The average size of shopping centres has steadily increased since the 1990s, with centres slated for completion between this year and 2020 being significantly larger than those developed during the 1990s and 2000s, a study by Morgan Stanley Capital International (MSCI) Real Estate South Africa on behalf of the South African Council of Shopping Centres (SACSC) has found.
Data also indicate that centres planned for development in the country’s city regions, local or niche towns and service towns are all now 100% larger compared with those developed during the 2000s.
As of July this year, the South African retail development pipeline measures 1.9-million square metres across 68 centres, the bulk of which is planned for completion in 2018. Currently, there are also 17 shopping centres slated for completion in the remaining weeks of this year.
“MSCI’s latest research, based on SACSC’s shopping centre directory, provides a perspective of the links between expected retail mall space, economic activity and population densities,” MSCI executive director Phil Barttram said.
The report, released on Tuesday, notes that the trend towards larger centres may be attributable to developers opting for larger formats in order for a mall to dominate its immediate catchment area, attract a higher proportion of national tenants and strengthen the centre’s position within its catchment area.
“Given the highly competitive environment for malls in specific nodes, we believe centre selection within the retail segments will become increasingly important.”
Retail supply in the small-town markets is expected to show double-digit growth for 2017 to 2020 compared with 2010 to 2016. The Mpumalanga, Limpopo and Eastern Cape provinces combined contribute 82% of the overall retail pipeline in the small settlement-type markets.
The study conducted by MSCI also notes that despite slowing retail development, the South African retail market has expanded significantly over the past few decades, increasing to 23.4-million square metres at the end of 2016.
Since 2010, retail stock has grown by an average of 17.3%, with 32 new centres a year.
Last year, Menlyn Park in Pretoria, now the largest shopping centre in South Africa, embarked on a R2-billion redevelopment that added 50 000 m2 of additional retail space to its already massive footprint, making it one of the largest malls in Africa.
In February, the Fourways Mall expansion project in Johannesburg broke ground. This R23.7-million project will see the mall become a retail behemoth of 175 000 m2.
The Pavilion as well as Ballito Junction, both in KwaZulu-Natal, have also undergone expansion projects.
South Africa ranks as sub-Saharan Africa’s most saturated retail market, accounting for 88% of the available retail space in the region. According to the SACSC, South Africa has the sixth most shopping centres in the world.