“Incorporating mixed-use into a precinct can help drive spending with office and education offerings providing the greatest increase in centre MAT growth,” said CBRE’s regional director of retail services Meagan Wakefield, adding that as retailers reduce department store and specialty store floor space in larger centres, there’s an opportunity to introduce more mixed-use offerings.
According to CBRE’s report Retail therapy: Shopping for resilience in retail property, incorporating office, high-density residential or education/technical facilities are the most feasible ways to create a resilient retail asset from a revenue uplift perspective.
Clive MacKenzie, Kiwi Property CEO, said mixed-use projects have always been at the core of their strategy.
“By bringing together different asset classes at the one location, we’re able to create an outstanding experience for the people who work, shop and stay there,” MacKenzie told Inside Retail.
“At Sylvia Park, for example, we have New Zealand’s favourite shopping centre and the ANZ Raranga office building,” he said. “Workers enjoy the convenience that comes from having an abundance of shopping, dining and entertainment options on hand, while retailers benefit from an increased number of potential customers on-site every day. In time, we think there’s potential to add apartments to Sylvia Park, which will offer even more benefits for residents and retailers alike.”
MacKenzie said Kiwi Property has four key assets that they believe have the right characteristics to become leading mixed-use developments, such as large landholdings, great transport connectivity and significant catchment areas. These are Sylvia Park, LynnMall in west Auckland, The Base in Hamilton and Drury, south of Auckland.
Kiwi Property’s office building at Sylvia Park, the ANZ Raranga and the expansion of the shopping centre’s retail galleria have recently been completed.
The shopping centre owner is currently designing two new office buildings at Sylvia Park, and progressing plans for built-to-rent residential apartments.
“It’s a new proposition for New Zealand, but one that’s doing well overseas and we think has potential to help alleviate Auckland’s housing shortage,” MacKenzie said. “We’re also looking at a range of new opportunities at our other mixed-use sites, including LynnMall and The Base.”
Ibrahim Jassim Al-Othman, president and CEO of the Qatari real estate conglomerate United Development Company (UDC), said the government-imposed lockdown to avoid the spread of the coronavirus has, in a way, actually helped their business.
According to him, the pandemic has made people realise how necessary it is to have everything close by — residences, shopping centres, a pool or the beach, offices and restaurants.
“We had been receiving queries from people who have realised how good it is to have stayed at the Pearl Qatar in times like this, and this helped the business in a way,” he said during a webinar hosted by Euromoney Livestreams. “People were really anxious to go out and at least to be able to go back to, not necessarily just dining at restaurants, but to be able to have some breather outside. And the Pearl can offer them that.”
The Pearl Qatar is UDC’s flagship urban mixed-use, man-made island project and one of the largest real estate developments in the Middle East.
The project, which is expected to be valued at $15 billion upon completion, sits on 4 million square metres of reclaimed land divided into 10 architecturally distinct precincts inspired by Mediterranean cities. The place features an eclectic mix of residences, 30,000 square metres of retail and dining space, entertainment outlets, thousands of parking spaces for cars, 200 moorings in the marina and a Kempinski Resort and Spa.
Luxury brands like Hermès, Chanel, Balenciaga, Alexander McQueen, Stella McCartney and Salvatore Ferragamo have opened shops on the island.
The company is also working on another mixed-use project, the Gewan Island project, which the company formally launched construction works last July. Located just north of The Pearl Qatar, it is UDC’s most recent urban mixed-use, man-made island development which spans 400,000 square metres.
Once completed, the island will be home to over 555 apartments, 21,000 square metres of retail space which will feature local and international restaurants and retailers, an air-conditioned crystal boardwalk – the Crystal Walkway, a community mosque, 26 waterfront villas, 21 beachfront villas, six exclusive island villas, a community garden, a five-star hotel and a golf course.
“Here at The Pearl, you see people really enjoying their time, yes with different behaviours in place like social distancing, putting the masks on,” he said. “But they are enjoying.”
Al-Othman said on weekends The Pearl Qatar’s beaches are mostly full.
“People are continuing to live their lives,” he said. “Maybe not exactly the same as before, but I think we need to gradually go back and set our pace to a new normal and live our lives.”
According to CBRE’s research, retail conversion rates of retail property are crucial in determining retail spend, with variation in conversion depending on: competition in the trade area, the asset class in question (regional, sub regional, neigbourhood) and seasonal changes in retail spending. Factoring in the above, the average retail conversion rate is approximately 28 per cent.
In Australia, the average annual spend on retail is approximately $16,000 per capita. This has been increasing by 4 per cent (CAGR) since the ABS started collecting this data in the early ’80s.
Therefore, within a 20-minute drive time of a shopping centre, if there are 10,000 people every day for a year, 2,800 are inclined to go into the centre every day and each spend approximately $42 per day.
Al-Othman said mixed-use developments are the future of retail especially with residential areas nearby. After all, he said, people will have kids and those kids will grow up to have families and would want homes of their own.