Consumers spending less time in malls but spend per visitor has increased says Broll

A positive effect of the adjusted Level 4 lockdown is that many more private investors are seeking professional management services – good news for the real estate industry as it means there are new business opportunities.

On the other hand, there are now a lot more properties up for sale, including industrial which comes as a surprise considering it has been performing better than other sectors. Numerous office buildings are up for sale, but this has been going on for a while. The fact that there are many retail centres on the market too, is evidence that the listed property funds are under pressure and disposing of their assets as a result.

This is part of a larger cyclical process” says Nkuli Bogopa, COO Property Management at Broll Property Group. “What it has done is to create a new wave of investors in a buyer’s market. Combined with favourable interest rates, it is generating quite some movement in the sector, which means we are getting some new players in the game.”

The retailers are under tremendous pressure due to the latest lockdown. Broll is witnessing the closure of small businesses from restaurants to gyms. This will impact rental collections and the investor landscape in terms of income. However, the fact that it is an adjusted Level 4 lockdowns means that activity is still seen in the malls.

While retailers are largely in a hybrid mode, with some open and others closed, the third wave combined with the Level 4 lockdown remains a major cause for concern in the office sector, says Bogopa. “Every person now either has a friend or a family member who has contracted Covid-19, or who has lost a number of loved ones. The concern is palpable, and offices are obviously not the place where people want to be right now. Employers are also having to be guided by the regulations, with the lockdown dictating that we keep people out of office spaces”.

This will affect rental income too. “I have not seen any major shift in terms of the investor landscape. Many investors did the hard work last year in terms of rental adjustments and discounts which was done with a long-term view. This is still in place to assist our tenants and it was part of the lessons learnt from the initial hard lockdown”.

However, no one was prepared for the duration of the pandemic. We were all disrupted at the outset and the resultant concern about the impact of Covid-19, but the current uncertainty has been brought on by the fact that we do not know when the pandemic is going to end.

From an operational point of view, Broll did very well in collaborating with our broader stakeholders last year, including the government and the private sector. Now we just need to keep the momentum going, especially in terms of increasing the speed of the national vaccination rollout which will assist in returning a sense of stability and hope” she says. “It is gratifying to see that the registration for the 50 plus category has been launched. Hopefully, this means we can get to the bulk of the workforce quicker which is not in the 50 -59 years’ old category. The sooner we can bring this vaccine to the age group who are economically active, the better. This can only really only happen if there is continuous close collaboration between the public and private sector.”.

What does this mean for the everyday person? The message from President Ramaphosa that we are to avoid enclosed spaces, keep our masks on and follow all necessary regulations and protocols, remains paramount. Bogopa says that in terms of the malls that Broll manages, they are sanitising at a higher frequency than usual. “People have become used to the fact that every retail shop has protocols that need to be observed. We are seeing a great deal of cooperation, and this should remain the norm”.

Real estate service providers, such as Broll, who are at the forefront of managing these properties, are keeping up to date with the latest developments such as clean-air sanitizing technology as an option to ensure their malls remain safe spaces. Cognizant of the fact that this still does not remove the fear factor, it is encouraging to see that while people are keeping the time they spend in malls to a minimum, their spend per visitor is greater. This means people are visiting shopping centres with a specific intention.

Both Broll’s super-regional and strip malls rely heavily on anchor tenants and the restaurant trade, which has now been shuttered again by the lockdown. Retailers will opt to remain open if not compelled to do otherwise. “We are noticing a higher rate of Covid-19 infections among retail staff. Restauranteurs are reporting that takeaway or home delivery is not a viable option in terms of cost, so they are rather opting to do with less staff. It is not sure as to how the current scenario will play out in the broader retail and clothing sector”.

I have always maintained that to ensure a sustainable lifeline for these businesses, they require both an online and an offline presence. A good balance between these two is essential. The half-year results of some listed funds point to the encouraging fact that, in South Africa, the rural and township retail sector has shown the greatest resilience, and even a better performance when benchmarked against similar countries like Spain, where a latest study there revealed that consumers there prefer to come in-store rather than purchase online” notes Bogopa.

My message to tenants is that the collaborative spirit kindled at the beginning of this pandemic must prevail. Landlords and managing agents continue to evince extraordinary empathy for the economic hardship that has ensued, while professional organisations like the South African Property Owners’ Association (SAPOA) continue to lobby for municipal rates and taxes to be contained, so that these additional costs do not have to be passed onto tenants. Collaboration between the government and private sector is vital. The government must meet private investors halfway, because ultimately our tenants are going to be the hardest hit. In this regard, it is sincerely hoped that the government will also consider relief measures for those sectors most affected by the latest lockdown measures, especially as this will have a knock-on effect on the entire economy”.

Source: Propertywheel.co.za | https://propertywheel.co.za/2021/07/consumers-spending-less-time-in-malls-but-spend-per-visitor-has-increased-says-broll/

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