‘It's fun': John Gandel explains why big malls are winners
Chadstone shopping mall in Melbourne’s south-east, jointly owned by John Gandel and Vicinity Centres, clocked up almost $2.7 billion in annual sales last year, 16 per cent better than it was doing before the pandemic and more than double its nearest rival.
Chadstone’s success, along with that of other major malls including Westfield centres – which account for seven in the top 10 of the biggest earning malls – is indicative of the sector’s rebound from the lockdown years and its resilience amid cost-of-living pressures, industry players say.
Mr Gandel, who owns a half stake in Chadstone directly and is the largest investor in Vicinity, said Chadstone had become so successful and so big, its comparators were no longer local but international, such as the Dubai Mall, one of the world’s largest.
“We’re way up there now,” he told The Australian Financial Review on Thursday.
Driving that success is the steady investment into the expansion of Chadstone, which now covers close to 240,000 square metres of space, with the latest redevelopment – the Social Quarter which opened this month – adding another 10,350 square metres, occupied by 17 entertainment and dining tenants.
“That added thousands and thousands of customers in the first week (it opened) above normal traffic. We’re still going, we’re nowhere near finished this current development,” Mr Gandel said.
Chadstone also claimed the prize for hosting the most productive speciality retail space among the country’s top malls, increasing over last year to nearly $27,000 per square metre of retail space. That represents a 27.1 per cent jump on 2019, the year before the pandemic hit, according to the Shopping Centre News Big Guns report. The report, a much anticipated industry barometer, has resumed its rankings after a hiatus during the COVID-19 disruption.
“We’ve kept on putting money into the centre, working with tenants all the time to get them in the right location. It’s a combination of management, the physical structure itself and location. We’re outgrowing everybody else,” Mr Gandel said.
Along with regular attendance at his office in Chadstone, Mr Gandel often visits the giant mall in his spare time, purely for amusement as much as any shopping need. Investment in over 50 redevelopments had never been dictated by short-term gains and was now paying off, he said.
“It’s fun. We’re now an entertainment facility as well. It’s not just shopping,” he said.
“At the end of time, we’re looking at the long-term quality of the asset. It’s starting to come out and more and more.”
The Big Gun rankings this year feature some 91 centres, with 85 per cent significantly increasing their annual turnover while the other 15 per cent either maintained 2020 levels or showed minor falls. Nine of the top 10 malls now generate $1 billion or more in annual sales.
“People want to visit shopping centres, they want experiences, they want to feel and touch things, they want social interaction,” said SCN publisher, Michael Lloyd.
Westfield malls, owned by ASX-listed Scentre, the country’s largest retail landlord, dominates the SCN rankings, including seven of the top 10 performing centres in the country for specialty sales per square metre.
Scentre chief executive Elliott Rusanow agreed with Mr Gandel and Mr Lloyd that creating rich experiences at malls was the key to bringing customers through the door.
“Our collaboration with Disney and more recently with Netball Australia as well as our extensive program of 15,000-plus customer activations and events are just some of the ways we are creating reasons for our customers to spend more time in our Westfield destinations,” he said.
“We are focused on attracting more people to our Westfield destinations to create opportunities for our business partners to transact with more customers.
“In 2022 this was 480 million customer visits, up 67 million on 2021. Customer visits continue to significantly grow in 2023, as we provide people even more reasons to spend their time with us.”
The most productive mall in the country – factoring in all tenants – was the Broadway centre in inner-city Sydney, owned by Mirvac and Perron, which generated $16,272 per sq m.
“Broadway Sydney has long been a safe and inclusive destination with a vibrant and culturally diverse local community,” said Kelly Miller, general manager for retail at Mirvac.
“We’re proud of the incredible work our team does to deliver beyond a great shopping experience, creating moments of celebration, learning and purpose that continues to bring our communities together. This means a lot to our team and our retail partners.”
