Vacant retail centres are being reinvented as places not just to shop and eat but also provide office space for a post-Covid workforce.
Sentinel Property Group is the latest of a growing number of owners of retail assets that are converting vacant and unused portions of their properties to office and professional space.
The Brisbane-based fund manager’s chief investment officer Warren Ebert said the retail sector was undergoing significant changes due to the advent and challenges of Covid-19.
As a result, it has recently commenced works on repurposing part of its DFO Cairns retail complex for office and medical services space.
“We are currently in the process of converting a portion of the centre to offices for government tenants,” Ebert said.
Sentinel owns a total of 13 retail assets in suburban and regional locations in Queensland, New South Wales, ACT and Western Australia.
Ebert said the economic impact of the Covid-19 pandemic had prompted owners of retail assets in regional and suburban areas to provide more space for offices as well as medical and professional services.
“The one thing that shopping centres have is a lot of car parks,” he said.
“And if you can convert some of the bigger space into offices, it’s a good utilisation.
“Additionally, most larger retail centres have a good food precinct along with public transport.”
Ebert said despite disruptions caused by Covid-19 and the growth of online shopping, there were still sectors of the retail market such as homemaker centres performing strongly and some regional areas are “really booming”.
“Retail is a dynamic business which is always changing and if it wasn’t we’d still be shopping at corner stores instead of Woolworths or Coles,” he said.
The repurposing of retail space into offices has become a global trend and strategy for shopping centre owners to fill the void left by store closures as a result of the pandemic and generate foot traffic for remaining retail tenants.
Sentinel has a total national portfolio of more than 50 retail, industrial, office, land, tourism infrastructure and agribusiness assets with a total value in excess of $1.2 billion.
Ebert said that earlier this year the group moved its 90-strong Brisbane workforce to a larger floorspace to ensure Covid-19 safety measures by providing proper social distancing standards at workstations and meeting rooms “something many business and government agencies will need to do to get homebound staff back in the office”.