IPSWICH City Council has paid a heavy price for its decision in 2019 to enter the tough world of retail leasing.
Council’s bid to find tenants for its multi-million dollar CBD refurbishment project has failed to deliver despite them paying leading leasing agents Ranbury Property Management Group a figure including GST of almost $950,000.
Ranbury spent four years trying to find tenants and while they signed a number of heads of agreement they only managed to sign leases with six small food outlets, two beauty care operators and a chemist who was already there.
It’s believed they also initiated council signing off on controversial lease agreements with Hoyts Cinema and AusHotels.
Cost blowouts surrounding those two projects has seen ratepayers burdened with $48m to renovate the CBD Venue building and $11m plus to stabilise and rebuild the Commercial Hotel.
The sting in the tail for council is that they still have 24 empty shops to fill and they have yet to sign any retailer that offers anything substantially different to what the massive Riverlink Shopping Centre across the river has except for a hotel.
When questioned about the lack of retail leasing success council replied with a long winded explanation which said in part:
“The COVID-19 Pandemic had world-wide health impacts and significant consequences across every level of government, business and industry, including the retail and entertainment market.
In addition, multiple, consecutive national interest rate rises and major supply-chain constraints have had negative impacts on the retail and entertainment market.”
Highly experienced shopping centre executive, Peter Coroneo, has a long involvement in the retail property sector, and currently heads up the Leda Group’s portfolio of four major shopping centres, which includes Riverlink.
Mr Coroneo said that curating a retail offering has always been a challenge, made more difficult by today’s ever-evolving retail landscape. “One of the biggest lessons we have learned from COVID is to carefully look at the sustainability of the asset.
“As the owner of Riverlink, and despite Riverlink being an established and very well performing asset, we have had to work really hard over the past few years to ensure that we are delivering an asset and an offering that are sustainable for all involved.”
Mr Coroneo said it would not be surprising if the Council is finding it difficult to agree terms with tenants in Council’s CBD redevelopment, which is currently an unknown proposal.
“We have been especially concerned that Council follows the recommendations received from KPMG, including that any tenants they sign should not compete with Riverlink or nearby retailers, and should enhance and differentiate from the city’s retail offering.”
The KPMG report also contains budgets that underpin the feasibility of the redevelopment, which according to Council’s records have been exceeded.
“We are a long time investor in Ipswich, and are supportive of a rejuvenated CBD. We are deeply concerned about the overspend, and how the duplication of Riverlink’s tenancy mix in the CBD will impact the hard working tenants at Riverlink.”
Ranbury’s contract with the council to lease properties in the CBD has recently been taken over by Colliers after a tender review process.
NOTE: Editor Peter Chapman has an intricate knowledge of retail leasing and the operation of shopping centres after working as the communications manager of Leda Holdings for more than two years in 2017-18.