Frydenberg tells shopping centre landlords 'to take it easy on retailers'

Treasurer Josh Frydenberg has told shopping centre landlords to “take it easy on those retailers” as the sector goes through structural change and major tenants push to secure better rental deals.

"Clearly it is a challenging economic environment, but also this age of disruption, particularly with the online developments are really affecting retail," Mr Frydenberg said at the Australian Financial Review Property Summit in Sydney on Thursday.

However, he said the recent tax cuts from the federal government would have a positive impact on spending.

Mirvac's Broadway shopping centre

"I think the tax cuts will have an impact with more than $17 billion that has made its way into the pockets of Australian taxpayers for the 2018-19 tax refunds," Mr Frydenberg said.

"But it is a challenging time for the retail sector and hopefully they will ride it through as they are a big employer and they're important and I think they can manage this technological disruption."

However, Susan Lloyd-Hurtwitz, the chief executive of one of the country's biggest landlords Mirvac, said she had not seen the cash come through the register yet.

"No one needs to go to a shop anymore," Ms Lloyd-Hurtwitz said at the summit.

"People are in an environment where they are insecure about employment, don't make big financial decisions and they rein in spending, so we are not seeing the tax cuts and rates cuts in their expenditure," she said.

"There is a more profound force going on and that's the shift in retail from a necessity to choice. No one ever needs to go to a shop for anything ever again if they desire."

Some economists have said Australia is in a retail recession. Australian Bureau of Statistics July trade data showed retail sales for the month were down 0.1 per cent, following a 0.4 per cent drop in June.

Big retailers such as Premier Investments, Myer and David Jones have recently taken action against mall landlords such as Scentre Group and Vicinity over unfair and "unrealistic" lease terms due to the retail slump.

Scentre Group and Vicinity said at the summit while "pledging" to take it easy on their tenants, said it was their business to "curate the retail mix" to entice shoppers.

Scentre's chief operating office, Greg Miles, said if the landlord didn't offer the right mix of tenants, "then the business won't grow".

"It's negative to call them malls, they are living centres," Mr Miles said.

"We are all very cognisant to have the best offer and we are clearly focused on having a vibrant offer for our customers."

Vicinity Centre chief executive Grant Kelley, which co-owns and manages the country's biggest shopping centre at Chadstone in Melbourne's south east, said malls need to have a twist and some "sizzle" to keep consumers coming back.

"We have a responsibility to the community as malls are the community hub of the suburbs."

Chief executive of landlord Dexus Darren Steinberg said another issue facing the sector was over-supply.

"We have obviously built too much retail space," Mr Steinberg said.

"People are doing a lot of their spending online today and undoubtedly there will be more. We need to be careful about the future development of retail space, we need to develop less space and we need to develop in the right locations."