The future of shopping centres in the spotlight

Whilst a survey in 2017 by Visa showed that South African consumers still prefer doing their shopping in malls, and a recent study by MSCI on behalf of the South African Council of Shopping Centres (SACSC) shows South Africa as having the sixth most shopping centre space in the world, FASA’s Franchise survey does show a decrease in the number of outlets in shopping centres and malls.

Of the claimed 45 011 franchised stores in South Africa, business units/stores are placed where the most traffic occurs, i.e., in high streets and in shopping malls/centres. There seems to be an increased number of outlets operating from a home base, while the number of stores in shopping malls/centres shows a corresponding decrease.
Franchisees surveyed claimed that they paid an average upfront deposit of R60 669 or 2,4 months rental and put forward an average rental per square foot and an average annual percentage escalation of rentals somewhat higher than a year ago (R238 vs. R167 and 8,9% vs. 8,5%).
The size of the business premises ranged from less than 100 square metre to over 1 000 square metres, averaging out at 348 square metres.
Relationships with the landlord have not changed significantly in the last year. Approximately three in four franchisees rated their relationship with their landlord as being very good or good. A good relationship and prompt attention to queries and fixing things earned the landlord a positive score. Another reason for giving the landlord a positive score related to good maintenance of the property.