15 l04 benvgffas2986 retail property management
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Retail Property Management
BENV2986 Property & Asset Management
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Shopping Centre facts
• At June 2013, 1,267 shopping centres in Australia which exceeded 1,000 m2 of lettable area.
– 91 regional shopping centres
– 313 sub-regional centres
– 840 neighbour or super-market based shopping centres.
• Generate $133.8 billion in retail sales in 2012/13 which was equivalent to 8.6% of Australia’s GDP.
• Shopping centres sales comprised 51% of total retail sales in Australia
• Employ 6.7% of total workforce (10.7% in retailing).
(Sources : Shopping Centre Council of Australia)
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Types of Retail Property
• City Centre
• Neighbourhood (or Convenience) Centre
• Sub-regional (or Community) Centre
• Regional shopping Centre
• Major Regional Centre
• Super Regional Centre
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City Centre
Definition:
• Retail premises within an arcade or mall development owned by one company, firm or person and promoted as an entity within a major Central Business District.
• Total gross lettable area retail (GLA) exceeds 1,000m2.
Key features:
• Dominated by specialty shops
• Likely to have frontage on a mall or major CBD road
• Generally do not include supermarkets
• Often co-exists with large department store
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Neighbourhood Centre
Definition:
• A local shopping centre comprising a supermarket and approximately 35 specialty shops.Total GLA will typically be less than 10,000m2.
Key features:
• typically located in residential areas;
• service immediate residential neighbourhood;
• usually have extended trading hours; and
• cater for basic day-to-day retail needs.
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Sub Regional Centre
Definition:
• A medium-sized shopping centre typically incorporating at least one full line discount department store, a major supermarket and approximately 40 or more specialty shops.Total GLA will typically range between 10,000 and 30,000m2.
Key features:
• provide a broad range of sub regional retail needs; and
• typically dominated by a full line DDS or major supermarket
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Regional Centre
Definition:• A shopping centre typically incorporates one full line department store, a
full line discount department store, one or more supermarkets and approximately 100 specialty shops.
• Total GLA ranges between 30,000 and 50,000m2.
• In some instances, all other characteristics being equal, a centre with two full line discount department stores, without a department store, serves as a regional centre.
Key features:* extensive coverage of a broad range of retail needs (including specialised
retail), however, not as exhaustive as major regional centers;
* contains a combination of full line department stores, full line discount department stores, supermarkets, banks, chain and other specialty retailers
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Major Regional Centre
Definition:• A major shopping centre typically incorporating at least one full line
department store, one or more full line discount department stores, one or more supermarkets and approximately 150 specialty shops.
• Total GLA ranges between 50,000 and 85,000m2.
Key features:• one-stop shopping for all needs;
• extensive coverage of the full range of retail needs (including specialisedretail), containing a combination of full line department stores, full line DDS, supermarkets, services, chain and other specialty retailers;
• typically includes a number of entertainment and leisure attractions such as cinemas, arcade games and soft play centers; and
• provides a broad range of shopper facilities (car parking, food court) and amenities (rest rooms, seating).
• caters for basic day-to-day retail needs
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Super Regional Centre
Definition:• A major shopping centre typically incorporating two full line department
stores, one or more full line discount department stores, two supermarkets and approximately 250 specialty shops.
• Total gross lettable area retail exceeds 85,000m2.
Key features:• One-stop shopping for all needs;
• Comprehensive coverage of the full range of retail needs (including specialised retail) - combination of full line department stores, full line DDS, supermarkets, services, chain Super Regional Centre
• typically includes a number of entertainment and leisure attractions such as cinemas, arcade games and soft play centers; and
• provides a broad range of shopper facilities (car parking, food court) and amenities (rest rooms, seating)
• Often co-exists with large department stores
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Size of Various Components of Shopping Centre
• Major Department Store
– 18,000 ~ 20,000 m2
• Discount Department Store
– About 7,000 m2
• Supermarket
– 1,200 ~ 2,800 m2
• Specialty Shop
– About 100 ~ 150 m2
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Retail Property Hierarchy
COMPOSITION PARKING
BUILDING AREA
Super Regional
2 - Major Department 1(2) - Discount Department2 - Supermarket 250 - Specialty Shops
3,500+ cars
85,000 M2
Major Regional 1(2) - Major Department 1(2) - Discount Department1(2) - Supermarket 150 - Specialty Shops
2,000~ 3,500 cars
50,000~ 85,000 M2
Regional 1 - Major Department 1 - Discount Department 1(2) - Supermarket 100 - Specialty Shops
1,200~ 2,000 cars
30,000~ 50,000 M2
Sub-Regional 1(2) - Discount Department1 - Supermarket 40 - Specialty Shops
400~ 1,200 cars
10,000~ 30,000 M2
Neighbourhood 1 - Supermarket 35 - Specialty Shops
~400 cars
Less than 10,000 M2
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1. Chadstone Shopping Centre, Malvern East VIC: $1.415bil
(167,588m2 GLA)
2. Westfield Bondi Junction, NSW: $1.025bil (127,736m2 GLA)
3. Westfield Sydney, NSW: $950.2mil (167,911m2 GLA)
4. Westfield Fountain Gate, Narre Warren, VIC: $918.2mil
(177,755m2 GLA)
5.Westfield Carindale, QLD: $913.6mil (136,373m2 GLA)
Ranking of Shopping Centres by Annual Turnover(June 2013)
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1. Chadstone Shopping Centre, Malvern East Victoria: 190,000sqm
2. Westfield Fountain Gate, Narre Warren, Vic: 177,715 sqm
3. Westfield Sydney, NSW: 167,911 sqm
4. Westfield, Chermside, QLD: 150,733 sqm
5. Knox City Shopping Centre, Wantirna South, Vic : 142,244sqm
6.Westfield Parramatta, NSW: 137,183 sqm
7.Westfield Carindale, QLD: 136,373 sqm
8.Westfield Marion, Oaklands Park, SA: 133,778sqm
9.Westfield Southland, Cheltenham, Vic: 129,180 sqm
10. Westfield Bondi Junction, NSW: 127,736 sqm
11. Warringah Mall, Brookvale, NSW: 125,372 sqm
12. Robina Town Centre, Robina, QLD: 125,000 sqm
Ranking of Shopping Centres by Size
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1. Scentre Group: 2,497,726 m2 GLA
2. Federation Centres: 2,106,550 m2 GLA
3. Stockland: 920,793 m2 GLA
4. QIC: 884,104 m2 GLA
5.GPT: 795,458 m2 GLA
Five Largest Shopping Centre Owners by GLA(June 2013)
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Shopping Centre Management
Consideration
• Consumer confidence in the region
• Prospect of catchment areas
• Management intensive
• Regular capital improvement required
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Who works in Shopping Centre Management
• Owners such as Westfield (Scentre Group), Stockland, Lendlease, AMP plus high net worth individuals and property companies
• Centre Managers on behalf of owners or external agents
• Operations
• Marketing managers
• Leasing agents
• Admin support
• Customer service
• Security
• Cleaners
• Contractors
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A Standard Retail Business
• 15 - 30%: Cost of goods
(eg: stock/ingredients/packaging etc)
• 20 - 40%: Wage Costs
• 5 - 10%: Incidentals
(eg: advertising, accounts, uniforms etc)
• 10 - 20%: Occupancy Costs
(eg: rent, outgoings etc)
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Design of Shopping Centre
AnchorTenantParking Specialty Shops
Master plan for a continuous program (system) of expansion, upgrading, and refurbishment
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Retail Property Leasing
• Initial letting.– The best possible tenancy MIX.
• Factors affecting tenant selection.– Types of retail demand.
– Overall marketing theme.
– Experience.“Only experienced and existing retailers with proven operation
records need to apply.”
• Subsequent reletting and negotiation.
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Retail Shop Lease
• Base rent
• Percentage of turnover rent
• Recovery of outgoings
• Marketing levy
• Sale of a business or assignment
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Percentage Rent
Assumption:– Base rent: $20,500.
– Percentage gross sale: 6%
– Gross sale (previous year): $560,000.
– Following year sale: $595,600.
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Percentage Rent Calculation
• Estimated turnover rent based on previous yearGross sale x 6% - Base rent= $560,000 x 6% - $20,500= $33,600 - $20,500 = $13,100
• Month turnover rent in advance$13,100 / 12 months= $1,091.67 say $1,090
• The following year turnover rentGross sale x 6% - Base rent= $595,000 x 6% - $20,500= $35,736 - $20,500 = $15,236
• Balance dueDeduct the turnover rent already paid= $15,236 - $1,090 x 12= $15,236 - $13,800 = $2,156
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Other Clauses peculiar to Shopping Centre Lease
• Permitted use.
• Shopping centre rules.
• Conducting of business.
• Merchandising display.
• Insurance.
• Promotional activities.
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Retail Leases Act (1994)
• Retail Shop
– The Act does not apply to retail shops that have a lettable area of 1,000 m2 or more.
• Retail Shopping Centre
– At least 5 of retail shops that are all owned by the same lessor.
• Key Money or Goodwill
– A lessor can not ask for any payment or benefit in connection with the granting, renewal, extension or assignment of a retail shop lease.
• Recovery of outgoings
– A lessor must provide the lessee with an annual estimate of outgoings at least 1 month before the start of the period.
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Retail Leases Act (1994)
• Term of a Retail Shop Lease
– Minimum term of 5 years including options (3 years plus 2 option).
• Registering a Retail Shop Lease
– Registration of retail shop lease for terms of more than 3 years.
• Rent review
– No ratchet clause.
– No whichever of two or more method gives the higher results.
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Promotional Management
• Shopping centre management differs in promotional management.
• Determine the aim of the campaign and budget available.
– A committee with representatives from the tenants and owner administers promotional fund.
• Key areas:
– Tenancy mix and retaining customers.
• Gauging promotional campaign results (cost benefit analysis).
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• Demographics of population in trade area
• Occupations
• Industry of Employment
• Family characteristics
• Competitor Analysis
• Centres within 5 - 10 km radius
• Impact
• GLAR (gross lettable area retail)
• Sales MAT (moving annual total)
• Traffic MAT
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Market Profile
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Marketing Plan
Overview
• Location details of centre
• Aims of marketing plan e.g. to increase the centers profile within the community along with increasing sales and traffic.
Marketing Objective
• Measurable financial goals and objectives have been established to be achieved by 30 June 2015:
• Increase total comparable sales to $51,797,767 MAT comprising:– $44,550,577 Majors Sales ($11,405 psqm; benchmark is $10,872 psqm)
– $7,247,190 Specialty Sales
• Increase total MAT foot traffic by 4%
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Forms of Promotion
• Letter box drop.– Immediate vicinity of the centre.
• Local press.– Professional preparation.
• Radio.– For a particular campaign.
• Television.– Most expensive, major campaign, opening.
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Special Promotion
• Aim.
– Generate attendance.
• Discounting, competition and other generating activities.
• Refurbishment and annual campaign.
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Types of Refurbishment
A marketing and business development exercise aimed at generating additional rental income from the property.
• Renovating. (Interior design)
• Revitalising. (Theme)
• Improving. (Space planning)
• Re-positioning. (Competitive positioning)
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Types of Refurbishment
A. CompetitivePositioning
B. SpacePlanning C. Theme
D. InteriorDesign
Repositioning
Improving
Revitalising
Renovating
Total Retail Concept – Market Driven
Maintenance Driven