CBRE Releases Shopping Centre Development – The Most Active Cities Globally
April 23, 2014, Beijing – A total of 39 million square metres (sq m) of shopping centre space is currently under construction across the world’s major cities, representing a three million sq m increase from 2013, according to the latest research from global property advisor CBRE. China remains the most active market and more than half of all development is taking place within the country.
The research shows that China is still the largest retail construction site in the world with eight out of the top ten cities featured the largest shopping centre space under construction. Indeed, more than half of the shopping centre space under construction in the 180 countries surveyed is taking place within China’s borders. Shanghai takes first position with 3.3 million sq m of space under construction – more than the combined total of all 86 European cities excluding those in Russia and Turkey. Just behind Shanghai is Chengdu with 3.2 million sq m followed by Shenzhen and Tianjin with 2.7 million sq m and 2.5 million sq m under construction respectively. Other markets in the top ten include Istanbul, Wuhan, Moscow, Beijing, Nanjing, and Guangzhou.
Given the huge amount of space under construction at the end of 2012, China retained its position as the most active development market in 2013. Nine Chinese cities were in the top ten in terms of new space completed last year. Chengdu, with just over one million sq m completed in seven centres, was by far the most active market in 2013, as it was in 2012. Tianjin (640,000 sq m in eight centres) was in second place, with Shanghai, Chongqing and Shenzhen not far behind. Markets include Hangzhou, Beijing, Istanbul, Wuhan and Shenyang are also in the top ten lists.
Frank Chen, Executive Director, Head of CBRE Research, China, comments that, “With unprecedented pace of urbanization and a rising middle class, there is an increasing demand for modern shopping facilities in China. A number of major cities in China, such as Chengdu and Tianjin have witnessed a glut of new supply in 2013, and still expect more new supply in coming years. The increasing new supply has resulted in a divergent performance among retail sub-markets in each city. Retail facilities run by experienced operators in prime locations remain keenly sought after by occupiers and are in short supply, while those in emerging markets run by inexperienced operators face intensifying competition including over-supply, poor foot traffic, etc.”
The report also points out that in Chengdu, robust occupier demand has ensured stable occupancy levels for prime retail space despite the addition of substantial new supply in non-core areas. However, rents in suburban areas have come under strong downward pressure. Landlords have responded by lowering asking rents and introducing experiential elements such as quick service restaurants and entertainment facilities whilst providing more ancillary facilities in public areas. For example, CapitaMall Jinniu in Chengdu has vertical gardens, a pet park and a kids playground. Enhancing the entertainment based provision in shopping centres is a trend that is spreading across China as new supply and the growth of e-commerce increases competition between malls.
Sebastian Skiff, Executive Director of CBRE Retail, commented that, “The best, most efficient, model for providing diversified shopping requirements under one roof in an environmentally controlled manner around a public transport hubs comes in the form of the shopping centre. Chinese cities present a physical environment that lends itself to environment controlled shopping centres. They are not old in terms of possessing the large scale, historic commercial architecture often found in western counterparts such as the historic Regent Street in London or the Champs Elysee in Paris. We can see numerous opportunities in China market to build new modern facilities right where the people are living, connected by mass public transport systems, unrestricted by what has gone before.”
This is the third year that CBRE has measured the level of shopping centre development in 180 of the world’s major cities. The survey was based on new centres of over 20,000 sq m and excluded retail warehousing and factory outlet centres.
Source: CBRE Research
Source: CBRE Research
Shopping Centre Definition - For the purposes of this analysis, shopping centres have been defined as purpose-built and centrally managed schemes with a gross lettable area of over 20,000 sq m. The analysis includes only new centres and major extensions (20,000 sq m and above) to existing schemes. Retail warehousing and factory outlet centres have been excluded. Whilst every effort was made to provide data on a consistent basis there are some differences by country and region. In Asia, the analysis includes retail shopping malls and standalone department stores over 20,000 sq m. It excludes department stores which lease space as tenants within larger shopping centres. In North America, the analysis included regional malls, lifestyle centres, and power centres and also includes all extensions to existing schemes (albeit there was very little new space under construction).
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.
