MCCORMICK PROPERTY DEVELOPMENT
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MCCORMICK PROPERTY DEVELOPMENT
Rural Retail Kings PRODUCTION: Timothy Reeder
Founded by Chairman John McCormick in 1983, McCormick Property Development (MPD) has pioneered the development of emerging markets ever since, and has become the dominant force in growing critically important retail centres in rural South Africa.
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INDUSTRY FOCUS: PROPERTY
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McCormick Property Development is a South African company to its core, embodying the archetypal local, family-run business that has stuck stringently to its founding values throughout its lifetime. MPD puts its success down in large part to having remained private by design, achieving the remarkable that it has experienced through the recommendations of the scores of people it has served over the last more than 30 years. Both clients and the wider public have been moved by its ability to develop primarily real estate, but more broadly, entire communities, creating wealth and employment in the process. While a smaller economic contributor than such sectors as mining and manufacturing, providing 8% and 13% of the country’s gross
// WE’RE IN THE LAST QUADRANT OF THE COUNTRY THAT STILL HAS OPPORTUNITIES FOR NEW MALL DEVELOPMENTS // domestic product respectively, real estate is nonetheless an important tertiary sector for the South African economy. As recently as 2016, the South African property sector was said to be worth R5.8trn, equating to a meaningful increase of nearly R1trn in four years. This was revealed by a reviewed market size estimation by the Property Sector Charter Council, compiled alongside provider of research-driven
insights MSCI. “For a sector this big and this important,” explained Property Sector Charter Council CEO Portia Tau-Sekati, “it is crucial to have a hub of knowledge that consolidates information to support a common and consistent understanding of the sector.” For McCormick Property Development the report proved especially revelatory in the value it showed to be held in commercial property - around R1.3 trillion - with R534 billion of this provided by its top performer, retail property. Retail development has long been the central pillar of McCormick Property Development’s work, but the company has worked tirelessly to set itself apart by focussing almost entirely on high growth emerging markets. The retail sector forms an ever-more critical element of a community’s economic and social welfare, and provides its
// About Mike Buyskes Construction In November of 1972 Mike Buyskes, a young man of 20 years old decided he was not going to work for an employer and started a business in the building trade called Mike D. Buyskes Builders. The Business consisted of Mike and one labourer who together started an alteration that eventually took 1 year. As they progressed the first payment they could employ a few more people and that was the start of today’s Mike Buyskes Construction (Pty) Ltd. the Company grew from strength to strength and today it plays a leading role in the Pretoria based Construction Companies. A taste of our Mission & Vision statement The mission of the Company is to engage in and execute building contracts to the highest standards and professionalism as humanly as possible. To at all times trade at a reasonable profit and not to the detriment of its employees, sub-contractors, suppliers, clients and professional associates. To at all times belong to and be pro-actively involved with organizations allied to and engaged in the welfare of the trade. We have a long list of projects under our belts including: •
Military College, Centurion
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Z.A Hospital, Pretoria
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Fairways hotel and spa, Randburg
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Stay easy hotel, Witbank
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Marataba Lodge, Thabazimbi
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Chamberlains & Checkers distribution centre, Pretoria (silver lakes)
Anyone doubting our experience or level of workmanship should have a look at our testimonials and website.
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MCCORMICK PROPERTY DEVELOPMENT
// WE AIM TO ROLL OUT SOLAR POWER PLANTS ACROSS OUR PORTFOLIO // people with choices and services which had been, until very recently, extremely limited in township areas. This, combined with a slowdown in the development of retail ‘mega-malls’ within traditional urban centres due to a weakening market and oversaturation of retail space in these areas, has allowed MPD to craft its niche in the development of rural areas and the peri-urban townships, seeing numerous previously underdeveloped areas now catered for. PwC’s important ‘Drivers of change for the Real Estate Industry’ study was unequivocal in its agreement
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with this approach, stating that, “rapid urbanisation and demographic changes, especially within emerging markets, will lead to substantial growth in the real estate industry.” It is widely acknowledged that South Africa’s pre-1994 retail landscape was dominated by small, often informal businesses, which offered basic household necessities to relatively low income earners. According to AA Ligthelm, of the Bureau of Market Research, University of South Africa, this meant that, “the majority of township workers engaged in economic activities outside the townships with most of their shopping being in the main city centres or at shopping malls at the fringes of township areas.” Rapid income growth of township residents since this point, however, has resulted in a substantial
increase in consumer expenditure in these areas, and has given rise to a lucrative emerging market which, according to Ligthelm, represents the last retail frontier in South Africa. “The increasing movement of formal retailers into previously untapped middle- and low-income markets has resulted in an increase in shopping centre development in townships,” concludes Ligthelm, and McCormick Property Development has made this its task, a communityfocussed company striving to become the premier development company in South Africa. At its helm is secondgeneration family leader Jason McCormick, who began by talking us through the importance of its specialist spaces to the population as a whole. “South Africa has the sixth highest ratio of malls to population in
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CONSTRUCTION IS LIKE ART, AND IF DONE WITH PASSION, IS JUST AS REWARDING.
MIKE BUYSKES MD – MIKE BUYSKES CONSTRUCTION PTY (LTD)
+27 (0) 12 809-8900 | OFFICE@MIKEBUYSKESCON.CO.ZA | WWW.MIKEBUYSKESCON.CO.ZA
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INDUSTRY FOCUS: PROPERTY
the world which makes us very much a mall-centric country,” he explained, “and malls have very much become the town squares of old, where people get together to socialise. “South Africa as a whole has an oversupply of shopping centres in the urban areas and old towns but we’re in
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the last quadrant of the country that still has opportunities for new mall developments.” As with any so-called leap into the unknown, at its inception MPD was viewed by many industry peers as something of a risky concept, but the success experienced over the intervening
years, has seen the emergence of a number of competitors also opting to shift focus from their operations in urban areas. “The big change is that my father was the only person doing it for a long time but now there’s a massive influx of developers trying to get involved in rural areas because of the over-saturation in urban areas,” McCormick clarified. These businesses are significantly disadvantaged by the absence of MPD’s wealth of experience to back them, however. “Many of them have failed quite spectacularly,” McCormick continued, “because the models that we use to develop even a fancy mall are very different to what others are used to in the urban areas. Rents achievable per square meter are lower, building costs aren’t significantly lower but we have the advantage of 30 years of defining models; financial models, construction models, building models; to suit the same return on investment but at a lower rental income. “We’ve changed as we’ve moved.
MCCORMICK PROPERTY DEVELOPMENT
// WE’RE A DEVELOPMENT, MANAGEMENT AND LEASING COMPANY ALL ROLLED INTO ONE SO WE ARE A FULL TURNKEY SERVICE PROVIDER // I’ve been in the business for 14 years, we saw the influx of competition coming and we now we have in excess of 30 land parcels that we will develop as and when the need arises.” It is such developments that have been the source of a steady influx of news in recent times. The opening of the Alex Mall saw the culmination of the largest private investment into the township to date, hosting more than 90 stores and spanning 30 000sqm, offering unprecedented levels of retail
and a unique entertainment element to Alexandra. The inclusion of state of the art 5-a-side soccer courts and a ‘Living Museum’, meanwhile, highlights the Mall’s aim to be more than just a pure retail centre. Also noteworthy are those projects still busy being realised and brought into existence. In February this year the City of Tshwane, for example, gave the green light to Capital Mall, the R1.2bn corner stone of the ‘Capital City’ mixed-use development, a development set to revolutionise both the Pretoria West region and the McCormick Property portfolio, as Jason McCormick, underlined. “We have seen the potential of this area for decades,” he commented, “and know that this development will be a game-changer for the community of Pretoria West as well as the retailers that are included in this iconic development.” McCormick Property Development added another first to its portfolio with the commissioning of a rooftop photovoltaic system at its ‘Olievenhout
Plaza’ in Gauteng, with the solar system forming an integral part of the company’s long term sustainability strategy and the pilot for what will become a standard in all McCormick’s developments going forward. “One of the major goals of this project is to gather sufficient production data to build the financial models to allow the roll out of solar power plants across our portfolio,” McCormick said. All of this combines to set MPD up for many more years of pioneering dominance, as Jason McCormick concludes. “We manage all of our own properties and we have by far the lowest vacancy rates in the industry, we have the lowest expense ratios and we monitor things meticulously. We’re a development, management and leasing company all rolled into one so we are a full turnkey service provider.”
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April 2018
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