Shopping centre investment fundamentals require review

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The tailwinds that have driven the profitability of shopping centres over the last 25 years are petering out, and investors may need to review their approach to the asset class to ensure they remain exposed to the best opportunities, said Chris Bedingfield, portfolio manager at global real estate investment manager Quay Global Investors.

“For the best part of 25 years, shopping centres (both direct and listed) have been the ‘go to’ asset class for investors seeking low volatility and competitive total returns.

“For example, the various incarnations of Westfield have been strong outperformers relative to the local indices, while in the US, property securities managers could build a portfolio around companies such as Simon Property Group, safe in the knowledge it would be a reliable outperformer.

“But it is unlikely that the factors that supported past performance are still applicable today.”

Chris said there have been a number of significant advantages supporting the outperformance of shopping centres over the past 25 years.

“A big tailwind for the sector has been demographics.  In the late 1980s/early 1990s, the baby boomer generation was in the midst of a consumer boom, at or nearing peak incomes, and busy raising their children and creating their homes.

“But this generation is now reaching retirement and are more likely to spend on health and other services, rather than at shopping centres or malls.  And subsequent generations are unlikely to have the same shopping habits, having grown up with technology.

“Another driver for shopping centres was the need for national and regional retailers to have a physical presence.  Catalogue and direct marketing were never a real substitute to a physical store presence.

“While physical store presence remains critical, it is no longer the only channel for distribution.  The growth in online retailing can no longer be ignored and, while shopping centre owners have felt a small impact so far, this will increase as times goes on.”

Chris said it is clear the factors that supported the retail property asset class have changed.

“The short-term outlook for most shopping centre operators is likely to be ‘business as usual’. But taking a five-year plus view, we believe that while the best shopping centres and malls will survive – and even thrive – many mid-level centres will close in the US. 

“The problems are less pronounced in Australia and Europe as there is a lower provision of retail floors space per capita.  However these markets are not immune to technology and demographic headwinds.

“Retail landlords will need to have a greater focus on the luxury and ‘value’ retailers, and development will be more targeted.

“Smaller shopping centres that meet local needs, focussing on groceries, services and pharmacy, will also continue to perform well.

“Investors will need to be patient in order to find good value in their preferred retail landlords, but at Quay we are happy to wait for the right entry point,” he said.


For further information, please contact:

Claudia Pritchitt
Pritchitt Partners
0438 221 550


About Bennelong Funds Management

Bennelong Funds Management is a boutique fund manager nurturing a growing suite of asset management teams. Bennelong’s boutique partners collectively manage approximately $6.5 billion in funds under management. It is a wholly owned subsidiary of the Bennelong Group, a privately owned funds management and investment business. Visit


About Quay Global Investors

Quay Global Investors is a boutique investment manager focused on the preservation and creation of wealth through innovative strategies in real estate securities.

Quay was launched in May 2015 as a partnership with principals Justin Blaess and Chris Bedingfield and Bennelong. Prior to this, the business operated as Quay Real Estate Advisors which was founded by Justin and Chris in 2013.

The founding partners have over 40 years of collective experience in direct property, equities research, investment banking and investment management across domestic and global markets, giving them a unique skill set and perspective which they bring to the management of a portfolio of global real estate securities.