The mystery of the many shopping centres, explained

Why then does it seem that shopping centres are mushrooming on every corner, with existing centres being lavishly refurbished at what can only be significant costs? 

Indeed, research by Stanlib shows that South Africa has one of the highest numbers of shopping centres in the world: the United Kingdom has about 1000 shopping centres, SA has approximately 1 750. 

SA has 21-million square metres of retail floor space for our 52-million people — approximately the same as Australia (with its 22-million people), but significantly more than Germany with its 81-million people. 

Maurice Mdlolo, managing director of Liberty Properties, notes that in as much as there is currently a downturn in the economy, it is cyclical.

 “In times of economic downturn, retailers use this period to plan for the future by either expanding existing stores or looking for new retail space so that they are prepared for the economic upturn to be able to capture the increased customer base that becomes available when times get better.

“In addition, smaller metropolitan areas have historically been underserviced from a retail point of view, creating an opportunity to service the growing markets in these areas.” 

Councilor Johan van der Merwe, Cape Town’s Mayoral Committee Member for Economic, Environmental and Spatial Planning agrees, pointing out that examining the trends in building plans submitted for approval show that the retail facilities completed in 2012 and 2013 were a lagged effect of the economic optimism surrounding the 2010 FIFA World Cup tournament. 

“However, there has been a steep decline in the number of building plan submissions for new shopping space since 2010, which would suggest that this sector of the market, in Cape Town at least, is exercising caution in light of current economic conditions.” 

Van der Merwe refers to a recent presentation from Old Mutual, which highlights the fact that South Africa has seen a marked shift up the LSM curve, as consumers become wealthier. 

Retail space has ballooned and opportunities to grow the market are becoming limited. The property giant suggests that there are three ways for retail property owners to grow market share: Buy, fix and sell smart; the commonsense, sustainable approach; and improving centre relevance through strategic leasing. 

Upgrades and expansion

Expansion projects are also driven by demand from retailers. For example, Keillen Ndlovu, head of listed property funds at Stanlib, points out that the recent upgrade and expansion of The Mall in Rosebank was driven by retailers looking for space in the area. 

“The Gautrain station has certainly boosted development in the area in the office and residential property sectors, which in turn brings more people to the area creating opportunities for retailers,” he says. 

Often, development or refurbishment has a lot to do with demand from retailers and shoppers, and to a certain extent, with property owners defending their “territory” in a particular area. 

Ndlovu says that the Rosebank retail areas of The Mall, The Zone, The Mews and The Firs are all owned by different landlords, competing for consumers — and having to be constantly at the top of their game to maintain their competitive advantages. 

He adds that the upgrade and extension of Sandton City, completed two years ago, achieved two objectives: it brought in new retailers who wanted to have space in the centre — but which they were unable to accommodate. 

Furthermore, most of the existing retailers upgraded their stores to keep pace with the upgrade, bring the latest store concepts to consumers and attract a broader shopper profile, which in turn brought about increased footfall. 

“It is important to note that any decision to upgrade or expand a shopping centre, as well as decisions on the tenant mix, are informed by detailed consumer insights and research,” he notes. “The overarching decision is ultimately an investment decision for investors and retailers.” 

The planned expansion and redevelopment of the Fourways Mall will  more than double its size, growing its footprint and its height – in response to the densification of residential developments in the area.

“Retailers appreciate the value of established centres because there is already a trading pattern that they can take advantage of,” he says. 

“This is why local retailers use renovations and upgrades to expand their existing space, and why international retailers Cotton On have chosen malls as their route to market.” 

Mdlolo says: “International retailers see South Africa as the gateway to the African market, and so drive the need to expand shopping centres to accommodate them as they establish their foothold on the continent.”


Ndlovu agrees with Mdlolo that many of the new mall developments aim to create new facilities for areas that have a growing residential base or were previously underserved, citing examples such as the Cradlestone Mall in Krugersdorp, the Mall of Africa in Midrand and the Mall of the South in the south of Johannesburg. 

The Mall of Africa serves the Midrand area, which has needed a higher-LSM facility to service residents who have previously travelled to Sandton or Fourways to enjoy the premium shopping experience that they seek. 

It’s not just the “usual suspects” of Johannesburg, Pretoria, Cape Town and Durban that are seeing significant growth and development in the retail sector. For example, the Middleburg Mall in Mpumalanga is currently being expanded and upgraded, with an additional 12 000 square metres of space, costing R200-million, being added to the centre.

Township areas are also seeing growth in the sector in response to the historic lack of local retail facilities. The likes of Maponya Mall in Soweto is well established now, but Umlazi, a township southwest of Durban, is one example of a previously underserved area that will now benefit from retail development. 

The R360-million 23 000 square metre KwaMnyandu Shopping Centre has been carefully located to be linked to the KwaMnyandu railway station, which is the second busiest station in KwaZulu-Natal. 

Furthermore, it is close to the King Zwelithini Stadium and the Mangosuthu University of Technology— clearly in a sweet spot that services commuters, students and other community members. 

Van der Merwe emphasises that the construction of new shopping centres is a carefully planned process. 

“The feasibility of a shopping centre is calculated in terms of the disposable spending in the surrounding neighbourhood, existing supply of shopping space, and trading densities for various retail formats,” he says. 

“Land use and building plan applications are processed by the City’s planning and building development management department, which is in turn guided by the City’s spatial plans, including the spatial development framework, the relevant district spatial plan and site-specific development frameworks. Spatial plans are in turn guided by provincial and national legislation.”

This article has been made possible by the M&G’s advertisers. Content was sourced independently by the M&G’s supplements editorial team.

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