The Macarthur region is one of the fastest-growing regions in the state of NSW. The region is steeped in history with the name Macarthur embedded in Australian culture. Lendlease’s Macarthur Square sits at the heart of the Campbelltown commercial district which, in turn, is the epicentre of the Macarthur region. Macarthur Square is about to transition from a regional into a super-prime regional. It’s the ‘next generation’ centre taking it well over the 100,000 m2 mark. Already a powerhouse, it’s about to dominate the shopping scene in the region with a growing population already over 400,000. SCN profiles the new Macarthur Square.
Macarthur Square sits at the heart of the commercial district of Campbelltown, some 60km south of the Sydney CBD; it is one of the major retail assets managed by Lendlease and jointly owned by Australian Prime Property Fund Retail (APPF Retail) and the GPT Wholesale Shopping Centre Fund.
The Macarthur region is steeped in modern Australian history. The legendary couple, John and Elizabeth Macarthur, were the region’s first entrepreneurs establishing the Australian wool trade. The rich pastoral land of the Macarthur region was, prior to 1970, the epicentre for farming and dairy production in Australia.
But Macquarie fell from grace and his replacement, Governor Brisbane, shelved plans for Campbell Town’s development and for several years it languished somewhat.
For a hundred years, from the mid-nineteenth century, growth was slow as it went through a number of starts and stops, two world wars having their effect until, in 1960, it was designated as a satellite city and the regional city for the south-west of Sydney. By then it was known as Campbelltown.
In 1959 Lendlease Homes, the then residential arm of the company, acquired land at Macquarie Heights (now known as Bradbury), its first foray into the region. Over the next few years into the 1970s, Lendlease Homes developed several residential estates as well as the Campbelltown Golf Course.
Just 17 years after founding Lendlease, Dick Dusseldorp formed an association with the Macarthur Development Board, that was well underway with converting the rolling pasturelands around Campbelltown into a thriving satellite city.
In line with its new status as the regional capital, Lendlease developed Macarthur Square at Campbelltown, opening it in 1979.
Geographically, the Trade Area was large; no motorways existed in those days and Macarthur Square drew from as far away as Bowral and the Southern Highlands. David Jones occupied a three-level, 12,000m2 store; Big W opened one of its first outlets in a freestanding structure adjacent to the centre; Woolworths supermarket anchored the western end with DJs to the east. Total project costs were $30 million and the centre, fully leased, was delivered some six months earlier than programmed.
It was not just the construction and delivery of the centre that beat the programme; the centre generally, in terms of trading, was ahead its time. It was never desperate, but it traded below the levels of its counterparts closer to Sydney. Everyone knew that Macarthur Square had been built for growth.
As the 1990s came, so did that growth; Macarthur Square, dominant in its region, began its inexorable rise through the ranks of the MAT ladder. From an MAT of less than $100 million during the 1980s, by 1995, Macarthur Square passed the $150 million mark. Extensions took it from its original 46,000 to 58,000m2 and, by the end of the 1990s, its MAT had grown to $268 million.
In 2006, a few years prior to the GFC, Macarthur Square was extended to some 95,000m2. An entertainment and leisure component had been added to its western end – a group of restaurants and cafés leading out to the railway station, anchored by an Event Cinema complex. The ‘freestanding’ Big W had long been incorporated into the centre at the eastern end, together with a Coles supermarket on the lower level and Target above. By 2010, Macarthur Square was trading at an MAT of around $540 million.
Yet, as is mostly the case, the other figures – MAT/m2 and Specialty MAT – told the real story. At the dawn of the new millennium, in 2000, Macarthur Square had an MAT/m2 of $5,600 with a Specialty MAT/m2 of $7,500. By 2013, the Specialty MAT/m2 had passed the $9,000 mark, with centre MAT/m2 at $6,677. The centre was trading well, but some of the majors were underperforming. By the end of 2014, centre MAT/m2 was $6,736 with a Specialty MAT/m2 in excess of $9,300.
It’s obvious Macarthur Square needs expansion, but it’s more than a case of just adding shops; it’s reconfiguring and maximising the potential of what’s already there. In addition, a new market needs to be catered to; at Macarthur Square, it’s a whole new ball game with a whole new market. South-western Sydney has matured, and Macarthur Square is set to become one of Australia’s super-prime regionals. The whole scene has changed.
Long gone are the days when the region was a stepping-stone to secure a residence closer to the Sydney CBD. Long gone are the days when Macarthur Square was eagerly anticipating Trade Area numbers of 150,000. Long gone are the days when Campbelltown was an isolated pocket suburb to the south west of Sydney.
Today, Macarthur Square is positioned as the undisputed prime regional serving a Trade Area population in excess of 400,000. It sits at the heart of the fastest-growing sub-region in Sydney, expanding at nearly twice the rate of the Sydney metro.
Trade Area population is expected to grow to over 463,000 by 2021, less than five years after the present redevelopment is completed. And the growth isn’t over by a long shot – Trade Area population forecast for 2026 is 530,760.
Below: Part of the Macarthur region Trade and Areas
It’s not just population numbers, either. Of significant importance to the retail trade, both incomes and household expenditure are seeing strong growth. Average per capita incomes in the Main Trade Area rose by 24% from 2006 to 2011, and retail expenditure is forecast to double in the next 11 years; that’s a growth rate of 6.4% per annum for the next decade.
In actual numbers, it means the retail spend will grow from its present $5 billion to $9.9 billion by 2026.
The region is now experiencing a new generation of affluent families moving into the area, and their incomes continue to rise – you can see it in emerging pockets as well as already established upmarket areas. In pockets of the secondary south west for example, average incomes are pushing $160,000 per annum, which is similar to that of the Sydney suburb of Mosman. Suburbs within the Trade Area have average household income over $105,000, compared to the Sydney metro average of $99,586; in the secondary west it’s $105,771.
This new affluence and population growth is a direct result of Campbelltown’s status as the regional city; with that designation, many cogwheels click into action. There is a large campus of the University of Western Sydney within walking distance of Macarthur Square. The campus offers degrees in medicine, health, sciences, law and business. There are research facilities and, in 2007, the UWS School of Medicine was established and began offering the Bachelor of Medicine/Bachelor of Surgery (MBBS) degree for the first time in the university’s history. It is hoped that many of the School’s graduates will practise in the Western Sydney region, in order to redress the shortage of healthcare professionals in the area.
Badgerys Creek, the nominated site of Sydney’s second airport, is just 30 minutes away from Macarthur Square, and it’s expected that major infrastructure works connected to that project will resonate in increased spending in the region.
Road systems and public transport have improved dramatically over the last few years. The M5 Freeway has reduced the travel time by car to the Sydney CBD to around 45 minutes, and the train (the railway station is adjacent to Macarthur Square’s entertainment precinct) will take you to the centre of Sydney in just over an hour. The Macarthur Square Bus Interchange services the south-western routes covering Campbelltown, Macarthur, Camden and surrounding areas.
So what does all this mean for Macarthur Square: this population growth, the increased wealth and spending and the maturing of the region in general? Gary Horwitz, Lendlease’s Head of Retail told SCN that it was time for a complete rethink of the centre, and that the present redevelopment will change its very nature.
“In the past we’ve added retail in order to satisfy increasing demand,” he said. “We connected the western end to the Big W some years ago, which gave us the opportunity of adding some more retail. We’ve added a Coles supermarket and a Target over the years and the last project we undertook here was the entertainment and leisure precinct, linking the centre to the railway station. But now it’s time for ‘quantum leap’ – the centre needs more retail, yes, but it’s more than that. It needs to make the transition from being a major regional centre into super-prime regional, and that not only adds retail, services and other facilities, but it changes the very nature
of the centre.”
Currently, Macarthur Square comprises a GLA of some 95,000m2 with majors David Jones, Coles, Woolworths, Big W, Target and Event Cinemas. Mini majors include JB HiFi, Best and Less, The Reject Shop and Rebel Sport. There are 289 specialties and the MAT is some $575 million.
The $240-million redevelopment creates a brand new mall on the upper level, springing out from the David Jones court running north-south at right angles to the existing east-west mall (see Diagram 1).
Diagram 1 Upper Level
Below: Lower Level
David Jones reduces in size, opening with a totally new fit-out to make it a next-generation David Jones, the first flagship store in the state.
Adjacent to DJs is a 3,500m2 space, and you don’t need to be Einstein to see that it’s the likely location for the first international brand in the south-west region. Will it be H&M, Uniqlo or even Zara? Speculation is rife; SCN is considering opening a book and quoting odds!
The new mall leads to a stunning fresh-food market hall; it’s a blend of fresh food with quality dining options, with the line between the two blurred somewhat so one sits to consume food in full view of both restaurants and fresh-food providores. It’s not just indoor eating, either, since the new feature incorporates a stunning alfresco terrace as another dining option.
It’s here, as the mall turns east-west, that the new Coles supermarket is located – the very latest prototype, the first in the state of NSW. The mall leads directly into the new carpark, and it’s not difficult to guess the future. Although Lendlease say they have no plans as yet, it’s a safe bet that the next extension will continue this east-west mall and then turn it north-south (parallel to the new one being developed now), linking back to the original mall somewhere near the Target store. Will a Myer department store become the catalyst for a future redevelopment? In SCN’s view, it’s a natural fit! David Jones remains the only department store in the entire region and it’s a market too large, too affluent and too mature to ignore.
The area adjacent to David Jones and, more to the point, its size (3,500m2) signals that the region is ripe for the new international brands. Plans show another mini major, also yet undesignated, opposite this space. All Lendlease would say at this point is that negotiations are ‘under way’ with several international retailers.
With a strong student population alongside the Trade Area demographic, it’s Uniqlo territory down to a ‘T’ – they’d have to be in the running, and there’s no doubt that Zara would trade its backside off in that part of the world. All interesting stuff! Keep your eye on this space for further news on the retail mix.
A full-line Harris Scarfe is a further addition and, along with the 45 new specialty stores, the Macarthur Square redevelopment will also see the inclusion of a brand new Aldi supermarket.
What’s convincing about this project, what separates it from many of its peers, is that the developers, Lendlease, are heavily involved in the region on a variety of fronts: they have another presence, in multiple locations within Sydney’s south west, through their Communities business. Again, this demonstrates the scale of growth in the region.
Located at Wilton and at the foothills of the Southern Highlands, Bingara Gorge is a lifestyle and leisure community. Home to over 1000 residents already, the masterplanned community reflects the area’s stunning natural setting and offers residents the latest in modern conveniences. At 450 hectares, Bingara Gorge features over 200 hectares of open space including 120 hectares of protected bushland, 13 hectares of parks and playgrounds, 18km of cycling and walking trails and stunning waterways. Upon completion, Bingara Gorge will provide an 18-hole golf course, leisure centre, retail precinct, childcare centre and primary school, cafés and restaurants, as well as convenient connections to major roads and Town Centres. In 2015, Bingara Gorge received the Urban Development Institute of Australia’s (UDIA) award for best residential development in NSW.
In May 2015, Lendlease’s Communities business announced the acquisition of Mt Gilead, a 610-hectare property within the bounds of Campbelltown City Council, approximately seven kilometres from Macarthur Square shopping centre. The acquisition is in line with Lendlease’s national growth strategy to acquire sites selectively in key growth corridors, replenishing their portfolio and expanding their NSW footprint. So Lendlease is not simply harnessing the growth in this region – they’re actively engaged in providing it! As Gary Horwitz told us, “This is now a market that chooses to live here for the lifestyle it provides. We’re seeing an emerging aspirational fashion market; there’s a need to move Macarthur Square a notch upward. The community want more fashion but they also want more restaurants, more dining options and an extension of the leisure and entertainment component.”
The present fashion mix is exhaustive but it’s ready to move up a notch or two. The demographics are right, the market is there, and the opportunities for some retailers are obvious. It’d also be a safe bet to say the likes of Mimco, L’Occitane, Mecca Maxima and some of the better ‘mid-range’ labels will be targeted. There’s a need here, and the centre as well as the consumers are crying out for some new faces in retail.
Macarthur Square, with an MAT close to $575 million, is showing a 6.5% growth in Specialty MAT. In December, David Jones was significantly up on the corresponding month for 2014.
Turnover of the store for the full year is up too, no doubt as a result of the new owners’ focus on their
new brand offering.
A further 500 car spaces will be added as part of this redevelopment, and the Specialty count will increase to over 320. GLA will increase to over 107,000m2.
We walked the centre on a Monday around lunchtime. It was wall-to-wall people; testimony to the 12,000,000/year foot traffic count. The place was buzzing and people were spending. What’s highly noticeable, to those of us who knew the Macarthur Square of old, is the difference in the style of people who now comprise the 400,000 plus Trade Area population.
The demographic has changed dramatically. It’s not only matured, but it now has confidence. People live in Sydney’s south west because they choose to. In the Lendlease literature describing the centre, there are quotes from customers reflecting that new thinking: “I want an evening out, without having to drive to the city”, and “I want the best of both worlds, the buzz of the city, but without the queues”.
The Lendlease publicity adopts the theme of ‘The Next Generation Macarthur Square’ and it’s very fitting. It is indeed the next generation, and they are looking for the next Macarthur Square. In SCN’s view, the MAT in the first full year, 2017, will be close to the $750 million mark. As it stands, Macarthur Square dominates the Main Trade Area with sales more than twice that of its nearest competitors. Last year (2015) SCN’s Big Guns showed Macarthur Square in the Top 10 centres in NSW, but its growth rate far outpaces those above it.
This is not just an extension. DJs downsizing to open its first flagship store in NSW will radically increase
the efficiency of the space, and therefore the MAT/m2. The surrendered excess space is converted to prime specialty retail, with potential international retailers as an adjacency. The new Coles store is the very latest in design and presentation.
Significant refurbishment works are planned for the entertainment and leisure precinct leading to the railway station. Macarthur Square will ‘present’ as a vastly different centre as other parts of it are remixed and refurbished. It will make the transition from its present ‘dominant regional’ to the status of ‘super-prime regional’ very comfortably. In major terms, the redevelopment will be complete prior to Christmas this year. SCN