You are currently viewing our desktop site, do you want to visit our Mobile web app instead?
 Registered users can save articles to their personal articles list. Login here or sign up here

Mall landlords are surely nervous

Space cuts continue, with little demand to mop up leases …

When last did you really pay attention to what’s happening in shopping malls around the country? Churn of smaller stores in particular is at elevated levels, while the situation at neighbourhood or convenience centres is grim.

The elephant in the room is Edcon. It intends to cut about a third of the space it currently occupies across its store footprint, from 1.5 million square metres to around one million. This 500 000mcut is significant: it represents more than two ‘Sandton Citys’. Standalone Boardmans, Red Square and La Senza outlets are being shut and absorbed into Edgars stores, some of which are likely to be made smaller.

This is not a Stuttafords-sized vacancy, which barely totalled one tenth of Edcon’s planned rationalisation. And given the store mix of the centres affected by Stuttafords’ failure, it was easy to fill.

Most malls will lose at least one Edcon store, with many larger regional and super-regional malls easily losing two or three. Even neighbourhood and convenience centres (the likes of Nicolway or Rivonia Village) are affected, given the shuttering of Red Square.

But this is not an Edcon-only problem.

Four of the country’s five large retail banks have been actively cutting branch space – and not just entire branches, but floorspace being occupied as well. In some cases, total floor space is down by 10% over the past five years.

Churn in the fast food, casual dining and restaurant spaces is higher than ‘normal’, affecting food courts.

On the periphery, some closures have been startling. Virgin Active shut two clubs in the six months to December, something that simply hadn’t happened previously. Cinema chain Ster-Kinekor has closed at least three complexes this year.

Space growth among the large retailers has moderated. In the year to end March, Mr Price Group grew its weighted average space by 2.1%, with a 0.1% decrease in its second-largest division (by revenue and space), mrpHome. A year ago, it grew by a net 2.6%. The 2.1% figure is noteworthy given that, in its FY2017 integrated report, it aimed to “grow trading space by ~4%”. The group says it plans to continue being “selective” on growth going forward.

Also in the year to end March, TFG Limited grew space in its Africa division (which includes South Africa) by 3.5%. Two years ago, this was running at nearly double that (at 6.6% in FY2016).

The march by international retailers, including H&M, Cotton On and Zara, which mopped up the space that was both added with mall expansion (including greenfield centres) and vacated by store closures in recent years has all but stopped.

The two latest international retailers to enter South Africa, sporting goods retailer Decathlon and home improvement giant Leroy Merlin, are not likely to fill this supply. The French chains, both owned by the Mulliez family, have very deliberate – and moderate – roll-outs planned. While the former might elect to be opportunistic, with stores at around the 1 500 m2 – 2 500 m2range, Leroy Merlin stores are significantly larger (around 10 000 m), think Builders Warehouse.

This leaves a decreasing number of prospective tenants to fill relatively small stores and potential parts of larger ones. Every mall that could possibly have any number of the TFG or Truworths brands, has one. Clicks is surely finding it harder to identify sites that won’t cannibalise existing outlets. And as for neighbourhood and convenience-type centres, there simply aren’t many options at all.

Reason to be nervous?

* Hilton Tarrant works at YFM. He can still be contacted at

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.



To comment, you must be registered and logged in.


Don't have an account?
Sign up for FREE

SA has NO growth, declining consumer spending and high interest rates. Why is there any reason to be surprised retailers are getting canned???

The main causes;

1. VAT increase to 15%
2. Municipal rate increases
3. Sugar tax
4. Mismanaged fuel price
5. Inelastic interest rates (not dropping even when fundamentals are right)

This is the elephant in the room, and it is killing the economic growth,

…another elephant in the room is the Zuma/Gupta legacy, SA will still feel for a long time.

there’s more..
-private security because police are not doing their work.
-private education because the public schools have collapsed.

All the money is going to the state then to ANC cadres who only spend in Paris, London and Dubai.

Total mismanagement of the economy and Serial is doing fokol about it.

Why do you think Liberty listed L2D?

I buy most of my clothes online now, I go to malls when I have to. I have Netflix so very rarely go to movies. Have my coffees and meals in neighborhood shops and buy my groceries in neighborhood centers. Malls are an absolute last resort for me. I’m sure I’m one of millions. The model (as its stands re size and mega-malls) seems to be in serious decline.

@Pamplona 100% agree !!!!…I also try and support local markets only…buy organic produce from these markets too [ not the poisoned food from the supermarkets and retail chains ]

The times they have a changed my friend

there’s too many malls we need a new idea, recreational malls.

“Lucy in the Sky with Diamonds” ?

I often wonder which one will go first, Momentum or Liberty Life?

Last paragrah….”surely finding it harder to identify sites that won’t cannibalise existing outlets”

This could have been the opening line to the whole article

Every Mall is a bore…as there is nothing but the same old group of giant stores (on attractive lease terms) and none of the interesting independents that could be allowed to exist

indeed, the anchor lease is so preferentially structured, what about the small stores?? Landlords try teach them a lesson with their greedy paws, think the the Landlords are going to get taught a lesson, ultimately the tax payer through loss of investment value.

The wheels on the bus go……….

@LwoMalan….yup…agreed !

The small ‘mom n pop’ stores were the ones that made it unique and worth going…everything else can easily get online…yawn…..

But those landlords were always so far removed from reality….never saw the value in the smaller out of the ordinary stores

Just chased big money….

But as you say….watch the coming fall of mega malls

Cant wait !!!

Malls only warrant an occasional visit. No variety and some like Festival and Greenstone have had shooting incidents.

The Malls in SA are a danger to your mental and physical health. They are the pits.

Couldn’t happen to a nicer bunch of landlords. The mall owners previously refused to negotiate. Tried to purchase a business subject to renegotiating the lease in a mall where sales in the total mall were down. Their view then was don’t make your problem ours!! Guess its their problem now!!

You hit the nail on the head!Problem is the mind blowing arrogance and rudeness by Mall owners and especially their managing agents.My family had 2 small private shops in 2 different Malls few years ago and the sheer arrogance and aggressive bullying tactics in respect of the leases that we experienced were astounding. Nothing was their problem.Could not happen to a nicer bunch of people.

Agreed. The rents they charge are ridiculous and they could not care less about their tenants. My last landlord forced me out of my shop using under-handed tactics. I have to admit to seeing the empty shops in his centre gives me a sense of schadenfreude. My current landlord is far more pleasant to deal with and his centre is full.

they must cut their pricing to stimulate occupancy but most are greedy farts.

And guess what type of unit trust & ETF funds was all the rage the past year or three, with many newly launched: PROPERTY EQUITY funds!

When one witness many new funds in a certain sector launched in a short space of time (due to investor interest, with good past returns), then you know it’s close to the peak of that cycle.

”Collapse of a stout party”


The Mall Landlords – that must be mostly ”pension funds” and Insurance Companies, methinks ?

I suspect you are right. Our pension and related savings funds are probably well invested in these properties. The greedy arrogant landlords are probably no better than our socialist overlords. Playing with “other people’s money”. The property management companies live by contract I suspect, and have no real skin in the game. Pension Trustees have no idea of what these monsters get up to. Perhaps MW can do some digging into how malls are put together and managed.

If these greedy landlords didn’t see the apocalypse coming, they have been caught with their pants down. Just search ‘dead mall’ on Google and you will see the demise of the mall in USA has been happening for years. Entire buildings have been abandoned.

When you have a shop in a mall, you have to oblige to the rules of the mall.

Thus opening and closing times are not made by you, the owner. This might be a good opportunity for shops to move into the city / town centers.

The problem will be to lure back SA consumers to the centers, as all are accustomed to the ever increasing problem of shopping malls.

Liberty Group saw this coming a few years ago and liquidated the majority stake of their retail assets. It was better to make it a shared problem, and not a concentrated problem, just for Liberty to own. They knew of Edgar’s and other’s problems a long time before the rest of the market.

When one reads and sees land grab rioting, burning of infrastructure – Metrorail, clinics, libraries – there is no confidence in the future prospects of the economy. Ergo – why invest in a shaky political prospect?

No confidence = no spending = empty retail space. How hard is that?

Truworths I have noticed has also started giving up Earthchild and Naartjie stand-alone stores and opening up stores or concession spaces with the larger Truworths stores. V&A Waterfront Cape Town for example.

Load All 28 Comments
End of comments.





Follow us:

Search Articles:Advanced Search
Click a Company: