What does a department store exit actually free up? Westfield's owner now has 200,000 square metres of floor space to re-let across 17 centres where occupancy already stands at 99.8%, after David Jones confirmed it will close 19 of its 39 stores by the end of the year, nine of them inside Westfield centres, as of 12 November 2026. The receivers, FTI Consulting, have not published a closing date for each site but expect trading to stop by year end. For anyone modelling a trade area, the interesting number is not the closure count. It is the rent.
The rent gap explains the exit
Scentre told investors on 4 November that David Jones had sought a more favourable rental agreement for its Westfield sites. The same update put gross rent from those stores at $45 million for calendar 2026, or $352 per square metre, against a Westfield average gross rent of $942 per square metre. That is a gap of roughly 63%. When a tenant paying a third of the average asks for relief and does not get it, the landlord's arithmetic is straightforward: the space is worth more to someone else.
The demand side supports that reading. Customer visitation across Westfield centres rose by 17 million to 554 million in the preceding 12 months, and the chief executive described the portfolio as practically full. A centre that is full and still rising in footfall can afford to re-price an under-rented box. A centre with falling visitation cannot, which is why the same decision would read very differently in a weaker trade area.
What a 200,000 square metre hole changes
Anchor boxes are not interchangeable with small tenancies. They carry the traffic that the rest of the centre monetises, and they usually sit at the end of a mall that depends on them for circulation. Re-letting one is a two-year project: design, subdivision, permits, fit-out. During that window, the surrounding speciality tenants lose the reason customers walked past them. The practical question for a leasing team is whether to refill with one large format, split the box into two or three mid-size units, or use part of it for non-retail experience space.
| Metric | Reading | Why it matters |
|---|---|---|
| Stores closing | 19 of 39 | Scale of the withdrawal |
| Westfield sites affected | 9 of 17 destinations | Concentration of exposure |
| Floor space to re-let | 200,000 sqm | Absorption timeline |
| Rent per sqm | $352 vs $942 average | Re-letting upside |
| Occupancy | 99.8% | Pricing power today |
Flagships are getting bigger, not smaller
The counter-trend is visible elsewhere in the same market. Australian label All Things Golden opened a 2000 square metre site in Hawthorn East, Melbourne, that combines its flagship, head office, warehouse and a wellbeing studio for up to 18 people under one roof. The brand ships globally and has taken orders from at least 25 additional countries since launching internationally, growing faster in the United States in about 12 months than it did in three years at home. A single lease now does the work that four leases used to do, which changes what a landlord should be marketing: not floor space, but a format.
Physical retail is not in retreat everywhere. Amazon reported third-quarter physical store net sales up 2% year on year to $5.7 billion, growing at the same rate as its online store. The mix is shifting rather than collapsing, and the units that survive are the ones that give a reason to travel. That is the standard an anchor box now has to meet.
Three checks before signing a replacement
First, does the incoming tenant need the same floor plate? A 2000 square metre format with office and warehouse attached needs depth and loading access that a fashion anchor does not. Second, what does the replacement do to the centre's rent average? Filling space at $400 per square metre protects occupancy and damages the asset's income profile; waiting for $900 protects income and risks a two-year hole. Third, does the new tenant bring its own traffic or rely on the centre's? A destination format earns a lower rent because it generates visitation; a convenience format should pay for the traffic it consumes.
Subdividing the box is a rent decision before it is a design one
A single anchor split into three units normally lets for more per square metre than the same space let to one tenant, because mid-size formats pay for position rather than for the traffic they generate. The catch is that subdivision spends money before it earns any: new entries, services, fire compliance and demised walls all land on the landlord's side of the ledger. Modelling the payback means comparing the rent uplift per square metre against the capital cost per square metre of the split, and running it for two sizes rather than one.
There is also a merchandising constraint that finance models tend to leave out. Three mid-size units in an anchor box compete with speciality tenants already trading nearby, so a centre can raise rent per square metre and still weaken its tenant mix. A trade area that already carries three fashion offers does not need a fourth; it needs the categories that give customers a reason to walk to that end of the mall.
FAQ
Why does rent per square metre matter more than how many stores close?
It shows what the space earns today, and rent per square metre is what decides whether the trade area can be re-let at all. David Jones paid about $352 per square metre against a centre average of $942, so the gap is a re-letting opportunity rather than a vacancy problem.
Does high occupancy mean a centre is safe?
No. 99.8% occupancy measures signed space, not sales per square metre. A centre can be full and still be under-earning if anchor rents are below average.
Are flagships getting smaller or larger?
Some are getting larger and mixed-use. A 2000 square metre site can hold retail, head office, warehouse and a paid experience space in one lease.
What should be checked before re-letting an anchor box?
Visitation trend, rent per square metre against the centre average, and whether the incoming format needs the same floor plate or a subdivided one.
