Gugulethu Square of the Vukile Property Fund. Photo: Vukile Real Estate Fund
- Vukile Property Fund says retailers are looking to grow again.
- Others are looking to increase their footprint in rural malls, townships and value centers.
- Township, rural and convenience value centers have demonstrated resilience throughout the pandemic.
Vukile Property Fund declares for the first time in almost two years that retailers are excited to grow again. The owner of Gugulethu Square and Mdantsane Town Mall said he had just completed a road show with his major retailers.
“And really, pretty much without exception, each of them has aggressive expansion plans going forward. And all of that bodes very well for the retail industry,” Laurence Rapp said, CEO of Vukile.
Since there is no development of new malls going on – and Rapp believes there are enough malls and malls in South Africa anyway – existing owners are bracing for malls. more complete.
“If you have limited space and high demand, retailers need to start competing for space, and that should be positive for rental growth,” Rapp said.
It’s about being closer to the people
The demand for space is particularly pronounced in shopping centers located in municipalities and rural areas. The owners of small local centers in the suburbs are also lucky.
Rapp said that already in the last six months until September 30, Vukile had witnessed strong demand and commercial activity in its townships, rural areas and value centers. More and more retailers wanted to find space there.
As a result, the vacancy rate in rural shopping centers in Vukile declined to 1.9%, the lowest in four years. And value centers only have 1% of their empty space. Of all the shopping centers in Vukile, 13 are fully let and 21 have vacant premises of less than 1000 m2.
“We’re seeing pretty much overall demand from all of the retailers based on the roadshow we just had with them. They’re looking to grow, and especially in our asset types,” Rapp said. .
Rapp said looking at the recovery of Vukile tenants; it is clear that resilience lies in the proximity of the mall to the masses. It’s not so much about the catchment area’s income bracket. For example, most of the shoppers who visit these Vukile malls buy very small baskets. But they shop frequently.
“You just have to look at the number of people in South Africa, where they live, how they shop. That’s where the strength of that wallet shows,” Rapp said.
Throughout the pandemic, convenience stores, rural and urban shopping centers have shown greater resilience than their urban and super-regional counterparts.
However, in 2021, big malls like Sandton City started to rebound again.
But the early days of the lockdown appear to have shown retailers they need to be closer to people to hedge their bets if another economic crisis similar to the 2020s recurs.
However, Rapp said retailers looking to locate in rural and urban malls in Vukile are not necessarily closing operations in urban centers. Those who went out of business at centers like the East Rand Mall were primarily in the recreation and restaurant industries.
Thus, retailers who go to rural and township centers do so in addition to maintaining their presence in the East Rand Mall.
Almost all retail categories are returning to pre-pandemic levels
Vukile’s business in southern Africa is now trading ahead of pre-pandemic levels.
The group’s net operating income rose 3.7% on a like-for-like basis for the fiscal year ended September 30. The growth in the commercial density of tenants increased by 4.3%.
Vukile has tracked the performance of 13 different categories of retailers in its shopping centers. Six months ago, five of these categories were still in the red in terms of growth in trade density and turnover.
Now, 12 of the 13 categories are in positive territory. The only retail category that is still struggling is department stores, mostly because of Edgars and Game.
Retailers focused on furniture, art, antiques and home decor saw the strongest annual revenue growth at 8.8%, followed by food and drugstores.
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