Perth shopping malls: ‘Arms race’ to give shoppers more choice than ever before

Aug 14th, 2017

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In the suburbs of Perth, a building revolution is underway on a scale reminiscent of the mining sector a decade ago.

If all projects proceed, the city will have 49 new or renovated shopping centres — completed or under construction — by 2020, at a cost of more than $5 billion.

Real estate agents say the size of developments in Karrinyup, Booragoon, Innaloo and elsewhere may never be repeated.

"It's been literally a generation that they've taken to grow to the size they are," Lease Equity managing director Jim Tsagalis said.

"We're going to see that jump in five years."

Historically low borrowing costs have made it more attractive for shopping centre owners to refurbish their properties, according to real estate agents.

Labour and materials are also cheaper than they were during the mining construction boom, and the population has grown significantly from pre-boom levels, increasing the number of potential customers.

But agents say changes to town planning rules are the main reason for the scale of development underway.

"The primary thing that's driving it is the change in legislation, which previously prohibited the development of shopping centres," Mr Tsagalis said.

"We're now in an 'activity centre' platform, which essentially lifts the lid and allows shopping centres to grow to [sizes] more akin to what the demographic or size of the catchment otherwise is."

A report by UBS shows each of the six "regional" shopping centres in Perth is either undergoing or due to commence an expansion in the next three years, with the exception of Lakeside Joondalup, which was redeveloped in 2014.

The investment bank describes it as an "arms race" between centres, which have been forced to redevelop or risk losing their status as activity hubs.

A spate of "sub-regional" centres will also redevelop, bringing the annual investment on shopping centre expansions to more than $1 billion until 2020, with about 45,000 jobs to be created, according to property analysis firm Y Research.

'Big focus on entertainment'

The refurbished centres will include new cinemas, food and beverage retailers and even medical services — a vastly different proposition to the "big box" design of the past.

Some say it heralds a return to "village life", with economic and social activity contained in one place.

"They're going to be outward-facing dining precincts, a lot of greenery, rooftop [spaces], cinemas," Mr Tsagalis said.
"Bearing in mind, we still don't have deregulation of trading hours, so that's another layer that we lag behind the eastern states."

Colliers International WA associate director of retail leasing Tim Scott said the centres would reflect changing consumer tastes.

"There's going to be a big focus on entertainment, a big focus on health care, a big focus on food," Mr Scott said.

'Practically impossible' to build at once

But there are some doubts as to whether all the expansions will proceed, at least according to their current timeframes.

"Properties that have been development-approved or properties that are being mooted for development won't necessarily be developed within what really is two-and-a-half years' time. It's practically impossible," Mr Tsagalis said.

Others point to the recent uptick in consumer confidence as evidence for the ability of the state's economy to absorb the new retail space.

"The population growth has slowed, but all forecasts are that it will continue to trend upwards," Mr Scott said.

"We still spend above [the] national average in terms of retail spend per person. I think there's still a strong market here.

"We think that the conditions are there, that the state [economy] is going to come back quite significantly."

Source: http://www.abc.net.au/news/2017-08-12/shopping-malls-booming-in-perth-despite-online-explosion/8798194?pfmredir=sm&sf1055883

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