Food and beverage retailers continue to be outstanding performers in shopping centres, according to JLL.

JLL’s 20th Retail Centre Managers’ Survey was undertaken in February across 84 JLL-managed shopping centres nationally, with the majority of respondents being sub-regional centres (37) and neighbourhood centres (26), while 15 were CBD-based.

According to the results, sub-regional centres recorded a 2.9% vacancy rate in December, down from 3.4% in June 2018. 

At a glance:

• JLL has released the results of its Retail Centre Managers’ Survey undertaken in February.
• According to the results, 54% of Centre Managers said enquiries from food and beverage retailers – both takeaway and specialty – remained moderate or stronger than the previous survey.
• Shopping centres remain more than 97% occupied.

Rental growth is now 3.4% annually, well above the negative 0.6% recorded in June, with eight sub-regional centres posting rental growth above 5%.

Neighbourhood centre vacancy rates remained steady at 2.2%.

About one third (32%) of managers expected planned refurbishments to have a positive effect on sales performance.

Shopping Centre Managers said food and beverage retailers continued to drive leasing enquiries, spurred by younger adults’ interest in casual dining out. Tenant enquiry levels declined slightly since the last survey, but 58% of managers said enquiry levels remained stable.
 
Food spending is growing 4.1% year-on-year, according to the Australian Bureau Statistics.
 
JLL’s Australia's Head of Property & Asset Management, Richard Fennell, said sentiment in the retail sector has weakened since June 2018, describing it as a "global theme".

“When asked what factors were affecting turnover performance, managers nominated the strongest positive factors as ‘expected changes in tenancy profile’ (55%), ‘growth expectations within trade area' (45%) and ‘planned refurbishment activity’ (32%).

“The top three negative factors affecting turnover have remained constant over time - ‘competition from other centres’ (40%), ‘economic outlook’ (32%) and ‘online retailing’ (25%).

“Our portfolio shows that the perception of Australian retail conditions is worse than the actual performance.

"Rents have held up well and shopping centres remain over 97% occupied."

Source: JLL

JLL’s Director of Retail Research, Andrew Quillfeldt, said food operators continued to drive tenant enquiry levels.

“We found 54% of Centre Managers said enquiries from food and beverage retailers – both takeaway and specialty – remained moderate or stronger than the previous survey," he said.

"We have looked at research on spending by generation, and younger generations are spending much more on dining out and a much lower proportion on groceries; it is quite dramatic.

“However, there are so many operators now that it is creating competition between them.

"Shopping centres will need to be cautious not to overload with too many food and beverage outlets as this will dilute the retail mix.”  

The survey results indicate that enquiry was subdued in the jewellery category, with 82% of managers reporting leasing enquiry as weak or very weak.

Clothing and footwear enquiry also remains very subdued, with 72% of respondents noting weak or very weak enquiry levels.

In the takeaway food category, however, 51% reported strong or moderate enquiry levels.

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