Stockland plans smaller, regional shopping centres to combat online threat

Stockland plans smaller, regional shopping centres to combat online threat
Stockland plans smaller, regional shopping centres to combat online threat

As we look to what's ahead for 2012, Property Observer is republishing some of our most noteworthy stories of 2011.

 

Property developer Stockland will invest close to half a billion dollars in new-style retail centres in regional areas designed to combat the threat of online shopping.

Rather than focus on metro areas, Stockland CEO Matthew Quinn says the company sees strong growth potential in regional areas such as Townsville, the Latrobe Valley and Gladstone.

“We are big fans of very good centres in regional cities. We understand these markets,” Quinn told Property Observer during the company’s annual results media briefing.

He highlighted its $100 million shopping centre in Rockhampton in Central Queensland, which has delivered significant value and has performed well above expectations.

“The quality was well above what consumers expected,” he says.

Stockland will build smaller shopping centres, as Quinn says a reduction in the amount of retail space per capita will act as a “natural shock absorber” to increasing online sales.

It forecasts retail space per capita to shrink from two square metres currently to 1.8 square metres by 2020.

Stockland says its retail centres will act as a social and community hub and are more resilient to market downturn and the online threat.

The focus will be on day-to-day value convenience and attracting people to the centres rather than just to the shops themselves.

Centres will feature a higher proportion of food, leisure, retail services and entertainment offerings.

Research by Stockland and Quantium shows that higher end of fashion is more exposed to online sales and the focus will be on securing tenants in the “value to mid-end” retailing range.

Stockland’s $330 million redevelopment of the Shellharbour centre in the Illawarra will include 220 speciality stores.

The reweighting in retail property will be funded partly by $308 million of apartment sales, and a further $73 million under contract.

Quinn says based on extensive research of retail activity in partnership with Quantium, Stockland expects the proportion of online sales to increase (currently about 5%) but the rise will not be as dramatic as some are forecasting.

Annual results for 2011 revealed that Stockland’s retail assets were the strongest performing of its commercial assets, delivering an 8% increase in net operating income of $286 million compared with a 5% drop income from its office portfolio ($183 million). Industrial properties delivered a 3% increase in income to $77 million.

Quinn says the development pipeline is flexible and can be put on hold should conditions deteriorate.

 

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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