NEW YORK — Simon Property Group and two partners plan to break ground this fall in China on an urban, multilevel mall anchored by Wal-Mart, and the partnership has identified more than a dozen other potential projects with Wal-Mart as the primary tenant.
Simon will be the first U.S.-based retail real estate investment trust to make major inroads in China. The company will invest $65 million to $70 million in this first project, a 500,000-square-foot mall in Hangzhou, a two-hour drive south of Shanghai, said Leslie Chao, president of Chelsea Property Group, a subsidiary of Simon. The REIT plans to start construction in October and complete the project in spring 2007.
Simon will develop the retail center in partnership with Morgan Stanley Real Estate Funds and SZITIC Commercial Property Co., the retail subsidiary of the Chinese state-owned firm Shenzhen International Trust & Investment Co. Ltd. SZITIC was developed by Shenzhen specifically to coordinate Wal-Mart's development in China.
The more than one-dozen potential projects total 8 million square feet of retail space. Each would be an urban, multilevel, retail destination of 430,000 square feet to 750,000 square feet. All of the malls would have Wal-Mart as an anchor, and might also include Warner theaters as another anchor tenant. Simon has the right of first refusal on these SZITIC projects in the Shanghai region, Chao said.
The relationship with Wal-Mart is an extension of Simon's U.S. business, which counts the retailer as one of its largest tenants in terms of square footage in its community and lifestyle center division. Simon, the largest regional mall REIT in the U.S., has 10 Wal-Mart stores in its portfolio.
The company's expansion in Asia, however, isn't entirely tied to a deal with Wal-Mart. Chao, along with other Simon executives, is spearheading the REIT's growth in the Pacific Rim. The company recently opened a Hong Kong regional office that will serve as its launchpad to markets in China and Southeast Asia for malls and outlet centers. It already owns five outlet centers in Japan, and this year established a joint venture with Seoul-based Shinsegae Co. to develop premium outlet centers in South Korea.
"We're starting out small, but hopefully we'll eventually be in the business of developing, leasing and managing properties all over Asia," Chao said.
Issa Rae stopped by WWD's NYC headquarters to talk about season two of "Insecure," which premieres this Sunday on HBO. Click link in bio for all the details. #wwdeye (📷: @jgreenery; Styled by @mayteallende)
A Stella McCartney sketch of a custom dress made from protein-based silk in partnership with biotech lab Bolt Threads. The dress will be displayed at The Museum of Modern Art's upcoming design exhibition, "Items: Is Fashion Modern?"