Online shopping begins to impact on retail sales: Mirvac
Online retailing is set to increase resulting in retail sales facing difficulties, according to Mirvac’s latest report.
While retail sales are facing headwinds from lower wages growth and an increase in online retailing, quality urban-based centres with an attractive tenancy mix are expected to continue to perform well.
New South Wales continues to record above trend levels of economic growth, with a large infrastructure investment pipeline, low interest rates and a lower currency supporting a positive outlook.
With a 64 per cent exposure to Sydney, Mirvac is positioned well in this environment.
Retail Highlights:
- maintained high occupancy of 99.5 per cent 1 (99.7 per cent at 31 December 2016);
- solid comparable moving annual turnover sales growth of 3.5 per cent and comparable specialty sales growth of 3.6 per cent;
- achieved total sales productivity of $9,934 per square metre and remain on track to achieve a sales productivity target of $10,000 per square metre in FY17;
- increased comparable specialty sales productivity to $9,749 per square metre with specialty occupancy costs of 14.9 per cent;
- executed 69 leasing deals across approximately 17,500 square metres, with leasing spreads remaining positive. More than 250 lease deals have been executed in the retail portfolio in the nine months to 31 March 2017, representing approximately 36,600 square metres;
- Broadway Sydney, NSW ranked No.1 in the Shopping Centre News’ Big Guns Awards for annual turnover per square metre for the fifth consecutive year;
- East Village, Zetland, NSW ranked No.1 in the Shopping Centre News’ Little Guns Awards in its first year of entry;
- progressed with the $19 million Flinders Gallery development at Birkenhead Point, NSW. The 3,500 square metres of recon figured retail space is 95 per cent pre-leased and includes several premium international brands; and
- received development approval for a 6,800 square metre expansion at Kawana Shoppingworld, QLD, delivering cinemas and an expanded dining precinct. The project, which is expected to commence in FY18, is 85 per cent pre-leased 1. This follows the successful $85 million expansion completed in 2014, which saw sales increase 28 per cent in the 12 months post completion. Mirvac has also commenced a campaign to sell-down a 50 per cent interest in Kawana Shopping world, in line with the Group’s capital partnering strategy.
Ms Lloyd-Hurwitz commented last week that its focused urban retail strategy continued to support a solid performance during the quarter, with high occupancy and strong sales productivity maintained.
"We remain on track to achieve our FY17 targets as we continue to grow a resilient urban income stream and extract further value from our existing high quality assets.”