The recent economic climate in Perth and Western Australia has not been mild, with the effects of the post-commodities boom still reverberating across the State since around 2012-13. The latest economic picture from the WA Treasury indicates a fall, in real terms, in the Gross State Product (GSP) by 2.7% in 2016-17, which was the lowest rate of change across all states and below the national Gross Domestic Product (GDP) growth of 2%.
Western Australia’s population stands at around 2.58 million people, and grew modestly by 0.8% in 2017, well below the national level of 1.6%. The unemployment rate for the State averaged 6.0% over the year to May 2018, which is lower than the 6.2% average rate for the year to May 2017, but still higher than the national average of 5.5% for the same period.
Amidst the gloom, there are encouraging signs of confidence for the future including in infrastructure building with government-led and resource sector projects and within the commercial sector, excluding the office market. The residential sector is also showing some modest positive signs, albeit only at a slow pace. The other sector slowly crawling out of the mist is retail, though not across all categories, with Treasury reporting an average annual rise of 0.1% in retail trade for the State, driven predominantly by ‘non-discretionary’ spend.
A greater sign of confidence can be grasped from the more than 50 retail projects across Western Australia, which are in various stages in the development pipeline and totalling an estimated $5+ billion in capital investment. Each of these projects has significant potential to boost the economic wellbeing in their respective local areas, including in jobs creation, with flow-on benefits to the wider economy.
Garden City Booragoon in southern Perth and Karrinyup SC in northern Perth – two of the main regional shopping centres in Perth – are both set for their next phases of expansion and redevelopment. The redevelopment of Garden City Booragoon will take the centre from 72,000 sq.m to 120,000 sq.m for a cost of $750 million, and will feature a new cinema complex, a comprehensive dining/leisure precinct and enhanced shopping choices. Karrinyup’s transformation will cost $850 million and will deliver a 113,000 sq.m centre inclusive of new contemporary fashion and designer brands, and food/dining and lifestyle offers.
The nearby Westfield Innaloo, which will be renamed as Westfield Stirling post-development, will undergo a $600 million expansion and redevelopment, doubling the size of the centre to include a rooftop dining, leisure, and entertainment precinct, and incorporating an Event Cinemas complex. The development will also aim to transform the neighbouring locality, with proposals to add residential apartments and link them to the centre.
Scentre’s two other Perth assets – Westfield Whitford City and Westfield Carousel – have not been left out of the loop. The $80 million redevelopment of Whitford City was completed in September 2017 with the opening of a brand new dining, lifestyle and entertainment precinct; while Westfield Carousel’s $350 million redevelopment, started in 2017, is nearing completion and will feature a new David Jones department store, additional specialty retail and fashion stores, and a new rooftop dining and entertainment precinct.
Galleria SC in north-eastern Perth is also proposed for a major facelift following approval of the development plan – a $500 million expansion to deliver a vibrant, premium new retail and entertainment offer, including fashion, new fresh food concepts and dining experiences, and a leisure precinct. Further north-east, Midland Gate is undergoing its $100 million expansion, which will open in stages over the coming months to 2019.
In the Perth CBD, the $100 million redevelopment of the prominent Forrest Chase in the heart of the retail core is well underway to create a premium CBD destination for shopping and dining. The CBD core is set to experience yet further changes, with Carillon City proposed for a $60 million overhaul, while Stage 1 of the $75 million redevelopment of the nearby Raine Square is expected to be unveiled in the next few months. Yagan Square, with its market hall offer of a host of specialty food outlets, recently opened in March as the flagship public space of Perth. To the east of the CBD, the Perth Airport retail precinct is under construction, and will host a new $150 million DFO development and a $55 million Costco warehouse, both of which enjoy immense success on the eastern coast and will make their debut in Western Australia.
New greenfield centres across suburban Perth are also on the horizon, focussed along the urban growth fringes, from Alkimos to the north, Wungong/Haynes to the south-east and Byford to the south. New neighbourhood centres will emerge at Whiteman Edge/Brabham, Alkimos, Sienna Wood, Byford, Baldivis, and are in various stages of their planning and development phase.
Just beyond the Perth metropolitan area, the $350 million redevelopment of Mandurah Forum was recently completed and showcases a flagship ‘new generation’ David Jones store for Western Australia, together with a new suite of specialty stores and offerings, including fashion, a new al fresco café and restaurant precinct, and a food market hall.
As a property economics and consulting firm operating nationally, MacroPlan is privileged to have worked on a large number of those Perth and Western Australian projects, providing advice to owners and developers in various forms along their research and planning stages, whether it be in demographics, market potential, sales forecasting or impact assessment studies. The coming wave of new centre additions and changes are positive economic signals, helping to cement the confidence in the underlying fundamentals of the Perth retail landscape.
MacroPlan’s experienced and qualified economists align their understanding of macro-economic forces with micro-economic variables such as geographic and industrial characteristics, demographics, labour market shifts, resource demand and commercial realities. Contact Stuart McKnight, General Manager – Western Australia, today to discuss your property research requirements. To better understand the Western Australian retail market, please contact Denis Chung – Manager Retail.