McCormick Property Development: Heightened sophistication unlocking Africa’s potential

Twelve months ago The SA-Mag was privileged to tell the uplifting story of McCormick Property Development (MPD) and its ground-breaking construction work in isolated South African townships during the years of Apartheid.

This month we revisited the company and Jason McCormick, Managing Director, shared his vision for an exciting 12 months ahead. In actual fact, the intervening year since our last conversation has proved memorable as MPD enjoyed a record breaking 2013.

“We opened 5 new shopping centres in the last 4 months of 2013 alone and it was a really good year for us; all of the malls are trading superbly which underlines the value that retailers place on Southern Africa,” he enthuses.

“We have just opened a further 4 and have another 2 under construction and are planning to start work on another 3 in the next month. Most of these projects are substantial and in the 30,000-40,000 square metre range and will open next year,” he adds.

mall of mozambique_0001_update_comp_28SEPTThe company’s order book is healthy for two reasons: the raft of new shopping mall developments in South Africa and beyond its borders; but also demand for refurbishment and expansion on existing sites, with MPD having retained a number of these projects over many years.

As Africa becomes more sophisticated, needs, demands and expectations rise and that has lead to a number of opportunities for MPD, as McCormick explains:

“The Tsakane Mall in Gauteng is doubling in size and our first major project the Chris Hani Crossing Mall is going up to 50,000 square metres.

“Part of the upgrade is to create space for a number of new retailers such as upmarket fashion clients, whilst we also have a big push on introducing new forms of entertainment to many of our township malls.

“In these areas, traditionally there has not been a lot of choice for quality entertainment but we are now looking to bring Action Soccer courts – which are mini astro-turf soccer pitches to these sites, which we hope will bring customers to the malls more often.

“We hope that this will help to encourage a healthier lifestyle for the local communities by keeping people away from the bars and helping to set-up soccer leagues.”

McCormick says that this innovative concept is MPD’s own initiative and sprang up from his own love of playing cricket:

“This is our own initiative and there have been examples before in South Africa but these soccer centres have been established in more urban areas rather than the townships.

“Some years ago we were asked by some guys in Mumbai to look at malls and cinema complexes to cater for India’s love of Bollywood. There was so much room space in the malls that it was suggested: why not use this room for a cricket pitch? The concept of soccer pitches came out of that really.

“There is a social aspect to this – very much. We will be developing 4 pitches and a pavilion so after matches the players can meet up for a beer in a healthy, socially responsible manner.

“We are also speaking to Virgin Active about introducing some township gyms into our developments and are also looking at other outdoor fitness centres. It is all about creating space where people from the townships can come and enjoy a normal lifestyle.”

With increasing interest in Africa from the world’s leading retail brands, expansion has become a buzz word in recent times. One of MPD’s flagship malls has been Acornhoek in Mpumalanga which has transformed from an initial 9,000 square metre site into a 30,000 square metre mall.

The company was also responsible for the magnificent 19,000 square metre ModiMall Shopping Centre in Modimolle, in the Limpopo Province of South Africa , which is anchored by prestigious retailer Checkers – the upmarket brand of the ubiquitous Shoprite Group.

“ModiMalll is our first site where Checkers are the anchor tenant and underlines how the African market is becoming more sophisticated,” says McCormick. “We continue to work extensively with Shoprite and are the second largest Shoprite developer in the country, but the move to put a Checkers in our ModiMall development is indicative of the increasingly aspirational nature of the African consumer” he continues.

Mall fo Zimbabwe Aerial View_27 July 2011Their prestigious “Mundial Shopping” Mall in the Angolan Capital of Luanda underlines this continuing trend of the increasingly sophisticated offering of retail on the continent as shopping malls shoot up across Africa – and MPD is ideally placed to play an important role in this development, but without neglecting its domestic focus:

“In South Africa we’ve had a robust period of retail development and we have been busier than ever and will continue to be,” McCormick asserts.

“There are macroeconomic concerns which look set to push up interest rates in the future and that will, as my father (founder and Chairman of the business) says: “Chase all the rogues out of the market” because the cost of borrowing will go up and cause difficulties for the less experienced competition.

“Our own model should be robust enough to cope with any significant rises in inflation as it was established back in the era of Apartheid when inflation rose 25 per cent. We survived and have grown enormously as a business so we will be less affected than some of the less reputable developers.

“There is a lot of regional development still going on around South Africa and generally speaking there is still lots of construction activity but it remains to be seen where that is in 12 months time.”

In the meantime expansion of existing malls offers a lucrative line of work for McCormick, who has recently returned from a trip to London where he met with a number of large retailers, showing increasing interest in the African market. And potentially high profile new tenants from around the globe will further raise the stakes in the retail development space.

“Among the prospective tenants we have spoken with have been Walmart, Carrefour, Zara and Mango – organisations we have never had the pleasure to offer space to before and they are now looking at African opportunities.

“We have been spoilt for choice with retailers and with Tete Mall in Mozambique for example, there is 100 per cent occupancy. We are now in the process of redeveloping the Mall of Mozambique in Matola.

“On my visit to London I gained inspiration from a visit to the Westfield Centres in Stratford and Shepard’s Bush and whilst we have to be pragmatic in terms of affordability it is good to stretch the imagination on where we can take malls in Africa,” states McCormick.

Mozambique is a country with a long association for MPD; back in the late 1990s, the company had a bad experience – the memories of which took a long time to heal – and it was not until 2008 that the business made a concerted effort to look at cross border opportunities again, having learned from that experience.

“In Africa the wheel turns a lot slower and each country has its own potential risks and each project has to be assessed on its own merits. But with improved transport links and supply chain we are very excited about Africa and its opportunities.

“I see our future as very much in South Africa – we are very well served by shopping centres in the cities so we will stick to what we have always done in the townships.

“The next 12 months sees us redeveloping the Kwagga Mall in Mpumalanga; this site is over 20 years old and we are increasing the size from 23,000 square metres to a 40,000 square metre enclosed mall.

“We have 30-40 projects in the pipeline over the next couple of years and the future is very bright.

“It is a new dawn for Africa and the resources are there, politically the Continent is stabilised and Africa is open for investment.”