Saving South Africa’s largest shopping mall
Fourways Mall faces serious problems, including poor foot traffic, empty stores, and financial challenges. However, it is on the path to recovery through a turnaround strategy.
The mall is the largest shopping centre in South Africa, boasting a gross lettable area of 178,000 square meters and 350 stores.
It is located in the heart of Johannesburg’s northern suburbs, with easy access through many prominent roads.
In 2019, Fourways Mall was expanded and revamped, offering a much better shopping experience. However, it did not work out as planned.
Despite the very expensive expansion, Fourways Mall failed to attract the shoppers and tenants it needed to make the business work.
It started to lose shops at a concerning rate. For example, vacancies increased from 14,349 sqm in March 2023 to 15,109 sqm six months later.
The net rent per square meter declined from R298 in 2020 to R262 in 2023. This decline is devastating to a property owner faced with increasing costs.
Accelerate’s 50% fair-value share of Fourways Mall declined from R4.8 billion in 2020 to R4.02 billion three years later. This is bad news for the property owners, who are losing money.
The net rent refers to the income the company generates from the property after all property expenses are deducted.
Accelerate’s latest financial results revealed that its gross rent, before expenses, for 2024 was R223, much lower than its 2023 net rent of R262.
The high vacancy rate and declining rent per square meter have resulted in a big decline in the property’s value.
Since the 2020 financial year, the first reporting period since the mall expansion, the mall has suffered several downward fair value adjustments.
Asset fair values are reduced when performance suggests they are worth less than what is reported in the company’s books.
Accelerate has been forced to reduce its 50% stake in Fourways Mall by R900 million over the past four years, from a value of R4.8 billion to R3.9 billion today.
The charts below, using Accelerate Property Fund’s latest financial results, show Fourways Mall’s financial challenges.
Big turnaround strategy
Fourways Mall appointed Flanagan & Gerard as the shopping centre’s strategic asset manager and Moolman Group to oversee property management.
The turnaround plan, announced earlier this year, includes improving signage for seamless navigation, introducing new tenants, and deploying backup power solutions.
It also wants to improve security through better parking area lighting and upgraded security measures.
To attract more shoppers, the mall will optimise traffic flow, enlarge parking bays, and revitalise the surrounding area.
The strategy is starting to take shape. Fourways Mall has made significant strategic upgrades and introduced various new retail brands.
Fourways Mall has significantly increased its retail offerings over the past six months, introducing 9,642 m2 of new brands and approximately 20,000 m2 of lease renewals.
It added notable brands such as Yokico, Legends Barber, Boa Beauty, Valora Jewellery, Perfume Gallery, Crazy Store, Archive, and Mr Price Home.
Other companies added include Nedbank, Truewood Furniture, Sheet Street, Miladys and Incredible Connection.
Many other brands are set to open stores, including Le Creuset Factory to Table, Converse, Polo Sport, Carrol Boyes, ValueCo, Tactical HQ, Tasko’s Sweets and Uniq.
These new additions are scheduled to open through the remainder of 2024 and will be joined by Planet Fitness and more names in early 2025.
Paul Gerard, managing director of Flanagan & Gerard said their new leases averaged 144 square meters per day over the past 29 weeks.
“It demonstrates our commitment to ensuring Fourways Mall’s position as a leading retail destination in South Africa,” he said.
In addition to the expanding retail mix, Fourways Mall is making substantial investments in infrastructure and technology.
It installed energy-efficient lighting across all parking levels, creating brighter and safer environments for shoppers.
The mall upgraded its northern parking deck, created clearer signage, and added a colour identity for each level.
It launched a VIP parking area that provides customers with wider bays, enhanced lighting, and easy access to popular tenants like Woolworths.
It also added the admyt ticketless parking system on 16 August, which uses license plate recognition and smartphone technology.
It gives shoppers a streamlined, paperless parking experience that eliminates the need for tickets and cash.
It further installed free Wi-Fi throughout the mall to further enhance the Fourways Mall shopping experience.
“We hope everyone enjoys the latest changes as we work to create an exceptional shopping experience for them,” said Gerard.
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