The average size of shopping centres has steadily increased since the 1990s, with centres slated for completion between this year and 2020 being significantly larger than those developed during the 1990s and 2000s, a study by Morgan Stanley Capital International (MSCI) Real Estate South Africa on behalf of the South African Council of Shopping Centres (SACSC) has found.
According to the SACSC, South Africa has the sixth most shopping centres in the world and despite slowing retail development, the South African retail market has expanded significantly over the past few decades. With shopping space increasing to 23,4-million square metres at the end of 2016 South Africa ranks as sub-Saharan Africa’s most saturated retail market, accounting for 88% of the available retail space in the region.
As of July this year, the South African retail development pipeline measures 1,9-million square metres across 68 centres, the bulk of which is planned for completion in 2018. Currently, there are also 17 shopping centres slated for completion in the remaining weeks of this year.
According to MSCI the trend towards larger centres may be explained by developers opting for larger formats in order to dominate its immediate catchment area and attract a higher proportion of national tenants, thus strengthening the centre’s position within its catchment area.
The data also indicates that proposed centres planned in the country’s city regions, local/niche towns and service towns are all now 100 per cent larger compared to those developed during the 2000’s. Another possible reason for the increase in mall size, including redevelopment of malls, may be globalisation. Globalisation has brought many international brands into the country that were once considered unattainable. This means that the store-within- a-store that stock these international brands will be rendered obsolete, thus creating the opportunity for expanded retail space.
Phil Barttram Executive Director MSCI said that there is a unique perspective of the link between retail space, economic activity and population density.
“MSCI’s latest research, based on SACSC’s shopping centre directory, provides a unique perspective of the linkage between expected retail mall space, economic activity and population densities. Given a highly competitive environment for malls in specific nodes, we believe that centre selection within the retail segments will become increasingly important. There are fundamental drivers of mall defensiveness and it will be the malls that best exploit these factors that will prove to be more resilient in the times ahead,” he added.
Retail supply in the small-town markets are still expecting double-digit growth for 2017 to 2020 compared to 2010 to 2016. The Mpumalanga, Limpopo and Eastern Cape provinces combined contribute 82 per cent of the overall retail pipeline in the small settlement-type markets.