The pressure is mounting on shopping centre landlords GPT and Westfield to maintain low vacancy rates and high rental growth, with the continual rise in online shopping and the high Australian dollar.
A report published by Moody’s predicts a negative outlook for Westfield Group, though it does maintain high levels of investment and low credit risk.
GPT is predicted to have a more stable outlook, with an upper-medium grade rating and again, a low credit risk.
Concerns over the threat of online retailing over shopping centres follow a recent research project conducted by PwC/Frost & Sullivan, which showed that more than half of Australians shop online, a figure that grows annually by 14.1%.
PwC also forecasts that online spending will boost from $13.6 billion in 2011 to $26.9 billion annually by 2016.
Moody's analyst and the author of the report, Maurice O’Connell, said that despite his concerns of online shopping, GPT and Westfield are better positioned than other landlords and A-REIT’s due to the size and quality of their development portfolios and large percentage of regional centres.
O’Connell also expects that regional centres will be more resilient up against online retailers than their sub regional and neighbourhood counterparts, who are at a higher risk.
“Retail centres that provide a broad range of offerings, including entertainment, restaurants and services, are more likely to be able to continue to attract tenants than smaller and more narrowly defined centres," Mr. O’Connell said.
“Ninety-five percent of GPT’s centres are classified as regional and Westfield has a similar profile."
Mr. O’Connell also said that “retail tenants are operating within a poor retail environment where sales growth, excluding food, over the past few years has been below 1% per annum” he said.
Mr O’Connell’s comments come as a local online shoe retailer StyleTread was booted from its Westfield Parramatta kiosk, following uproar from the shopping centre’s existing tenants.
StyleTread created the kiosk earlier this year, in an attempt to teach shoppers how to navigate the website and ask questions to its staff.
“After visiting us here at the kiosk, you can go home and shop from the convenience of your lounge room 24/7,” StyleTread published on its website.
StyleTread founder Mark Rowland said that, though StyleTread was ultimately evicted after a couple of weeks, it was extremely beneficial to the growth of the company.
“In just under three weeks, StyleTread reached 400,000 potential new customers,” Mr. Rowland said.
“StyleTread will continue to explore new and innovative territory in the company’s efforts to bring the convenience of shopping for shoes at StyleTread to all Australians.”
