Retail Property Management

BENV2986 Property & Asset Management

CMP

Shopping Centre facts

At June 2013, 1,267 shopping centres in Australia which
exceeded 1,000 m2 of lettable area.
91 regional shopping centres
313 sub-regional centres
840 neighbour or super-market based shopping centres.

Generate $133.8 billion in retail sales in 2012/13 which was

equivalent to 8.6% of Australias GDP.
Shopping centres sales comprised 51% of total retail sales in
Australia
Employ 6.7% of total workforce (10.7% in retailing).
(Sources : Shopping Centre Council of Australia)
2

CMP

1
1

Types of Retail Property

City Centre
Neighbourhood (or Convenience) Centre
Sub-regional (or Community) Centre
Regional shopping Centre
Major Regional Centre
Super Regional Centre

CMP

City Centre
Definition:
Retail premises within an arcade or mall development
owned by one company, firm or person and promoted as an
entity within a major Central Business District.
Total gross lettable area retail (GLA) exceeds 1,000m2.
Key features:

Dominated by specialty shops

Likely to have frontage on a mall or major CBD road

Generally do not include supermarkets

Often co-exists with large department store

CMP

2
2

Neighbourhood Centre
Definition:
A local shopping centre comprising a supermarket and
approximately 35 specialty shops.
Total GLA will typically be less than 10,000m2.
Key features:
typically located in residential areas;
service immediate residential neighbourhood;
usually have extended trading hours; and
cater for basic day-to-day retail needs.

CMP

Sub Regional Centre

Definition:
A medium-sized shopping centre typically incorporating
at least one full line discount department store, a major
supermarket and approximately 40 or more specialty
shops.
Total GLA will typically range between 10,000 and
30,000m2.
Key features:
provide a broad range of sub regional retail needs; and
typically dominated by a full line DDS or major
supermarket

CMP

3
3

Regional Centre
Definition:

A shopping centre typically incorporates one full line department store, a

full line discount department store, one or more supermarkets and
approximately 100 specialty shops.
Total GLA ranges between 30,000 and 50,000m2.
In some instances, all other characteristics being equal, a centre with two full
line discount department stores, without a department store, serves as a
regional centre.

Key features:
*

extensive coverage of a broad range of retail needs (including specialised

retail), however, not as exhaustive as major regional centers;
* contains a combination of full line department stores, full line discount
department stores, supermarkets, banks, chain and other specialty retailers

CMP

Major Regional Centre

Definition:

A major shopping centre typically incorporating at least one full line

department store, one or more full line discount department stores, one or
more supermarkets and approximately 150 specialty shops.
Total GLA ranges between 50,000 and 85,000m2.

Key features:

one-stop shopping for all needs;

extensive coverage of the full range of retail needs (including specialised
retail), containing a combination of full line department stores, full line DDS,
supermarkets, services, chain and other specialty retailers;
typically includes a number of entertainment and leisure attractions such as
cinemas, arcade games and soft play centers; and
provides a broad range of shopper facilities (car parking, food court) and
amenities (rest rooms, seating).
caters for basic day-to-day retail needs

CMP

4
4

Super Regional Centre

Definition:

A major shopping centre typically incorporating two full line department

stores, one or more full line discount department stores, two supermarkets and
approximately 250 specialty shops.
Total gross lettable area retail exceeds 85,000m2.

Key features:

One-stop shopping for all needs;

Comprehensive coverage of the full range of retail needs (including
specialised retail) - combination of full line department stores, full line DDS,
supermarkets, services, chain Super Regional Centre
typically includes a number of entertainment and leisure attractions such as
cinemas, arcade games and soft play centers; and
provides a broad range of shopper facilities (car parking, food court) and
amenities (rest rooms, seating)
Often co-exists with large department stores

CMP

Size of Various Components of Shopping Centre

Major Department Store
18,000 ~ 20,000 m2

Discount Department Store

About 7,000 m2

Supermarket
1,200 ~ 2,800 m2

Specialty Shop
About 100 ~ 150 m2

CMP

5
5

Retail Property Hierarchy

COMPOSITION
Super Regional

Major Regional

Regional

Sub-Regional

Neighbourhood

2 - Major Department
1(2) - Discount Department
2 - Supermarket
250 - Specialty Shops
1(2) - Major Department
1(2) - Discount Department
1(2) - Supermarket
150 - Specialty Shops
1 - Major Department
1 - Discount Department
1(2) - Supermarket
100 - Specialty Shops
1(2) - Discount Department
1 - Supermarket
40 - Specialty Shops
1 - Supermarket
35 - Specialty Shops

PARKING BUILDING
AREA
3,500+
cars

85,000 M2

2,000~
50,000~
3,500 cars 85,000 M2

1,200~
30,000~
2,000 cars 50,000 M2

400~
10,000~
1,200 cars 30,000 M2

~400 cars

Less than
10,000 M2

CMP

CMP

6
6

Ranking of Shopping Centres by Annual Turnover

(June 2013)

1. Chadstone Shopping Centre, Malvern East VIC: $1.415bil

(167,588m2 GLA)
2. Westfield Bondi Junction, NSW: $1.025bil (127,736m2 GLA)
3. Westfield Sydney, NSW: $950.2mil (167,911m2 GLA)
4. Westfield Fountain Gate, Narre Warren, VIC: $918.2mil
(177,755m2 GLA)
5.Westfield Carindale, QLD: $913.6mil (136,373m2 GLA)
13

CMP

Ranking of Shopping Centres by Size

1. Chadstone Shopping Centre, Malvern East Victoria: 190,000sqm
2. Westfield Fountain Gate, Narre Warren, Vic: 177,715 sqm
3. Westfield Sydney, NSW: 167,911 sqm
4. Westfield, Chermside, QLD: 150,733 sqm
5. Knox City Shopping Centre, Wantirna South, Vic : 142,244sqm
6.Westfield Parramatta, NSW: 137,183 sqm
7.Westfield Carindale, QLD: 136,373 sqm
8.Westfield Marion, Oaklands Park, SA: 133,778sqm
9.Westfield Southland, Cheltenham, Vic: 129,180 sqm
10. Westfield Bondi Junction, NSW: 127,736 sqm
11. Warringah Mall, Brookvale, NSW: 125,372 sqm
12. Robina Town Centre, Robina, QLD: 125,000 sqm

14

CMP

7
7

Five Largest Shopping Centre Owners by GLA

(June 2013)

1. Scentre Group: 2,497,726 m2 GLA

2. Federation Centres: 2,106,550 m2 GLA
3. Stockland: 920,793 m2 GLA
4. QIC: 884,104 m2 GLA
5.GPT: 795,458 m2 GLA

15

CMP

CMP

8
8

Shopping Centre Management

Consideration
Consumer confidence in the region
Prospect of catchment areas
Management intensive
Regular capital improvement required

CMP

Who works in Shopping Centre Management

Owners such as Westfield (Scentre Group), Stockland, Lendlease,
AMP plus high net worth individuals and property companies
Centre Managers on behalf of owners or external agents
Operations
Marketing managers
Leasing agents
Admin support
Customer service
Security
Cleaners
Contractors

18

CMP

9
9

A Standard Retail Business

15 - 30%: Cost of goods
(eg: stock/ingredients/packaging etc)
20 - 40%: Wage Costs
5 - 10%: Incidentals
(eg: advertising, accounts, uniforms etc)
10 - 20%: Occupancy Costs
(eg: rent, outgoings etc)

CMP

Design of Shopping Centre

Parking

Specialty Shops

Anchor
Tenant

Master plan for a continuous program (system) of expansion,

upgrading, and refurbishment

CMP

10
10

Retail Property Leasing

Initial letting.
The best possible tenancy MIX.

Factors affecting tenant selection.

Types of retail demand.
Overall marketing theme.
Experience.
Only experienced and existing retailers with proven operation
records need to apply.

Subsequent reletting and negotiation.

CMP

Retail Shop Lease

Base rent
Percentage of turnover rent
Recovery of outgoings
Marketing levy
Sale of a business or assignment

CMP

11
11

Percentage Rent
Assumption:

Base rent:
Percentage gross sale:
Gross sale (previous year):
Following year sale:

$20,500.
6%
$560,000.
$595,600.

CMP

Percentage Rent Calculation

Estimated turnover rent based on previous year
Gross sale x 6% - Base rent
= $560,000 x 6% - $20,500
= $33,600 - $20,500 = $13,100

Month turnover rent in advance

$13,100 / 12 months
= $1,091.67 say $1,090

The following year turnover rent

Gross sale x 6% - Base rent
= $595,000 x 6% - $20,500
= $35,736 - $20,500 = $15,236

Balance due
Deduct the turnover rent already paid
= $15,236 - $1,090 x 12
= $15,236 - $13,800 = $2,156

CMP

12
12

Other Clauses peculiar to Shopping Centre Lease

Permitted use.
Shopping centre rules.
Conducting of business.
Merchandising display.
Insurance.
Promotional activities.

CMP

Retail Leases Act (1994)

Retail Shop
The Act does not apply to retail shops that have a lettable area of
1,000 m2 or more.
Retail Shopping Centre
At least 5 of retail shops that are all owned by the same lessor.
Key Money or Goodwill
A lessor can not ask for any payment or benefit in connection with the
granting, renewal, extension or assignment of a retail shop lease.
Recovery of outgoings
A lessor must provide the lessee with an annual estimate of outgoings
at least 1 month before the start of the period.

CMP

13
13

Retail Leases Act (1994)

Term of a Retail Shop Lease
Minimum term of 5 years including options (3 years plus 2 option).
Registering a Retail Shop Lease
Registration of retail shop lease for terms of more than 3 years.
Rent review
No ratchet clause.
No whichever of two or more method gives the higher results.

CMP

Promotional Management
Shopping centre management differs in promotional
management.
Determine the aim of the campaign and budget
available.
A committee with representatives from the tenants and
owner administers promotional fund.

Key areas:
Tenancy mix and retaining customers.
Gauging promotional campaign results (cost benefit analysis).

CMP

14
14

Market Profile

Demographics of population in trade area

Occupations
Industry of Employment
Family characteristics

Competitor Analysis
Centres within 5 - 10 km radius
Impact
GLAR (gross lettable area retail)
Sales MAT (moving annual total)
Traffic MAT
29

CMP

Marketing Plan
Overview
Location details of centre
Aims of marketing plan e.g. to increase the centers profile within
the community along with increasing sales and traffic.
Marketing Objective
Measurable financial goals and objectives have been established
to be achieved by 30 June 2015:
Increase total comparable sales to $51,797,767 MAT comprising:
$44,550,577 Majors Sales ($11,405 psqm; benchmark is $10,872 psqm)
$7,247,190 Specialty Sales

Increase total MAT foot traffic by 4%

30

CMP

15
15

Forms of Promotion
Letter box drop.
Immediate vicinity of the centre.

Local press.
Professional preparation.

Radio.
For a particular campaign.

Television.
Most expensive, major campaign, opening.

CMP

Special Promotion
Aim.
Generate attendance.

Discounting, competition and other generating

activities.
Refurbishment and annual campaign.

CMP

16
16

Types of Refurbishment
A marketing and business development exercise aimed at
generating additional rental income from the property.

Renovating.

(Interior design)

Revitalising.

(Theme)

Improving.

(Space planning)

Re-positioning.

(Competitive positioning)

CMP

Types of Refurbishment
A.

Competitive
Positioning

B. Space
Planning

D. Interior
Design

C. Theme

Repositioning
Improving
Revitalising
Renovating

Total Retail Concept Market Driven

Maintenance Driven

CMP

17
17

Readings
The State of NSW (2005) NSW Retail Tenants Guide,
Department of State and Regional Development
Preston Rowe Paterson (PRP) (2011) Property Market
Report Sydney Retail Market.
Dubai Luxury Mega Mall (https://www.youtube.co
m/watch?v=JAI7tveh02w)

CMP

18
18