12 Jul 2005 : Municipal authorities have been urged to strike a careful balance in ensuring retail facilities for their communities.

On the one hand, a  real risk to sustainability of retail developments is emerging in some centres, says Brent Wiltshire, retail property executive of Old Mutual Properties.

“The recent oversupply and dismal returns in the office market stemmed from ill-disciplined rezonings and over-zealous development. The retail sector has been an investment darling but it’s in danger of going the same way as the office market with injudicious granting of rights, “ he says.

Wiltshire says that municipal authorities are also missing opportunities to insist on residential components allied to new retail developments and to create more integrated, commercial and residential mixed use precincts.

He says the focus has to be on creating sustainable developments that meet consumer needs and effective use of infrastructure.

“In some markets, retail centres being developed or proposed for some markets are clearly a response to an under-supply of facilities.  In other areas, where there is already a substantial supply, the balance between demand and supply needs to be maintained.

“Unfortunately, in some metropoles we are seeing planners encouraging developers who have not yet sought rights for their proposed site to build in competition with owners who already have retail zoning.

“New centres demand new infrastructure in terms of power supply and road access.  That in turn often requires a contribution from developers and ultimately, imposes a burden on ratepayers. “

Wiltshire says the need for a balanced approach is also underscored by reaction in some metropoles to plans to expand existing centres by owners who have contributed substantially to municipal rates income.

“These owners have also contributed infrastructure in establishing their projects. Those who are members of improvement districts are paying on top of their rates to ensure areas are cleaned and secured. When the infrastructure surrounding a centre becomes inadequate because more rights have been granted and used, they are expected to contribute even more. 

 “It boils down to major ratepayers being blamed for inadequate planning and being asked to pay again for infrastructure which their rates should have provided. “

Wiltshire says in the current buoyant climate, while retailers are saying they need to be in new centres because they don’t want to lose market share, they also are aware of the risk of cannibalisation.