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Confidence grows for shopping centre operators

According to a recent survey undertaken by Jones Lang LaSalle, shopping centre managers are currently much more confident that a growth in sales turnover will be realised in the next 12 months.

As reported by The Australian Financial Review, 56% of centre managers now believe that growth will be realised in this area compared to just 48% in May this year. Meanwhile, 42% are expecting to see rental growth in the next 12 months – compared to 29% in May – although this is partially due to the level of incentives being offered to attract tenants.

The retail sector is facing headwinds, such as a weak economic environment, subdued consumer spending and a growing threat from the online retail sector. As such, many potential tenants are hesitant to open new stores.

On the other hand, Richard Fennell, JLL’s Australian head of property and asset management has said the depreciation of the Australian dollar is welcome as it diminishes the advantages held by the online sector.

Foolish takeaway

The restored confidence is good news for shareholders in companies such as GPT Group (ASX: GPT), Westfield Group (ASX: WDC) or its affiliate, Westfield Retail Trust (ASX: WRT). As consumer confidence picks up, more retailers will open new stores which will increase revenue for these companies.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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