Guest Article - Y Research

Across June, I physically reviewed the occupancy of metropolitan Perth’s 78 largest supermarket based centres after relaxation of COVID 19 restrictions to determine each centres retailers’ current response to the COVID 19 pandemic.

The experience of visiting these centres, from Butler, Mundaring, Halls Head and all points in between, was the most impactful from both a property and social perspective of my 10 years of physically inspecting a majority of Perth’s commercial property.

Shopping centres as meeting hubs are reflective of the communities they service. COVID has highlighted the prevalence of homelessness, mental health/drug problems and social isolation. The number of people searching for change in vending machines, was just one example of the level of economic stress and inequality, I saw in too many centres.

From a property perspective, after government imposed closure, which left just 38.7% of retailers open across the major 16 shopping centres in late April 2020, a combination of COVID restrictions easing, rental relief from shopping centre owners, a national code of conduct restricting evictions and Government Assistance (Job Keeper) saw 97.4% of the over 5,000 stores within the 78 centres open for trade.

Based on discussions with various retailers – forecasting consumer spending is a daily challenge. As a result, retailers are focusing on keeping costs as low as possible either by reducing staff numbers or trading hours. 47.8% of these trading retailers have reduced their trading hours by an average of 18.6% per week, with most retailers opening an hour later and closing half an hour earlier (10am to 5pm, rather than 9am-5.30pm) per day.

With nearly all retailers trading, the concern is the existing level of vacancy. So far COVID has had minimal impact on current vacancies with a limited number of retailers, mainly tourism based retailers, surrendering their tenancies. Despite this, the vacancy rate as of June 2020 across these centres was already 9.4%.

This level of vacancy has been unseen since the GFC. A range of factors have contributed to the current level of vacancy - weak economic conditions post the mining boom, a string of national retailers going into administration and recent centre expansions adding supply.

The vacancy rate for WA’s largest centres, Major Regionals which includes centres such as Lakeside Joondalup, Westfield Booragoon and the Galleria, at 7.4%, is more than three times higher than their historical average of 1 to 2%. Despite anecdotal evidence that consumers are shopping at local neighbourhood centres, these centres recorded the highest vacancy rate of 13.9%.

Looking forward, February/March 2021, when Government assistance ends and investment decisions such as ordering winter stock are required, looms as a tipping point. Retailers will be depending on a strong Christmas/New Year period in order to trade through the worst of the economic pain caused by the pandemic.

Open wallets = open retailers. Where you can, support local retailers in the months ahead. I know every dollar you can spare will be greatly appreciated.

This article was submitted by Damian Stone at Y Research

Acknowledgement of Country

The Committee For Perth acknowledges the traditional custodians throughout Western Australia and their continuing connection to the land, waters and community. We pay our respects to all members of the Aboriginal communities and their cultures; and to Elders both past and present.