Major South African Shopping Malls Struggle Amid High Vacancy Rates and Declining Rental Income

Image Source: ARC Architects

Two of South Africa’s largest shopping malls, Fourways Mall and Brooklyn Mall, are facing significant challenges as vacancy rates soar, and rental income continues to decline, raising concerns for property owners and investors.

Brooklyn Mall, located in Pretoria and 75% owned by Growthpoint Properties, has seen its vacancy rate spike from 3.6% in 2019 to an alarming 18.7% in 2024. Once regarded as a premier shopping destination, the mall’s performance has deteriorated significantly, contributing to Growthpoint’s disappointing financial results. The company’s net asset value per share has dropped by 6.1% to 2,020 cents per share.

Brooklyn Mall’s troubles stem from several factors, including an influx of vagrants inside the mall, which alienated its affluent customer base, and a rise in criminal activities that scared away shoppers and tenants alike. Compounding these issues, competing malls such as Castle Gate Shopping Centre have lured away both retailers and customers, further straining Brooklyn Mall’s ability to fill its 220 stores. Despite its prime location and impressive 75,259 square meters of retail space, the mall’s gross rental income has plummeted.

Similarly, Fourways Mall, the largest shopping centre in South Africa, has faced a dramatic increase in vacancy rates, climbing from 3% in 2021 to a staggering 20% in 2024. The mall, which is 50% owned by Accelerate Property Fund, underwent a major revamp and expansion in 2019, increasing its gross lettable area (GLA) to 88,785 square meters. However, the redevelopment has not produced the expected financial returns.

Fourways Mall’s rental income has suffered, with net rent per square meter falling from R278 in 2019 to R223 in 2024. Total rental income declined from R330 million to R295 million over the past year, and the mall’s fair value dropped by R1.8 billion, down to R7.8 billion in 2024.

In response to these financial hardships, Fourways Mall has implemented a comprehensive turnaround plan. The mall has partnered with Flanagan & Gerard as strategic asset managers and Moolman Group as property managers to revitalise the shopping centre. This plan includes improved signage, new tenant recruitment, enhanced security measures, backup power solutions, and optimised traffic flow, along with plans to enlarge parking bays and enhance the surrounding area.

Both malls face uphill battles as they work to restore their positions as top shopping destinations. For property owners and investors, the sharp decline in performance at these malls highlights broader challenges within South Africa’s retail property market, particularly in the face of increasing competition, economic downturns, and shifting consumer behaviour.