Retail landlords are defying the flagging sales of their tenants and embracing multimillion-dollar deals to buy and revamp shopping centres across Sydney.
The aim is to recreate malls as suburban hubs, with a focus on food and entertainment rather than the traditional apparel sector, under pressure from the internet and consumers reluctant to spend.
In one of the largest projects this year, Stockland will pour $222 million into its Wetherill Park shopping centre in western Sydney.
The site work is scheduled to start towards the end of next month. Stockland intends to expand the property by 15,000 square metres to give it a gross lettable area (GLA) of more than 70,000 square metres. It will be the 47th-biggest centre by size in the country, according to the Big Guns list from the 2013 Shopping Centre News survey. The biggest in NSW is Westfield Parramatta at 137,000 sq m. Westfield Bondi Junction is 128,759 sq m and Westfield Chatswood 76,696 sqm.
The Wetherill Park development includes a larger entertainment and leisure complex including an upgraded 12-screen Hoyts, additional restaurants and a new 800-seat food court. The centre has two supermarkets, a Big W and a Target, and 200 specialty stores, with average rent of $11,150 per square metre.
The chief executive of Stockland, Mark Steinert, forecast the redevelopment would provide "strong financial returns, deliver growth in market share and recapture a portion of the estimated $600 million expenditure in this trade area".
In its full-year result, Stockland's chief executive of commercial property, John Schroder, said net operating income rose 5 per cent thanks to the redevelopments of several malls. Mr Schroder said rents were subdued.
In Sydney's south, Brisbane-based syndicator Sentinel has paid $31.5 million for the Menai Central retail mall, which is 10,796 sq m with 275 car parks.