It’s not looking good for the future of the humble shopping mall, as coronavirus hastens the closure of stores inside centres around the country.
New figures from JLL show the national vacancy rate in shopping malls rose to an average of 5.1 per cent in June, after sitting at 3.8 per cent just six months earlier.
In CBD shopping malls, the reality is grimmer still, with more than one in every 10 stores sitting empty.
Conversely, May saw a record spike in retail spending; as restrictions were eased and Aussies hit the stores again, spending rose 16.3 per cent.
This was a clear anomaly though.
The mall sector was already under strain before coronavirus hit, with the introduction of Amazon in Australia three years ago impacting fortunes. A new Amazon storage and shipping plant the size of Taronga Zoo planned for Western Sydney might proved the final nail.
In addition, the JLL survey didn’t include stores that temporarily shut during the restriction period, many of which may be forced into permanent closure in mere months, once stimulus payments are ceased.
“We remain cautious about the outlook for discretionary retail as stimulus measures roll off later in the year, which is likely to contribute to an upward trend in vacancy rates,” said Andrew Quillfeldt, JLL’s senior director of retail research in Australia.
“The events throughout the past few months, which have led to many discretionary retailers planning to shrink their store network, will likely polarise the retail property sector even more.
“This is likely to drive divergence even further between the performance of prime and secondary quality shopping centres – a trend which has been occurring for some time already.”
Mr Quillfeldt notes the collapse of many specialty stores, and the downsizing of department stores and large discount centres, as “the biggest challenges for owners now”.
“We’re expecting to see an acceleration of the alternate-use conversion theme as owners look to extract value from retail assets, whether it’s a partial or full conversion.”