Shopping Centres Face Vacancies
If you are a retailer or active in the fast food sector and therefore location-dependent, now may be the time to secure prime spots at advantageous rentals. This is according to an article in Business Report of 12 January 2009. UK experts predict that during 2009, one in ten shops in shopping centres and high street locations throughout their country will not only become vacant, but also remain empty for a long time.
In South Africa, demand for prime locations appears to remain reasonably strong. However, local experts expect neighbourhood malls to be hit hard by the current downturn because consumers will flock to the larger centres where price comparisons are easier to make. This can only mean one thing: mom-and-pop stores will go out of business at an accelerated rate.
Consensus exists that South Africa’s property sector remains solid, as do the major national retail chains. It follows that bargain basement offers are unlikely to crop up any time soon but desirable locations previously occupied by smaller operators may become available. Property owners will no doubt prefer to pass them on to a franchisee of a proven brand rather than to another unproven concept. Rentals on offer may not be rock bottom but every rand saved helps a new franchisee to get off the ground.
It is noteworthy that forward-looking property owners take no chances. They know that empty spaces are bad for business and take precautions. For example, the article mentioned above quotes Kgaogelo Mamabolo, head of unlisted properties at Liberty Life Properties, as saying: We do receive requests for decreases in rentals and in some cases, we have agreed to this but we have no plans to do so across the board.
If one of our existing tenants is in distress, we look closely at the situation. We believe that while a reduction in rentals may take some pressure off cash flow in the short term, it may not fix the underlying problems. If a business is inherently sound, it may make more sense, for example, to bring in a retail expert. Should this be the case then we may agree to help with that.
Read more about it in our newsletter
Whichever way you look at it, now is the time to avail yourself of bargains and prepare for the next upswing. Subscribers to our electronic newsletters will read more about this in the January editions, due to be mailed out to subscribers during the week starting on 19 January 2009. If you are not a subscriber yet, register now, it’s useful and it’s free. We are sure you’ll agree that this is an unbeatable combination!