Why community retail centres tick all the boxes

Posted On Thursday, 24 May 2018 14:14 Published by
Rate this item
(0 votes)

Recent tight economic times have seen certain big retail centres experience a reduction in rentals, turn-over and profits.

Denville-small

In certain cases, this has led to a subsequent loss of tenants, growing vacancies and further reductions in profits. However, many community retail centres have not experienced the same.

Sean Paul, Executive Director of Spire Property Management, who oversee many retail centres across South Africa, explains why this is so.

Convenience and location for shoppers
“Neighbourhood retail centres, and specifically those that sit firmly in the residential nodes, are very attractive from a convenience point of view. Consumers living in the nearby suburbs will frequent their local centre on an almost daily basis to purchase household goods and groceries, to enjoy a meal at their local restaurant or socialise over a cup of coffee, and make use of other services offered such as a laundromat or hair dresser.”

According to Paul, ease of access and more-often-than-not free parking are additional draw-cards held by these smaller centres which see customers returning frequently.

Attractive to tenants
“These smaller centres often do not struggle with vacant space as the larger centres do. The rentals in a small centre are far more affordable and these centres often operate on a gross rental structure rather than a turnover based structure. This is appealing to entrepreneurs and small business owners who can be daunted by the high costs associated with renting retail space in a large shopping centre, and also like the certainty of fixed rentals for budgeting purposes. Because of this, and also because shop sizes in general are smaller, these smaller retail centres hardly ever see vacancies, and tenant turnover is very small,” says Paul.

“Tenants within these centres are also usually from the surrounding community, meaning that they have an intrinsic understanding of what the market is wanting and needing.”

However, Paul does caution that the tenant mix in a community based retail centre needs to be well planned in order for that centre to flourish. “Shops and services need to be matched to the affluence levels and the needs of the surrounding neighbourhoods.”

Good investment option
All of this sees neighbourhood retail centres being a great investment opportunity for property buyers looking to add to their commercial portfolio. “These centres are also far more affordable, comparatively speaking, than the large shopping malls, which means private investors can afford them more easily. Added to this is the fact that monthly operating expenses and overheads are smaller than large retail centres.”

Last modified on Thursday, 24 May 2018 14:35

Most Popular

Growthpoint begins construction of the Kent residential apartments in KZN

Aug 26, 2021
Marius Els, Development Project Manager at Growthpoint Properties
Growthpoint Properties (JSE: GRT) has commenced the development of Kent, its first…

On Auction: Iconic Redevelopment Opportunity in Oranjezicht Cape Town

Aug 26, 2021
The_Lenox
Currently operating as a 43 room guesthouse / backpackers.

On Auction: Retail & Offices Property with unutilised bulk in Rivonia Johannesburg

Aug 26, 2021
KTM_Building
The anchor tenant is Road Adventure Dirt (Pty) Ltd (RAD) which is the premier KTM…

On Auction: Spacious offices with multiple amenities in Norwood

Aug 26, 2021
Default Image
Spacious offices with multiple amenities on Auction in Norwood.

On Auction: Commercial Historical Building in Cape Town

Aug 25, 2021
Cape Town Commercial Property for Sale - 3 Church Street
436sqm Commercial building comprising of retail and office space.

Please publish modules in offcanvas position.