Some of the brightest minds in the retail and mixed-use property sectors gathered recently at Point Polaris’s Melbourne office to discuss the future of shopping centres and retail-led destinations as part of our Outlook Boardroom series.
Hosted by Point Polaris’ Managing Director, Andrew Hogan, the evening featured guest speakers Carolyn Viney, Group Executive – Development at Vicinity Centres; Gain Duane, Director of LocationIQ; Don Foulds, Senior Property Development Manager at Woolworths and Point Polaris’ Rob Hain, Development Advisory Director.
Gavin begun the discussion asking “What does good retail look like? And does bad retail look the same?”
He argued that for retail development there is no longer an option but to create environments providing a mix of uses. From increasing density, rising land values, higher returns (typical of other uses), and the availability of retailers that remained relevant, retail cannot survive alone.
We are moving away from retail centres and towards activity centres where a CBD-type offer is provided in the suburbs.
Centres are achieving significant upside from under-utilised spaces through complimentary non-retail uses, including residential, commercial, hotels and childcare. Gavin said that retail clients were telling his firm that residents located on site or in the immediate vicinity of a centre are up to three times more valuable than customers originating beyond.
Next up, Carolyn put forward the very powerful opening statement: “The Power of the Place”.
She firmly agreed with Gavin that shopping centres will evolve to become urban centres. This is supported by recent research indicating that whilst online and e-commerce is convenient, ultimately human beings want to interact and connect. They want to be with other people.
Having said that, people have more choice than ever before. Highlighting the importance of creating environments people want to spend time in. So what kinds of places are we talking about?
“Well that,” says Carolyn, “really is the ‘secret sauce’!”
The change in the approach to retail destinations includes providing people with unique, authentic experiences and not simply consumer goods. Research says 61% of Millennials would rather have dinner at a new restaurant than buy a new pair of shoes.
So, whether it’s a great local coffee or finding something they can’t find at another retail centre, consumers are seeking out things that satisfy personally.
Next was Don, speaking from a retailer’s perspective.
28 million customers visit Woolworths’ chain of 4,000 stores every week. And every week 50,000 customers are surveyed.
Recurring themes from these surveys were: convenience; comfort; safety; choice; value and experience
“As a Property Group we need to be proactive in providing feedback to ensure designs evolve,” explained Don. “Mixed-use has opened up opportunities that were not viable for us before and have created new markets.”
Finally, our very own Rob Hain said that retailers need to” innovate or die!”
He reiterated the fundamentals for mixed-use, also echoed earlier by the other speakers, including demographics, market demands, the physical layout of a centre, flexible lease terms and proximity to transport nodes.
But crucially, he also discussed the importance of future-proofing. Understanding that although not every development can immediately cater for mixed-use, it can be designed to accommodate future growth and complementary uses.
How then do we get it right from at the master planning stage? What is achievable? What do current planning controls allow and what might such controls allow in years to come? How will the master plan impact the existing asset? And how can these impacts be mitigated?
“Well,” added Rob, “from a physical perspective, designs need to consider often overlooked concepts such as ‘soft spots’ in new slabs for future building cores and building redundancy into services infrastructure for future demand and load requirements.” A notion put to the architects and engineers in the room.
Andrew concluded the evening with Q&A and a brief overview of Point Polaris’ development advisory and project management services, after which guests enjoyed an opportunity network, and further discuss the insights shared over wine and canapes well into the evening.