Cautious optimism prevalent amongst shopping centres

Sales growth and increased customer traffic expected

Businesses looking to boost their sales this year may want to explore the option of taking out a lease in a shopping centre, with new statistics forecasting sales growth amongst retail tenants amid strengthened consumer sentiment.

According to real estate services company Jones Lang LaSalle, 53 per cent of retail centre managers expected to see growth in sales over the next 12 months, with nearly one in three indicating sales growth of up to three per cent.

Signs of "cautious optimism" were evident amongst centre managers, with one-quarter expecting to see growth between three and six per cent, while just under five per cent expected sales to rise by six per cent or more. Conversely, less than five per cent expect sales to decline by up to three per cent and less than 10 per cent expect sales shrink by three to six per cent.

When asked what factors were impacting their sales outlook in 2013, the majority indicated that planned refurbishment activity (24 per cent) and growth expectations within the trading area (29 per cent) would have a positive impact on future trading performance. On the flipside, 46 per cent indicated the economic outlook was an area of concern, although this was down three per cent from November, and 48 per cent considered online retailing to negatively impact business.

When looking back at the year that passed, the survey of 96 centre managers also found customer traffic grew, on average, by 2.8 per cent over the year to December 2012 with sub-regional centres growing their foot traffic at a higher rate than CBD shopping centres (largely a result of slowing growth in CBD employment). In addition to increased customer traffic, sales per customer also rose over the year to December 2012 to $36.70, up slightly from the previous year ($35.20).

Key trends highlighted by the Jones Lang LaSalle survey include:

  • Incentives are being offered by landlords to attract and retain tenants
  • Supermarkets and food retailers are the most active retailers looking to expand operations
  • Post-Christmas retail discounting  will likely begin prior to Christmas
  • Customer traffic is improving
  • Long-standing tenants are struggling to meet rent obligations, many for the first time in their retail life, with utilities and statutory charges highlighted as the main concerns

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