The so-called Retail Apocalypse is prompting a lot of people to think about how shopping malls and high streets can adjust to the shift toward e-commerce and away from bricks-and-mortar stores. The global head of property for AMP Capital Carmel Hourigan made some interesting comments, reported in the Australian last week, on the future of shopping centres, which my research assistant Ben Scott and I have quoted in our latest post on the Adept Economics website, Retail apocalypse in Australia? :
Not everyone is pessimistic about the retail sector. The Australian has reported that Carmel Hourigan, global head of property for AMP Capital, has highlighted the need for retail hubs to “keep evolving”. They can do this by becoming “social infrastructure-style businesses” and “community hubs rather than traditional shopping points”. While acknowledging high vacancy rates in many malls worldwide, Hourigan is convinced that shopping centres can endure the current downturn and take on new tenants such as health and education providers, which can expect growing consumer demand over the long-term.
Health and education are certainly growing sectors, and have been performing much better than retail trade, as revealed by ABS National Accounts data (see chart below). Health care and social assistance grew 7.2% in real terms through-the-year to June quarter, no doubt due in large part to the roll out of the NDIS. Education and training grew 2.0% while retail trade grew only 0.3%. Hourigan is right to identify the health and social assistance and education and training sectors as containing many potential tenants for shopping centres with rising vacancy rates.
For more on the Retail Apocalypse, see my post from last week:
My local big mall is Carindale. The high rents that were a part of these types of centres will have to be adjusted to keep tenants which means their asset values will fall. Beware REIT investors! Speciality shops will probably prosper as will the eating ares with a pub attached. It is very popular at Carindale. Not my cup of tea very often but it seems to be great for a lot of people. My son is a part-time barrister whilst being a student and works mornings at a “gourmet” coffee vendor 5 days a week including weekends. He is mostly rushed off his feet with business and the coffee is priced a little higher than elsewhere.
Yes, I think these places will continue to evolve into social gathering areas like the market square of old.
Great observations Russell. Many thanks