorspace (by commodity group) in the largest centres (listed in Table 3) for the period 2011 to 2031. It is estimated that the demand for hospitality and services floorspace would register the highest growth (20.1%), followed by bulky goods (13.5%).
32 It is assumed that the RTD in various centres would grow in 2012 dollars at a rate of 1% per annum.
Review of Illawarra retail centres 25
FIGURE 6. FUTURE DEMAND FOR FLOORSPACE BY COMMODIT Y – MAIN CENTRES
2011 2031 200,000 m²
180,000 m²
160,000 m²
140,000 m²
120,000 m²
100,000 m²
80,000 m² Retail Floorspace Retail 60,000 m²
40,000 m²
20,000 m²
0 m² Food Clothing Bulky goods Non-bulky Other Retail Hospitality Household Goods
Source: SGS Economics and Planning, Based upon the SGS Retail Model
In addition to forecasting demand by commodity group, we have forecast future demand for retail floorspace in the individual centres. Table 17 shows the retail floorspace forecast to 2031. It shows the demand for retail floorspace (main centres) in the Illawarra region increasing from around 644,000 square metres in 2011 to 705,000 square metres in 2031; a difference of around 60,000 square metres (a 9% increase).
Review of Illawarra retail centres 26
TABLE 17. FUTURE FLOORSPACE DEMAND FOR MAIN CENTRES, 2031 Centre Food Clothing Bulky goods Non-bulky Other retail Hospitality Total household & services goods Albion Park 4,985 m² 194 m² 0 m² 1,122 m² 2,378 m² 1,071 m² 9,763 m² Albion Park Rail 456 m² 0 m² 0 m² 5,310 m² 1,006 m² 758 m² 7,480 m² Central Business & Park Albion Park Tongarra 437 m² 245 m² 0 m² 13,414 m² 33 m² 1,498 m² 15,665 m² Corrimal 17,406 m² 2,421 m² 0 m² 3,394 m² 2,620 m² 4,129 m² 30,049 m² Dapto 11,128 m² 6,401 m² 0 m² 8,223 m² 9,225 m² 4,150 m² 39,404 m² Fairy Meadow 8,161 m² 1,436 m² 18,963 m² 2,607 m² 2,773 m² 5,736 m² 39,497 m² Figtree 9,202 m² 7,939 m² 0 m² 8,171 m² 7,752 m² 2,537 m² 35,703 m² Gerringong 3,109 m² 922 m² 0 m² 1,436 m² 990 m² 1,340 m² 7,815 m² Helensburgh 4,341 m² 696 m² 0 m² 776 m² 668 m² 1,130 m² 7,649 m² Kemblawarra 0 m² 1,133 m² 39,547 m² 18,856 m² 4,954 m² 1,677 m² 65,734 m² Kiama 4,886 m² 1,556 m² 0 m² 3,355 m² 4,530 m² 4,149 m² 18,656 m² Nowra 14,789 m² 3,068 m² 1,602 m² 8,243 m² 21,482 m² 11,797 m² 61,600 m² Oaks Flat 1,141 m² 302 m² 0 m² 3,173 m² 1,601 m² 520 m² 6,666 m² Shellharbour City Centre 15,750 m² 13,354 m² 19,036 m² 7,187 m² 7,709 m² 6,321 m² 69,430 m² Shellharbour Village 525 m² 1,318 m² 0 m² 430 m² 372 m² 2,804 m² 5,569 m² South Nowra 0 m² 0 m² 22,989 m² 0 m² 0 m² 0 m² 22,989 m² Thirroul 5,490 m² 1,081 m² 0 m² 1,202 m² 1,034 m² 2,829 m² 11,762 m² Ulladulla 6,318 m² 3,126 m² 0 m² 1,943 m² 17,212 m² 12,082 m² 41,264 m² Unanderra 4,657 m² 378 m² 0 m² 8,949 m² 1,795 m² 1,554 m² 17,111 m² Warilla Grove 16,830 m² 2,157 m² 2,162 m² 685 m² 2,196 m² 3,057 m² 27,187 m² Warrawong 16,747 m² 11,155 m² 13,387 m² 7,575 m² 10,618 m² 478 m² 59,622 m² Wollongong 8,100 m² 23,025 m² 11,936 m² 13,114 m² 18,621 m² 8,511 m² 84,181 m² Woonona 8,743 m² 1,176 m² 0 m² 1,527 m² 1,317 m² 6,668 m² 19,697 m² Total 163,199 m² 83,083 m² 129,622 m² 120,692 m² 120,888 m² 84,796 m² 704,495 m² Source: SGS Economics and Planning, Based upon the SGS Retail Model
3.4 Supply analysis
Planned floorspace Table 18 shows the planning estimated retail floorspace within the Illawarra region. It is worth noting that this additional floorspace may not actually eventuate. Moreover, some sources of information only state commercial floorspace, which is generally distributed between retail and non-retail activities (such as an accountant or dentist). As a result, a column has been added stating the assumption used.
Review of Illawarra retail centres 27
TABLE 18. RETAIL FLOORSPACE IN THE PIPELINE Centre Retail floorspace Notes/ sources
Wollongong 18,000 m² Extension of GPT Wollongong Central Shellharbour City Centre 36,000 m² Cordell Connect mentions an extension of Stockland Shellharbour of 36,000m² GLA. Shell Cove 6,000 m² Australand’s masterplan indicates 6,000 m² to 7000 m² of retail floorspace Albion Park Rail 8,000 m² Construction of a new Masters home improvement store, due for completion in late 2014. Corrimal - Construction of a new three storey shopping centre at Corrimal of 15,315 m² was due to commence in 2014 for completion in 2016, but as the approval has now lapsed, this has not been included in this analysis. Bulli N/a A DA for a new Woolworths has been approved, although modelling for this study does not extend to smaller centres such as this one. West Dapto 22,500 m² Two town centres have been proposed (Bong Bong Road and Darkes Road, with floorspace of 15,000 m² and 7,500 m² respectively) as well as some smaller neighbourhood centres; however, these have not been incorporated into the gap analysis at this stage. Total 90,500 m² Figures have been rounded; therefore, total figures may not add. Source: Cordell Connect, 2013; Shellharbour City Council, 2006; Shellharbour City Council, 2008; Shellharbour City Council, 2011; and Australand, 2013
Gap analysis Table 17 shows the estimated future demand for the main centres in 2031. A sensitivity analysis has been undertaken to estimate the upper and lower ranges of the estimated floorspace. The lower range assumes that RTDs will grow at an AAGR of 1.75%; whilst the upper range assumes a more modest rate of 0.25%.
Table 19 shows the summary of the demand range estimations and compares it to the sum of the estimated floorspace (Table 5) plus the planned floorspace (Table 18). Shellharbour City Centre is at risk of being oversupplied.
Overall, the modelling shows that there is a relatively close match between the likely floorspace demand for the Illawarra, and the future supply in terms of current and planned retail floorspace. As such, any further increases in retail floorspace are not necessary. However, future zoning studies may want to consider how to encourage retail uses in areas where undersupply is projected; while undertaking ongoing assessments of the impact of a change in pace of trends such as online retail on the demand side.
Although noting the balance between the future supply of retail floorspace and projected demand, it has been suggested by real estate agents that there are a limited number of suitable sites that can accommodate new bulky goods developments. This form of retail has specific needs, requiring large and flat sites with good transport connections and good visibility.
Capacity Retail floorspace capacity has been calculated for each commercial centre by estimating the maximum achievable floorspace within business zoned land, under current planning controls, and subtracting existing floorspace estimates as determined in the retail turnover section of the retail model.
Maximum achievable floorspace calculations are based on a floorspace ratio (FSR) value by lot (land parcel, which describe the maximum amount of floorspace permitted on a particular lot in terms of a ratio; floorspace to lot area). These FSRs form part of the LEP controls for the Illawarra region.
Not all lots have a specific FSR control assigned to them. To calculate an estimate of maximum floorspace permissible for lots with no FSR control, an average FSR was calculated by zone and applied to these lots. It should be noted that approximately one third of lots (34%) within the Illawarra region did not have an FSR controlling value. The vast majority of these (32%) were found within the Shoalhaven LGA boundary.
As the floorspace value calculated is at a maximum level, the resultant potential floorspace is a high estimate and does not consider that this maximum potential floorspace could be a dramatic uplift in commercial density. Further analysis would be required to take local market and feasibility issues into account.
Review of Illawarra retail centres 28
TABLE 19. SUMMARY OF FLOORSPAC E DEMAND ESTIMATIONS (SQUARE METRES), 203 1 Centre Demand forecasted – 2031 Current plus Level of over/under Centre capacity planned supply if high Lower range Higher range floorspace demand Albion Park* 28,000 m² 38,000 m² 37,000 m² -1,000 m² 38,422 m² Corrimal 26,000 m² 35,000 m² 28,000 m² -7,000 m² 45,222 m² Dapto 34,000 m² 46,000 m² 37,000 m² -9,000 m² 526,480 m² Fairy Meadow 34,000 m² 46,000 m² 35,000 m² -11,000 m² 67,312 m² Figtree 31,000 m² 41,000 m² 33,000 m² -8,000 m² 2,047 m² Gerringong 7,000 m² 9,000 m² 7,000 m² -2,000 m² 112,028 m² Helensburgh 7,000 m² 9,000 m² 7,000 m² -2,000 m² 57,834 m² Kemblawarra 57,000 m² 76,000 m² 58,000 m² -18,000 m² 48,642 m² Kiama 16,000 m² 22,000 m² 17,000 m² -5,000 m² 231,552 m² Nowra 53,000 m² 72,000 m² 57,000 m² -15,000 m² 644,094 m² Oaks Flat 6,000 m² 8,000 m² 6,000 m² -2,000 m² 46,339 m² Shellharbour City Centre 60,000 m² 81,000 m² 100,000 m² 19,000 m² 328,802 m² Shellharbour Village 5,000 m² 6,000 m² 5,000 m² -1,000 m² 47,866 m² South Nowra 20,000 m² 27,000 m² 20,000 m² -7,000 m² 113,412 m² Thirroul 10,000 m² 14,000 m² 11,000 m² -3,000 m² 55,173 m² Ulladulla 36,000 m² 48,000 m² 38,000 m² -10,000 m² 297,067 m² Unanderra 15,000 m² 20,000 m² 16,000 m² -4,000 m² 85,090 m² Warilla Grove 23,000 m² 32,000 m² 25,000 m² -7,000 m² 84,106 m² Warrawong 51,000 m² 69,000 m² 56,000 m² -13,000 m² 427,185 m² Wollongong 73,000 m² 98,000 m² 95,000 m² -3,000 m² 516,048 m² Woonona 17,000 m² 23,000 m² 18,000 m² -5,000 m² 88,823 m² Total 609,000 m² 820,000 m² 722,000 m² -114,000 m² 3,863,044 m² *Albion Park Rail (including its strips) and Central Business Park at Oak Flats have been added Source: Cordell Connect, 2013; Shellharbour City Council, 2006; Shellharbour City Council, 2008; Shellharbour City Council, 2011; and Australand, 2013; and SGS Economics and Planning calculations
3.5 Summary
SGS has used its retail model to examine the availability of retail floorspace given anticipated levels of demand. The model was used to project demand and supply for retail floorspace in the Illawarra region by centre to 2031. The results show that overall, a shortfall of 114,000 square metres of retail floorspace is anticipated in the Illawarra to 2031 if using the higher demand estimates as a test. In all but one centre (Figtree) there is sufficient capacity to easily accommodate the predicted undersupply. If using the lower range demand estimates, no undersupply is anticipated in any centre.
On the demand side, there may well be repercussions from a change in pace of the retail trends mentioned previously (the impact of online retailing on demand for retail floorspace, in particular), which could mean that actual demand estimates in future are lower than those anticipated above. On the supply side, there is a substantial amount of potential capacity in the existing zoned areas if required, and there may well be potential for increased efficiency in how retail businesses use space. Together, these suggest that there are unlikely to be supply issues for general retail space in the region. However, real estate agents have suggested that there may be specific issues relating to the supply of floorspace appropriate for bulky goods uses.
Figtree has been highlighted above as a centre where there may be some constraints in terms of meeting demand. However, consultation suggested that this is unlikely to be an issue, given that demand for floorspace has been declining in Figtree. Real estate agents anticipate that the centre will perform the role of a neighbourhood centre in future, rather than a major town (with Wollongong creating increased competition for centres around the periphery).
Further increases in retail floorspace in the Illawarra are not advised, given the retail analysis results that show a relatively close match between the likely demand in the Illawarra, and the future supply in terms of current and planned retail floorspace.
Shellharbour City Centre is at risk of been oversupplied with retail floorspace.
Review of Illawarra retail centres 29
REFERENCES
ACT Government. (2013). ACT Commercial and Industrial Floorspace - 2011.
Australand. (2013). Shell Cove, Masterplan.
Australian Bureau of Statistics. (2013). Census of Population and Housing: 2011, Tablebuilder.
Australian Bureau of Statistics. (2013). Consumer Price Indexes, Cat. No 6401.
Australian Bureau of Statistics. (2011). Household Expenditure Survey, Australia: Detailed Expenditure Items, 2009- 10, Cat No. 6530.0 .
Australian Bureau of Statistics. (2013). Population by Age and Sex, Australian States and Territories — Catalogue Number 3201.
Australian Bureau of Statistics. (2013). Population Projections, Australia — Cat No 3222.
Australian Bureau of Statistics. (2013). Retail Turnover, State by Industry Subgroup, Original Series — Catalogue Number 8501.11.
Cordell Connect. (2013). Database.
Department of Urban Affairs and Planning. (2001). Integrating Land Use and Transport – The Right Place for Business and Services Planning Policy.
Destination NSW. (2012). Travel to Kiama Local Government Area.
Destination NSW. (2012). Travel to Shellharbour Local Government Area.
Destination NSW. (2012). Travel to Wollongong Local Government Area.
Elmbridge Borough Council. (2006). Retail Study. http://www.elmbridge.gov.uk/planning/policy/RetailStudy.htm.
IRIS Research. (2013). Regional Profiles: The Illlawarra Region. http://www.iris.org.au.
Kiama Municipal Council. (2007). Kiama Retail study.
Leyshon Consulting. (2007). Economic Impact Assesment - Proposed Belmorgan Retail Project.
NSW Bureau of Transport Statistics. (2013). Small Area Population Forecasts.
NSW Department of Infrastructure Planning and Natural Resources. (2004). Illawarra and South Coast Retail Centres Study.
NSW Department of Planning. (2009). Draft Centres Policy: Planning for Retail and Commercial Development.
NSW Department of Planning. (2007). Illawarra regional Strategy: 2006-2031.
Productivity Commission. (2011). Economic Structure and Performance of the Australian Retail Industry, Report No. 56. Canberra.
Property Council of Australia. (2012). Shopping Centre Database.
Review of Illawarra retail centres 30
Shellharbour City Council. (2011). Draft Shellharbour LEP 2011. http://www.shellharbour.nsw.gov.au/LEP2011/FileData/PDF/DraftShellharbourLEP2011RetailBusinessEmploymentSt rategy.pdf.
Shellharbour City Council. (2006). Ordinary Concil Meeting - 28 November 2006. http://www.shellharbour.nsw.gov.au/FileData/pdf/11.2%2028%20Nov%2006.pdf.
Shellharbour City Council. (2008). Shellharbour Retail & Commercial Centres Study.
Shopping Centre News. (2013). Big Guns.
Shopping Centre News. (2013). Little Guns.
Shopping Centre News. (2013). Mini Guns.
Tourism Research Australia . (2013). Forecast 2013, Issue 1. http://www.tra.gov.au/publications/latest- forecasts.html.
Tourism Research Australia. (2013). International Visitors Survey.
Tourism Research Australia. (2013). National Visitors Survey.
Wollongong City Council (2013). Wollongong Economic Development Strategy 2013-23.
Wollongong City Council (2013). Warrawong Town Centre Study.
Wollongong City Council (2013). Figtree Town Centre Study.
Wollongong City Council (2013). Unanderra Town Centre Study.
Wollongong City Council. (2004). Wollongong Retail Centre Study.
Wood, S. S. (2012). Maintaining Town Centre Vitality in Competitive Environments: Pedestrian Movements.
Review of Illawarra retail centres 31
Contact us
CANBERRA Level 1, 55 Woolley Street Dickson ACT 2602 +61 2 6262 7603 [email protected]
HOBART Unit 2, 5 King Street Bellerive TAS 7018 +61 (0)439 941 934 [email protected]
MELBOURNE Level 5, 171 La Trobe Street Melbourne VIC 3000 +61 3 8616 0331 [email protected]
SYDNEY Suite 209, 50 Holt Street Surry Hills NSW 2010 +61 2 8307 0121 [email protected]
Review of Illawarra retail centres 32