I recently took part in Shopping Centre News Australia's Big Guns panel discussion exploring what this country’s most significant retail destinations will look like come 2030. While my industry colleagues from Scentre Group, Vicinity Centres, AMP Capital, Stockland and Lendlease inevitably approached the question from differing angles, we found ourselves agreeing on a number of strategic points and painting a diverse picture of retail real estate at the end of this decade.
Here are my six key takeaways from the frank and lively exchange of ideas, including the competitive strengths that QIC Real Estate can lay claim to.
The time for planning is over – the next few years must be about tangible action if we are to continually raise the productivity of our flagship assets. Retail has been the most lucrative use of space for an exceptionally long time, but we cannot afford to stand still once we have fulfilled local demand. At QIC, our masterplanning has for the past two decades focused on the enrichment of (and leveraging of) our retail core with complementary land usages, which has necessitated securing the surrounding land, building rights and transport connections.
The past five years have included some conspicuous first steps – plugging Castle Towers into the Sydney Metro and developing a commercial precinct at Eastland for example – to the point that we are now equipped and energised to undertake our most ambitious and multifaceted projects to date. The large swathes of property we possess in key growth corridors, such as Robina, present an incredible opportunity both in terms of development profit and increasing addressable markets for our retail partners.
With the past 12 months having lit a fire under many negotiations, the proposed investment in mixed-use development by Australia’s largest retail landlords between now and 2030 runs to tens of billions.
We have moved beyond comparing shopping centres like-for-like to instead focus on their place in the attention economy and how we can craft the most magnetic destinations possible. In our work with Urbis, which comprises a vast arsenal of proprietary research, we have landed on a new measurement system to help us more accurately chart which land usages will most benefit the retail core of our destinations and the customers we share.
At Eastland, where retail and dining offerings already share space harmoniously with a library, hotel and office accommodation, we are already seeing the flow-on benefits of additional footfall from non-retail usages and look to the future with much excitement based on what our updated metrics are telling us we can achieve in this location.
While there are comparably few examples of extensive mixed-use redevelopment of retail malls owned and managed by a single operator outside Asia, the opportunity is ours to exploit. We are in a stronger position than our counterparts in places like the UK and Europe, with our relatively low infection rate and rapid economic bounce back having already helped to recover significant foot traffic. Leveraging this productive retail core, we can harness the demand for new real estate solutions such as flexible workspaces or healthcare facilities that feed off the shopping centre’s amenity and accessibility.
Having already grown the health and wellness component of our retail composition significantly over the past decade, while simultaneously decreasing our reliance on apparel, wellbeing is becoming a new anchor for our places. Our masterplans factor in full-service community hospitals, short-stay surgical clinics and allied health hubs, as well as new partnership models and tenancy reconfigurations. As private and public investment come into closer alignment and we embed our centres more deeply into community infrastructure, we need to expand our collaborator base and in-house capability to better serve the healthcare needs of local residents.
I was not surprised to have my counterparts confirm that high-calibre shopping centres in all parts of the country have bounced back strongly from lockdown as consumers continue to seek out gathering spaces and in-person interaction.
Our confidence in quality retail has not wavered. Even with last year’s surge in e-commerce penetration, the vast majority of retail sales continue to go through bricks-and-mortar stores as a perennially popular and convenient piece of the omnichannel puzzle. At QIC’s Unitholder Conference in November, we heard of the numerous valuable lessons gleaned by major retailers such as Rebel Sport and JB Hi-Fi during the pandemic, including the value of the storefront as a customer satisfaction tool and in the efficient fulfilment of online orders. Speak to the team at Accent Group, who are about to launch a new workwear chain at Eastland and recently opened a store at Robina for their digitally native Stylerunner brand, and you will understand the still-huge capacity for innovation within the Australian retail market.
Yes, there will inevitably be greater delineation between different tiers of shopping centres as major retailers prioritise the most productive locations, but consumers in 2021 clearly still crave the social engagement they did in 2019.
The energy efficiency of our buildings and our ability to centralise services such as data collection for retail partners also preoccupied the panel. At QIC, we have prioritised investment in solar technology to unburden the grid around our places. By putting our extensive roof space to use in this way we are also defending our portfolio against volatility in electricity supply and pricing at the same time as moving rapidly towards our 2028 target for achieving net-zero carbon emissions.
So, will all large shopping centres be topped with build-to-rent apartments, schools and car yards by 2030? Of course not. Every addition and adaptation must serve the surrounding community rather than some one-size-fits-all recipe. Is it thrilling to be proactively shaping the future of Australian retail real estate at such a point of inflection? 100 per cent.