HONG KONG – It’s no secret that the department store format has been struggling hard, but what of the prospects for shopping malls, their more contemporary cousins?
Globally, 2016 added 12.5 million square meters of shopping centers, up 11.4 percent from 2015, according to real estate brokerage CBRE, which released the findings of its global survey on Thursday. Despite the double-digit rise, those growth rates are unlikely to be sustained in the long term as the pipeline of retail centers also declined by 22 percent year-on-year to 33.5 million square meters at the end of last year.
Asia Pacific accounted for most of last year’s growth, nearly 80 percent, and was driven by China. The world’s second-largest economy dominated the top ten most active global markets with seven Chinese cities making the list. Shanghai and Beijing came in first and second, respectively, followed by Mexico City. The only other non-Chinese cities in the top ten were Moscow, ranked eighth, and Melbourne, ranked tenth.
TOP 10 CITIES GLOBALLY:
3. Mexico City
Within China, the hive of activity came from two cities predominantly: Shenzhen and Shanghai, which together account for 40 percent of the pipeline in the country. However it is a tale of two cities when it comes to the health of these markets.
“With Shenzhen’s pipeline concentrated in just a few submarkets, the city has the riskiest leasing conditions among China’s four Tier 1 cities,” the CBRE report said. “In contrast, the retail pipeline in Shanghai is well-distributed across several submarkets, with good residential catchments. The 2017 rental outlook for the two cities reflects their differing supply conditions—Shenzhen is expected to see a mild rental decline this year while Shanghai will see stable rental growth.”
Half of the new malls completed in China last year delayed their completion dates by at least six months, due to poor pre-leasing, but “the Chinese retail market is showing some signs of recovery,” Joel Stephen, senior director of retail at CBRE Asia, said. “Leasing demand is stabilizing despite oversupply concerns.”
Southeast Asia was mostly flat, while Japan has just unveiled the Ginza Six mall in Tokyo. Down Under, the redevelopment of Melbourne’s Chadstone shopping mall was key in introducing many new retailers to the city—half of its new retail entrants in 2016.
The U.S. saw the greatest new supply in the Houston, New York and Honolulu metro areas, although the total completion levels were down slightly from the year before. Mexico has emerged as a robust market, experiencing the biggest increase in retail space of 43.6 percent or 1.3 million square meters, centered mainly in its capital, Mexico City. “Development has been targeting the growing population—fueled by Central Mexico’s current automotive boom—of the Bajio region,” the report said.
Other notable completions in the past year include the Mall of Africa in Midrand, part of greater Johannesburg in South Africa. It is Africa’s largest single phase retail development at 130,000 square meters.
Middle Eastern hubs like Dubai and Abu Dhabi have grown to be nearly synonymous with mega-mall structures, but the Gulf is experiencing a bit of a lull after a number of major malls were delivered over the 2008 to 2010 period. However, that’s set to pick up over the next three years with nearly 900,000 square meters of new retail space to come.