As the executive general manager of retail at Frasers Property, Peri MacDonald focuses on mixed-use precincts and the neighbourhood retail sector. Prior to joining FPA in 2008, Peri held senior property roles at Coles Myer Ltd, Macquarie Bank Ltd, Ray White Invest and as managing director of Space Development Corporation , where he undertook independent retail developments and provided specialist consultancy services.

Inside Retail caught up with MacDonald to talk retail and all things Central Park Mall…

IR: One of the biggest highlights for Central Park Mall recently was the launch of Palace Cinemas. It’s a beautiful space, but from what I understand, it was also a challenging process. Can you tell me about that?

PM: We were really using level three as a pop-up events space beforehand. Ambush Gallery was in there for about 18 months and while we worked through what we could do with that space on a long-term basis, we’d always thought that a cinema would be a great use in the centre.

Palace is unique – it’s got 13 auditoria, three of which are their new Palace Platinum model, which is like an elevated gold class. But to fit 13 auditoria into an existing 3,000 sqm floor plan that wasn’t designed for cinema with four-metre floor-to-ceiling heights was difficult.

We worked very closely with Antonio Zeccola, the chairman of Palace, and when we first took him up to the space, he immediately saw its potential. He wasn’t really looking at the internal space so much as he was actually looking out, which is pretty extraordinary for a cinema operator. But he just loved the building, he loved the development.

He said, ‘I’ve got this vision of auditoria around the edge of the building with glazing, where you will sit while waiting for the film to start, looking at this amazing vista, one way looking down Broadway, the other way looking at the brewery yard.’

I think there are three auditoria that actually do have that glazing so as the film starts, the curtains roll back and you’ve got [the view]. It’s extraordinary.

It was about a two-year process from when we sat down with them to when we opened in November. It was a real collaboration between Frasers and Palace. They actually say that it’s the most complex project that they’ve ever been involved in, in terms of how they fitting the cinema in that space and even getting the but services was incredibly difficult. How do you get mechanical services into a 13- auditoria complex? How do you make the bars and the beer hall work?

Palace is mainstream but with really strong boutique niche offering. It fits really well with the positioning of Central Park Mall and certainly where we want to want to take it as well. They’re not the type of offer that will go into standard sub-regional or regional shopping centre. They look for interesting and unique spaces that reflect the brand.

IR: There’s a big push for entertainment and experiences for a lot of shopping centres right now, so I can see how Palace would work really well for Central Park Mall.

PM: Absolutely. We realise that offering customers an experience is critical, particularly as the online phenomenon continues to grow and have an impact.

But I think cinema is undergoing a bit of a renaissance, certainly in Australia, and a lot of that is because of people are looking for a unique experience and one that’s shared as well.

At Frasers, we’ve got this central belief that guides the way that we develop and manage our assets, which is life’s best experiences are created by connecting people in memorable places.

There are probably three things there that are key – experience, connection and memorable places. I think we’ve all got memories of being at the cinema, seeing special films with special people.

Netflix and those streaming services will continue to grow, but cinema is true entertainment. You’re getting out of the house and into a unique environment and if you are doing it in a platinum-type lounge with the ability to sit and order food and drink and do it with a friend, it’s a different offer.

The other thing that really excites us about what Palace is doing at Central Park Mall is they are collaborating with other food and beverage operators in the centre.

That came about because Antonio said ‘Yes, we want to have this extraordinary cinema experience, but we also want to have a really a really good bar and F&B offer’. Our concern was we’ve already got quite a large component of F&B in the centre and we didn’t want that to be cannibalised.

And immediately Antonio said, ‘Well, the opportunity is for us to actually work with those operators to have them supply the food.’ So, for instance, you can sit in one of those platinum lounges and order dumplings from Din Tai Fung.

That collaboration with other retailers in the centre was really important and it’s also something that we think we’ll see more of in terms of trends – the collaboration between retailers.

IR: What were the other highlights of Central Park Mall in 2017?

PM: We’ve been working on rebranding and repositioning the mall to really make it a food and entertainment destination within that part of Sydney. We’ve done some leasing on the back of that as well with some new food offers.

We’ve reached an agreement with Timezone, which is under construction at the moment. We’ve had a few people look at us a bit weirdly when we mention it, but it’s a use that fits in really well with that entertainment offer. Timezone is a different business to what it used to be.

I think a lot of people know the Timezone of old, which was around smelly teenagers playing Space Invaders. It’s much more of a family-based entertainment offer now and there’s a lot more interactive digital gaming.

IR: Can you tell me about what the customer base is like at Central Park Mall? It’s an interesting mix of university students and young families.

PM: It is a pretty unique catchment and we’re smack bang in the middle of the four largest educational institutions in New South Wales, so there’s a high student base. When we look at our customer base, we would probably break it down into three areas: students, residents and workers. When you look across those three groups, there are some real similarities in that they’re generally mobile and international. They’re younger than the Sydney average, and have higher per capita incomes than the Sydney average.

We’re really conscious of that and we’re targeting the mix towards that. When you look at the mix, our business is targeting a sector that we call a ‘super neighborhoods’ sector – they’re assets that have a strong convenience and fresh food offer, but also a really strong entertainment and elevated food and beverage catering offer as well.

But then they’re designed, leased and catered for their local catchment and I think Central Park is a really good example of that. While you wouldn’t look at Central Park and say that it’s a standard neighborhood shopping centre, it very much ticks that convenience and fresh food offer. It’s got entertainment and it’s got a really good and and growing food and beverage offer, but then it’s really tailored towards the local catchment as well.

We’ve got some larger, national retailers in there and we’ve got some really interesting niche retailers. One good example is Ironlak, a spray paint art supply retailer. It’s largely an online business and Central Park Mall was their first bricks-and-mortar store.

The reason that they first looked at actually establishing a bricks-and-mortar presence at Central Park was because they worked closely with Ambush Gallery and after spending some time in the centre, they looked at our customer base and realised that there was some real opportunity there.

IR: Apparel and department stores are really struggling at the moment and it’s something that a lot of shopping centres are concerned about. What are your thoughts on that?

PM: Oh, absolutely. We’re targeting the super neighborhood sector, so we don’t see an asset like Central Park Mall ever having a really big apparel offer or a department store. I think that with online retail continuing to grow, apparel and that discretionary end of the market will need to evolve and reinvent if they’re going to survive.

But that’s not really the space that we’re in. If you look at the assets that we’re developing, they are all about convenience, food and beverage, entertainment.

If you look at the department store sector in Australia at the moment, there’s no doubt that there is some pain in that sector, but then there are retailers like Kmart that are continuing to do really well.

One of the trends that we think we’re going to see more of is what we call fragmentation, where the larger and stronger retailers that have a really good omnichannel offer are

going to get bigger and survive at one end of the scale.

Then at the lower end of the scale, the small, niche independent retailers that are really local with a unique offering and really appeal to millennials are going to thrive, too.

I’m not saying that we would never have a department store or an apparel offer, but we would be really selective and careful about how we do that.

IR: So with the food and beverage offer at Central Park Mall, is that something you’re still looking to grow?

PM: We’re conscious of how much space we’ve go there and we’re making sure that what we’re doing there in terms of F&B continues to be sustainable. Looking at our floorspace provision at the moment, we’re probably at about the right level and bringing Timezone in works for us as well. It’s about 670sqm of what was previously dedicated to F&B, so that allows us to readjust that F&B space and potentially reallocate space elsewhere.

I wouldn’t say that we’re looking to grow significantly, but certainly what we’ll continue to do is evolve the mix. And as any landlord would do, as leases come up, we’ll make sure that we’ve actually got a mix that is relevant for the local market and the positioning we want for the centre.

IR: I know a few F&B operators are concerned about the growing competition within their sector in shopping centres, but without the large increase of foot traffic. People will still only eat a certain amount of meals a day, after all.

PM:  The F&B spend in any catchment is only so big, so you can only cut the pie up in so many ways. But F&B has been growing as a segment and is continuing to grow as lifestyle changes take hold – people are eating out more. F&B is also part of this desire for experience in entertainment. I think you’ll continue to see that pie grow, but we’re conscious that in a centre like Central Park Mall, you can’t just continue to add more F&B space and expect all the retailers to continue to grow.

Part of what we’ve been doing with repositioning that mall and bringing in greater entertainment is to obviously grow traffic to help grow that F&B pie and support our operators in the centre. But it is also about making sure that we’ve got the right allocation of floor space towards F&B, entertainment, convenience food and non-food uses.

Timezone is a good example of where we’re saying, ‘On that level two area, there’s a good opportunity to increase our entertainment offer, reconfigure our F&B space and provide more traffic, without necessarily adding more competition to those operators.’

IR: What retail areas around the world are an inspiration for you?

PM: In terms of retailers, Aesop is a retailer that I love – I love their product, but I love the fact that you can walk into an Aesop store anywhere in the world and every store is unique, it has a different look and feel that’s localised, so it reflects the environment that it’s in. We’ve spoken about this in our broader retail business – we aspired to have our customers walk into our centres and say, ‘This is a Frasers centre’ and our retailers do the same. It’s unique, beautiful, but designed and leased to reflect the environment it’s in.

Aesop’s culture is almost cultish in a way – the’re so passionate about what they do and how they do, which appeals to me.

In terms of retail offers and it’s so overused and a cliche, but I love the Melbourne laneways. I often think designers and architects and people in our industry misinterpret what Melbourne laneways are about, like Degraves Street and Centre Way.

They’re not just about small, pedestrianised spaces with small shopfronts. They have a really eclectic, niche collection of independent retailers – that’s why they are so interesting, you just don’t see these retailers anywhere else. They’re in such a grungy environment that’s had some of the edges knocked off it, but it’s got heart and soul and it’s really authentic.

We talk a lot about trying to replicate that type of feel in our centres, places that do have real heart and soul. We have a real push on biophilic design – we really believe that people want to spend time in beautiful places and part of that is this innate connection with nature.