An unprecedented 32 million m² of shopping center space is currently under construction across the world, representing a 15% increase year-on-year (28 million m² in 2012), according to the latest research from global property advisor CBRE.
Shopping center development activity is heavily concentrated in emerging markets, with China home to more than half of all the space under construction (16.8 million m²). Seven of the 10 most active development markets globally are in China. These include Chengdu (2.9 million m²) and Tianjin (2.1 million m²), with Shenyang, Chongqing, Wuhan, Guangzhou and Hangzhou due to deliver over one million m² over the next three years.
Other markets experiencing substantial expansion include Istanbul, Moscow, St Petersburg, Abu Dhabi, New Delhi, Kiev, Hanoi and Kuala Lumpur.
The rapid growth of new shopping center development in emerging, as opposed to ‘mature’, markets is attributed to a growing middle class, the urbanization of large cities and consumer demand for better quality retail. Retailers, including many from Western Europe and North America, are competing to take advantage of these new opportunities.
Across Europe, shopping center development in 2012 increased by 10% year-on-year to 1.71 million m²; however, a large proportion (72%) was in Eastern Europe. Istanbul was the most active European development market last year with the opening of seven new centers, including Marmara Park (94,000 m²) and Trump Towers (41,000 m²). Istanbul will be the most active development market in coming years with 32 centers currently under construction.
Europe’s other highly active development market is Russia which, like Turkey, is benefiting from strong economic growth and rising incomes. In St. Petersburg, new residential areas supported by enhanced road and rail links are driving shopping center development, with 0.5 million m² under construction. Moscow has the largest development pipeline, with 815,000 m² due to open over the next two to three years. In neighboring Ukraine, Kiev has 445,000 m² under construction in eight centers, making it the fourth most active development market in Europe, and attracted a record 40 new international retailers last year.
Neville Moss, Head of EMEA Retail Research, CBRE, commented: “The fact that a substantial majority of new shopping center development in Europe is within its emerging markets is hugely significant. Prime space is in short supply in mature markets and retailers are increasingly turning to these emerging, but increasingly promising, alternatives.
“However, cross-border retailers continue to seek prime space and much of the new space in emerging markets is in peripheral areas of the large cities, appealing only to local retailers. In many cities, the mismatch between demand and supply has led to increasingly high rents in prime areas and high vacancies elsewhere.
“Another feature of both mature and emerging markets is that the proportion of mixed-use is increasing. Larger shopping centers of the future will incorporate major leisure attractions and other uses to create a more appealing customer experience and meet the challenge of online retailing.”
Source: FTI Consulting