Small Town Malls Faring Better
Our market research has provided us with some interesting insights into shopper habits and desires, says Wong
Slow performance of JB, Kuching retail spaceThe performance of retail space both in Johor Bahru and Kuching is slowing, with lower annual yield in the former and rising vacancy rates in the latter.
For Johor Bahru, the prime retail rental in the city centre is still commanding about RM27 per sq ft (psf) a month but the average yield has slipped below 7% as of last year compared with the previous year, according to the 2016 Property Market Report by CH Williams Talhar and Wong (WTW).
This is despite the occupancy rate increasing to 77% in an existing retail space supply of 13.3 million sq ft last year. The reason for the increase was the relocation of Metrojaya departmental store.
"It is noted that Metrojaya, one of the leading departmental stores in Malaysia, has relocated from Danga bay mall to Komtar JBCC [Johor Bahru City Centre] shopping mall since June 2015. Their entry has vastly improved the occupancy rate of Komtar JBCC shopping mall to about 80%," the report states.
However, a local observer notes that it was just a "dressing up" in the retail outlook.
"A relocation from one area so close to the city centre [Dagang Ball Mall to JBCC] doesn't really boost the vacancy rate. I will be more optimistic if it were another departmental store opening up in Johor," he says.
"The retail rental looks set to be stagnant at RM27 psf for the next two years and if the economy worsens, it may slip," he says.
For Kuching, the average rental rate has dropped for the retail sector as a whole, especially for older malls which are struggling to maintain their occupancy, says the WTW report.
"Rental rates generally average less than RM10 psf although the smaller units in prime locations [and] at better-performing malls are still being maintained at a good rate of RM20 psf.
With new and modern complexes coming up with better design and concept, older malls would need to reinvent themselves to remain relevant and occupied, the report says.
There are several malls in Kuching currently under construction due to be completed within the next two years. The latest - Viva City mega mall - fwhich opened in December, pushed up the retail space in Kuching by another 820,000 sq ft.
The others include the six-storey emporium, the four-storey Matang mall, the Moyan Square Shopping Mall and the Aeon Shopping mall, that will add over half a million sq ft of additional retail space in Kuching when completed.
"The large influx of new retail space into the market in the last few years has shown signs of saturation, which is reflected by falling transactions and occupancy rates for shopping malls,'says the report.
What is interesting is that in the case of Summer Mall, its performance is better than the market average in Kuching.
For Kuching, the large influx of new retail space into the market over the last few years is showing signs of saturation, which is reflected in falling transactions and occupancy rates for shopping malls, the report says.
In managing Kluang mall, Tenaga Nusantara backed up its strategies with internal market research to maximise its success rate.
"Our market research has provided us with some interesting insights into shopper habits and desires. Based on our comprehensive market research report in 2013, our shopper profile is young with more than 63% married with two and a half kids on average, living in a household with 4.4 persons," Tenaga Nusantara senior general manager of corporate affairs Vino Wong tells FocusM.
"Overall, 60% of our shoppers are aged between 18 and 34. Kluang residents shop at the mall an average of seven times a month, spending an average of 95 minutes per visit. The average house-hold monthly income is RM5,006," he says.
Giving what shopper wantsOne common feedback from the surveys was the desire for more brands. "This was one of the major factors for our management in seizing the opportunity to bring international brands to Kluang Mall," says Wong.
"Functional hypermarkets and malls are no longer enough. Shoppers demand experiential shopping with lifestyle themed decor and ambience along with family-friendly events and activities during the weekends," he adds.
And with new and modern complexes always coming up with better design and concepts, older malls would need to relevent themselves to remain relevant and occupied.