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News release


Competition in the retail sector is contributing to subdued sentiment for shopping centre managers

Repositioning of retail centres remains an ongoing strategy to attract customers

Despite interest rates being at all-time lows, a JLL national survey has found that sentiment among shopping centre managers remains subdued.  The prime reason appears to be the continuing competition being experienced in the Australian retail sector.

JLL's 15th Retail Centre Managers' Survey was taken in August across 116 JLL-managed retail shopping centres nationally. Centre Managers were less positive about their future trading prospects compared to the previous survey six months ago, with fewer managers expecting sales growth over the next 12 months.  52% of respondents expected some sales growth in the year ahead, down from 55% in February 2016.

The main concerns being highlighted by Centre Managers as impacting their turnover performance going forward were 'competition from other centres' (with a net balance of -34), 'economic outlook' (-25) and 'online retailing' (-25).  These results were mirrored in the previous survey in February, where managers identified these as the top three concerns.

JLL's Head of Property & Asset Management – Australia, Richard Fennell said, "The fact that competition remains the number one concern of centre managers demonstrates that the retail mix is ever important.  The competition for customers amongst retail centres is very strong.  That's why shopping centre repositioning remains an ongoing strategy for many centres.


"Centre managers reported the most positive factors they saw that would impact on future turnover were in relation to the expected changes in tenancy profile, planned refurbishment activity to provide for new anchor tenants or a remix of speciality tenants and growth expectations within the centre's trade area.

"A quality fresh food offering together with cafes that give customers a reason to linger for longer are seen as vital ingredients by many centre managers surveyed," said Mr Fennell.

The JLL Survey reported that there appears to be no end to the increased level of competition in the Australian retail market.  From ALDI's national rollout to major fast fashion chains committing to large regional centres is very strong.  Strong competition in the supermarket sector is also continuing.

New supply across the major metropolitan retail markets is set to peak in 2016, with strong growth in regional centres anticipated.  This growth is partly being driven by relatively new retailers to Australia, such as ALDI, H&M and Uniqlo.

JLL's Director, Strategic Consulting, David Snoswell said, "Despite centre managers being less positive about future trading prospects, there was still 52% of respondents expecting positive turnover growth for the year ahead, and only 16% of respondents expected a decline.

"Average sales turnover growth improved slightly over the last six months, increasing across JLL-managed sub regional centres by 1.9% for the 12 months to June 2016, with neighbourhood centres growing by 2.9% per annum.

"The mixed economic indicators remain a concern for retail trading over the next 12 months. 

"Economic growth in the first quarter of 2016 was the strongest since early 2012 and the recently released June National Accounts were positive, although both results were highly dependent on exports and this doesn't necessarily flow through to consumers.  Domestic demand remains sluggish and it is domestic consumption that drives retail spending," said Mr Snoswell.

Vacancy rates remained stable in neighbourhood centres at 3.7% in June 2016, based on the survey respondents across the JLL-managed portfolio.  This is well below the average vacancy rate of the last five years of 4.7%.  Vacancy levels increased in sub-regional centres from 2.8% in December 2015 to 3.5% in June 2016.