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News release

Australia

Optimism gradually repaired among Centre Managers: Jones Lang LaSalle Retail Survey


AUSTRALIA, 13 MARCH 2013 – A survey conducted by Jones Lang LaSalle has found that sentiment among shopping centre managers is slowly being repaired, consistent with trends in consumer confidence.

The latest Retail Centre Managers’ Survey found there had been a gradual improvement in a number of performance indicators. Customer foot traffic increased, passing specialty rents showed improved growth and leasing enquiry is grinding higher.
 
Director, Research and Consulting Australia, David Snoswell said, “A level of cautious optimism is beginning to come through in the survey results, but the view is still very different across individual centres.”
 
“The results are consistent with our view that the recovery for retail will be gradual and patchy. Nevertheless, there are some supportive factors which will be positive for the broader retail sector in the short term. Consumer sentiment has improved the last couple of months, and spending within some discretionary retail categories is growing, albeit at a relatively slow rate.”
 
“We expect these trends to begin to stimulate shopping centre performance over the short to medium term as the recovery persists,” said Mr Snoswell.
 
Richard Fennell, Australian Head of Property Management at Jones Lang LaSalle said, “The big headline finding in this survey was that more Centre Managers reported an improvement in tenant enquiry as opposed to weak enquiry.  This is the first time this has occurred since the survey commenced in September 2011.”
 
“Leasing enquiry levels strengthened in the December quarter, with 27% of Centre Managers reporting stronger enquiry compared with just 18% in the September quarter.” 
 
“Retailers are still facing very competitive market conditions and we expect national tenants will continue to take a cautious approach to new store commitments, but encouragingly, the survey found leasing enquiry levels are improving.”
 
“The outlook for sales growth and rental growth is still fairly subdued, and Centre Managers believe the two will be very closely linked over the next 12 months,” said Mr Fennell.


The Retail Centre Managers’ Survey, conducted quarterly across Jones Lang LaSalle’s managed portfolio of 173 centres, was taken in February and found:

• 53% of Centre Managers expected some growth in sales over the next 12 months.  Only one in five expected a decline in sales, which is the lowest level in the six surveys conducted to date
• Only 43% of respondents expected to see rental growth in the next 12 months, slightly higher than in November (39%). Face specialty rental growth is slowly accelerating. The average passing specialty rent for sub-regional centres rose to 3.8% over the year to December 2012 from 3.0% in the year to September 2012, while neighbourhood centre rents rose marginally from 3.5% p.a. to 3.6% p.a.
• Sub-regional centre sales growth averaged 3.2% in the year to December 2012, an improvement on the annual growth reported in June and September but slightly lower than the growth rate in 2011 (3.8%)
• Centre Managers in WA remain more positive than their interstate counterparts about the year ahead, due to continued strong economic conditions and the relaxation of Sunday trading laws in August 2012
• Supermarkets and food retailers are the most active retailers looking to expand their operations, although enquiry in all categories remains subdued

 
Turnover Outlook – Next 12 Months