Property leaders are “quietly optimistic” about Australia’s economic bounce back as shoppers return to malls and offices reopen. Hear what our powerhouse panel had to say at Friday’s livestream event.
Eighty per cent of retailers in Westfield centres are open for business, and recovery is occurring “more quickly than we imagined” said Phil McAveety, Scentre Group’s director of customer experience.
The story is similar for Stockland. Around 85 per cent of retailers have pulled up their shutters, while just half were operational during the peak of the pandemic, said group executive and CEO of commercial property Louise Mason.
“We are all quietly pleased and optimistic,” Mason said.
The GPT Group’s Bob Johnston said he was “surprised” how quickly people wanted to get back to the shops. Customers were generally adhering to social distancing guidelines, he added.
Shopping centres were meeting strict protocols around cleaning, security and safety, the panel agreed. The sheer size of shopping malls meant the four sqm metre rule was “easily managed” McAveety said.
Westfield had chalked up its highest net promoter score of all time in April because centres were “delivering what people really needed when they needed it,” McAveety added.
The industrial sector had generally performed well during the pandemic, although Mason said “it was a mixed bag”. Some businesses “couldn’t get enough space”, while others, like the automotive industry were down by 48 per cent, she said.
The commercial office sector remains in the early stages of recovery. Johnson said occupancy across GPT’s portfolio was “somewhere around five to 10 per cent occupancy per day – but this is starting to pick up”.
Johnston wasn’t worried about lifts or queues in office lobbies, which were “very manageable”. Public transport was a bigger obstacle; while staggered starts and carpooling would play a role in managing the commute, Johnston was worried about “the experience [on public transport] and how long it will take to get to the office”.
What long-term changes could be wrought by COVID-19?
McAveety said it was too soon to tell “what customer habits will stick”. While we are seeing an “acceleration” of existing trends – such as online shopping – he’s confident malls are here to stay. “People are social animals.”
Johnson agreed. The growth in online retail was “only bringing forward what we knew was coming”. Shopping centre owners now had a new opportunity to consider “how we are curating our centres”.
While some larger format retail stores may not survive – and the panel pointed to the consolidation of Target and Kmart as an example – “a myriad of things will fill those spaces,” McAveety said. Plenty of international brands without a position in the Australian market would be on the hunt for space, and “strong brands with a strong customer connection will continue to flourish”.
Mason concurred that consolidation was on the cards, but “I don’t think it’s a bad thing”. She expected to see more post offices, education, health and wellbeing stores move into malls as consumers demanded more “local” offerings from their town centres.
When it came to the office, Mason expected a “total workplace ecosystem” to evolve with a variety of locations and work settings. The hub and spoke model “makes sense” but Mason said she’s not worried about the future of the sector. Pointing to projected population growth, Mason said there would still be demand for office space. The question would be whether a company needed 20,000 sqm or 15,000 sqm.
Activity-based working and hot desking would need to evolve in the “near-term” Johnston added, and their long-term future depended on a vaccine.
What positive learnings would the panel take from the pandemic?
Mason said elevated communication across the business and agile decision-making were characteristics Stockland wanted to take into the brave new world.
McAveety said the pandemic had “accelerated our thinking around innovation”. Scentre Group was rolling out a range of new customer benefits over the next three to six months that would have normally taken much longer to deliver.
Johnson applauded the “unprecedented” level of collaboration businesses and governments. We have proven we can “get things done”. Now is the time to roll up our sleeves to remove red tape, bureaucracy and other handbrakes stopping us from moving forward.
Missed Friday’s livestream event? Don’t miss the next one on Friday 12 June Stockland’s Andrew Whitson, Dexus’ Deb Coakley and Buildcorp’s Josephine Sukkar AM unpack the drivers and policy levers needed for property to turbocharge our economic rebound. Register today.