This article is from the Australian Property Journal archive
THE first stage of Vicinity Centres and Perron group $460 million redevelopment of The Glen shopping centre in Melbourne’s south east, a marker of the efforts retail trusts are taking in the countdown to Amazon’s official entry to the Australian market.
Redevelopment construction on The Glen began in March 2017, with the first stage bringing an Aldi supermarket, the latest format Woolworths, a Coles supermarket, fresh food hall, 60 boutique food retailers and casual dining options, and specialty stores.
Stage two will see a “food gallery” open in 2018.Full completion is expected in early 2020 and expand the centre to around 78,000 sqm. Developer Golden Age will deliver a 500-apartment, three tower residential project above The Glen.
The shopping centre works are part of the $1.6 billion wave of mall redevelopment being undertaken by Australian retail trusts this financial year, according to Moody’s Investor Service.
That figure is led by Vicinity, as well as Scentre and Stockland, which combined account for around 80% of the figure at an average yield on cost of 7% to 7.2%.
It will also add an additional 250,000 sqm to Australia’s retail leasing portfolio, the equivalent of around 3% of Moody’s A-REIT retail space.
Moody’s said Amazon would increase competition in the Australian retail market and put pressure on traditional brick-and-mortar retailers’ market share over time.
Customer preferences have continued to shift from departments stores (DS), discount department stores (DDS) and apparel to food, services and leisure.
DS and DDS categories saw the biggest declines in moving annual turnover across Moody’s 13 rated A-REITs in FY17, at around 3.2% and 2.6% respectively.
“Specialty stores (with growth of 2.4%) and mini majors (5.8%) such as Sephora, H&M and Zara continue to gain traction. Supermarkets are holding up quite well, increasing MAT at around 2.1% as major tenants such as Wesfarmers Limited (A3 stable) and Woolworths Limited (Baa2 negative) scale down their discounting programs.
“A-REITs with large DS/DDS exposure, particularly Vicinity (11% total rent), Charter Hall Retail REIT (11%) and Scentre Group (10%), will likely face increasing pressure in terms of leasing demand.”
Swedish fashion house H&M opened its 23rd Australian store at Stockland Townsville yesterday, with the new single-level configuration of 2,500 sqm making it the label’s largest single-level store in Queensland.
Stockland owns the shopping centre alongside AMP Capital.
H&M will open at its Stockland Rockhampton centre on November 2nd, and will mark its debut in central Queensland and offer a similar type of space as the Townsville site.
Australian Property Journal
