This article by Peter Huddle, CEO – Vicinity Centres, forms part of SCN’s annual CEO Outlook feature published in Big Guns 2024. Premium members can view the full digital magazine here.
After a year of resilience and strategic refresh, we enter 2024 with cautious optimism. In July 2023, we refreshed our long-term strategy to ensure we are laser-focused on what we need to deliver in order to maximise our value as a leading property-led business.
Our strategy takes into account what we expect will be a challenging first half of the year, by executing strategic initiatives at pace to ensure we lay strong foundations for the coming years. We have no doubt that elevated costs of living for Australian households are impacting consumption, particularly across discretionary items, however with tourism continuing to grow, migration at historical highs and with a tight employment market, we continue to observe resilience.
Consumers continue to show a willingness and capacity to spend but are more value-conscious, targeting key sales events and planning purchases to get the best deal. This adjustment to consumer behaviour has underlined Vicinity’s sound strategy and attractive investment proposition with its high-quality and diversified portfolio, including suburban, destination and, importantly, DFO centres. These assets experienced exceptionally strong Black Friday and Boxing Day visitations, which all speaks to a strong and enduring appetite for physical retail.
As we look ahead to 2024, our strategy is underpinned by four pillars that guide our long-term growth: enhance our investment portfolio; deliver property excellence; maintain strong financial stewardship; and enabling good business.
Enhancing our investment portfolio through owning and developing the right assets
At the heart of our refreshed strategy is being a retail-led property business, which will see us own the right assets in the right locations and executing an optimal product to each market.
Chatswood Chase
Vicinity is in a unique position with a diversified retail portfolio that spans the length and breadth of Australia across different retail product classes. Our diverse footprint gives us a distinct competitive advantage and the ability to capitalise on market liquidity in certain price segments and recycle our capital into growth initiatives.
Most recently, as part of our active investment portfolio management, we have made key strategic divestments at attractive pricing to enable an uplift in investment in our premium retail assets, such as Chatswood Chase and Chadstone.
Vicinity has remained one of the most active A-REITs in terms of developments, incorporating both large scale and smaller refurbishment projects. We have continued to invest and manage through challenging construction conditions to ensure that our assets are positioned to meet market needs and deliver value growth through market cycles.
At Chadstone we unveiled The Social Quarter, adding more entertainment and premium dining, and currently work is well underway to deliver a new fresh food precinct – The Market Pavilion. These world-class amenities pave the way for a successful Chadstone office precinct. Officeworks corporate office joined us during 2023 and will soon be complemented by the contemporary 20,000m2 One Middle Road commercial office building, demonstrating Vicinity’s unique ability to deliver mixed-use projects that address the structural shifts in the commercial office category.
Chadstone x Azuma Makoto x NGV Event
Meanwhile, at Chatswood Chase, of which we acquired the remaining 49% in October last year, we are in the final stages of redeveloping the Lower Ground Floor to introduce Chase Market – a food, beverage and dining experience. Importantly, we commenced the $600 million redevelopment of the remainder of the centre in what we believe to be the preeminent premium retail development under construction in Australia now and for some time.
Both developments are indicative of the evolution at our assets as we respond to the changing tastes and needs of our customers and look for complementary retailers that make our retail, dining, entertainment and work precincts attractive places to visit seven days a week.
We are also enhancing our assets through smaller retail developments that make meaningful differences to our communities. Recent projects include those at Castle Plaza, Nepean Village, Bankstown Central, Bayside, Emporium Melbourne, and Box Hill Central, which saw a strong increase in visitors over the festive period post-development – a great indicator of a successful project.
In 2024, we’ll continue to enhance our investment portfolio, focusing on capital investment to reposition our assets in a financially responsible way to better cater for evolving markets well into the future.
Delivering property excellence through customer experiences and retailer engagement
In 2023, our teams did an incredible job of delivering property excellence through curating leading customer and retailer experiences, and that same drive and creativity is in the pipeline for 2024.
We have delivered some great partnerships that have focused on elevating the experiential customer offering to provide something truly unique. Recently we saw this with Rebel’s new Emporium Melbourne flagship – complete with a rooftop multi-purpose basketball court – and Luxury Escapes change the travel booking concept with its first physical store at Chadstone.
Emporium Melbourne
We also built on our customer experiences with a Banksy exhibition and NBA exhibition at QueensPlaza, a partnership with NGV’s Triennial exhibition, and the continuation of our national Monopoly partnership. And 2024 will be bigger still.
Another key part of our focus on delivering property excellence is the implementation of complementary products and services to our centres.
Following our installation of more than 70 electric vehicle charging points last year, with more yet to come, this year we turn our attention to our leading shopping centre media network and a new partnership with Cartology that will see us move towards a controlled primarily external media model that will leverage partnerships to unlock value through the ability to drive significant scale.
The way we do good business is critical
For me, one of the most important parts of our strategy refresh is the acknowledgement that the way we do business matters. By enabling good business, we are committed to creating a place where our people thrive in safe work environments, and sustainable destinations within our communities.
Through our commitment to sustainability, we have achieved some good results with energy rating improvements, an increase in Indigenous business procurement and community engagement.
We elevated our work with worthy community programs, and it was great to see our teams get behind our volunteering and workplace giving programs. In 2024, this will be a continued focus and I know the team are passionate about giving back to community organisations that are important to them.
The health and safety of our team is always top of mind for me and the executive team. Late last year, we launched our new employee assistance program, as well as a wellbeing platform that provides a range of resources for holistic wellbeing.
2024 will be an exciting time for the Vicinity team as we refresh our Purpose, Vision, Values and Behaviours. We have seen some great early engagement from our team, and we are excited to elevate our corporate culture together.
Looking ahead to 2024
We know our continued focus on engaging our teams, our communities and our partners in the right way throughout 2024 and beyond is critical to our success.
In 2024 we will continue to execute our strategy at pace and focus on delivering our long-term growth priorities. I am proud of the progress our team has made so far and I look forward to working with them, our retailers, our partners and shareholders this year and beyond.
