Malls feeling the pinch

Johannesburg - In the year to end-March the trade density (turnover per square metre) of all shopping centres fell 12.5% on an annualised basis, the heaviest decline in five years and nine months.

This figure reflects the difficult retail environment in which retail sales, despite the lower interest rates since December 2008, fell in 11 of the past 13 months.

Erwin Rode, property valuer and economist at Rode & Associates, said it reflects an environment in which consumers are under severe pressure and the decline in turnover confirms the sense that there currently is a cyclical oversupply of retail space in the country.

In the latest retail property report from the South African Property Owners Association (SAPOA) it appears that all sorts of shopping centres, with the exception of the super regional malls (larger than 100 000m²), experienced a decline in turnover per square metre in the year to March.

Community centres (12 000m² to 25 000m²) suffered the most, and their turnover per square metre for the first three months of this year was 15.3% down on the comparable period last year. Rode said this confirms that smaller centres are worse off because they sell discretionary goods - purchases that people generally postpone buying in difficult times.

Super regional malls, on the other hand, showed a 6.2% positive annual growth in trading density to end-March.

Coronation property portfolio manager Anton de Goede said this reflects the defensive nature of these centres, which have a broad mixture of tenants making it possible for consumers to do comparative shopping.

He said that retailers selling essentials like food and clothing have been less affected by the current economic climate and this comes through in the figures from the large shopping centres which generally have all the national retailers as tenants, including the Edcon Group, the Foschini Group, Pick n Pay and Woolworths.

He said there are seven super regional malls in the country and they represent about 15% of the almost 17m square metres of shopping-centre space. The super regional malls include Canal Walk in Cape Town, Gateway in Umhlanga in KwaZulu-Natal, Sandton City and Mandela Square in Sandton, and Centurion Mall in Centurion.

He foresees that the super regional and regional shopping centres will continue to perform best.

As far as gross rentals are concerned, rentals in regional malls are the most expensive where, according to the report, the monthly average in March this year was R186/m². This is 12.3% up on an annual basis. In contrast the average monthly rental for community centres in March was R101/m² 9.8% up year on year.

-Sake24