With big box retailers closing down at some shopping centres across South Africa, landlords will have to be innovative in how they repurpose vacant space.
Here’s what could be done with vacant spaces:
- Vacant spaces are likely to be sub-divided into smaller spaces to be let to smaller tenants.
- Other large nationals, international retailers as well as well-established independent retailers have the opportunity to be located in prime locations where they previously may not have had a presence.
- More consideration could now be given to value offering retailers.
- Large vacant spaces could be repurposed into boutique type gyms, kids play areas, entertainment areas or food courts where these are currently lacking in existing centres.
- Temporary exhibition spaces could be created for interim additional income until a permanent solution for the repurposing of this space is achieved.
Some shopping centres across South Africa are feeling the pinch as big box retailers are closing down leaving vacancies which might prove difficult to fill for many.
However, these vacancies provide an opportunity for landlords to revitalise and improve a centre’s tenant-mix thereby giving the centre a new lease on life.
This can result in stabilised, long-term leasing and increased rentals are possible if large spaces are subdivided as smaller tenants in general pay higher rentals in comparison to tenants taking up big boxes, according to the Broll SA Retail Snapshot Q2: 2017. Click here to download the report.
Other large nationals, international retailers as well as well-established independent retailers now have the opportunity to be located in prime locations where they previously may not have had a presence. Vacant premises could also be used as temporary exhibition spaces to enable landlords to earn an income until a permanent solution for the repurposing of this space is achieved, according to the snapshot.
Retail Executives at Broll Property Group say the closing down of big box retailers at some shopping centres is a cause for concern as it confirms the current tough trading market.
“Landlords need to become more proactive, focusing on tenant retention and flexible lease scenarios as well as improved customer service to retain their customers and retailers drawing feet to the centres,” says Wilna Savio, Portfolio Executive at Broll Property Group.
She explains that a number of retailers are currently struggling and as management teams, they are spending more time discussing leasing strategies with regards to tenant-mixes and centre improvements. They are also looking at viable options for rent/space reduction, escalation rates and growth and are also exploring innovative leasing deals.
Following the restructuring of rental terms within some Broll managed shopping centres, reducing shop sizes to be more affordable, thereby improving trading densities, has given some struggling retailers breathing space. Savio says this then creates new opportunities to relook at good performing retailers and to include value-add stores for bargain shoppers during tough economic times.
Savio says a number of centres have increased the reach of their marketing campaigns through the use of social media platforms such as Facebook, Instagram and Twitter to engage with customers. Marketing is often neglected especially by smaller retailers such as the Moms and Pops. To this end, landlords have now identified various marketing campaigns such as digital online paid for advertisements to assist retailers in marketing their products and services thus creating awareness and making them more accessible to the general public.
“We actively engage with existing tenants to determine the cause of their poor performance, however, tenants also need to invest back into their businesses and improve their service offerings in addition to increasing staff training in order to meet the demands of savvy customers who are currently cautious about what they spend on,” she adds.