Retail Property – The Meaning of Shop and Shopping Centre
Understanding the functions of the Retail Shop Leases Act 1994 (QLD) is paramount to ensuring ongoing financial success from your retail property asset.
As a registered specialist retail valuer in Queensland, I am examining the Act in this new three part series to help you understand important terms and their relation to your retail business.
There is an order of hierarchy in retail property
It starts with a single shop – perhaps the corner store – and ends with the regional shopping centre. In between, there are convenience centres, neighbourhood centres, district centres and sub-regional centres.
As a conglomeration of shops increases in size, its definition within the hierarchy of retail property will depend on the inclusion of supermarkets, discount department stores and department stores. Obviously, the regional centre has all of these and more, including cinemas, food courts, kiosks and a large number of shops offering an array of apparel, goods and services.
Within their category, the size of each centre (gross lettable area), number of shops and also the mix of shops will vary. No retail shopping centre within their category is exactly alike, but their attributes are similar.
The above describes the hierarchy of retail property within this asset class, but what defines a shop or shopping centre under the Retail Shop Leases Act 1994 (QLD)?
Retail Shop
A retail shop is a premises that is situated in a retail shopping centre, or used wholly or predominately for carrying on of one or more retail businesses. Retail businesses are those prescribed by regulation as a retail business. Therefore, provided retail business is carried on within a premises (a single shop), it is captured by the Act.
Retail Shopping Centre
A retail shopping centre means a cluster of five or more premises used wholly or predominately for carrying on retail businesses. This is a primary part of the attributes to the meaning. From the above meanings, one can deduce that all premises within a group of premises exceeding five are subject to the Act. Therefore, the hierarchy of retail property is captured by the Act.
However, if you, as owner, intend to lease a shop (or premises) to a major lessee then certain sections of the Act do not apply and you need to be aware of these. A major lessee is defined as a lessee of five or more retail shops in Australia.
In summary, while the retail property sector has its descriptions to categorise a retail shopping centre, the Act provides meaning of a retail shop and retail shopping centre via the legislation.
Next month, I continue with Part Two on exclusivity clauses in retail leases and several important definitions.
For expert advice on commercial property management or retail property management, please call our Brisbane office on 1300 076 046 or Bruce Barrington directly on 0411 726 512. Should you require a market rent review report or rental determination under the Retail Shop Leases Act, please click here.
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