Global shopping center completions rise, led by China

CBRE’s annual study of global retail development found that builders completed 12.5 million sq. m. of shopping centers globally last year, up 11.4% from 2015. China dominated the top ten most active global markets with seven Chinese cities making the list. Melbourne ranked number ten—the only non-Chinese city in Asia Pacific to have made the top ten.

Developers completed more retail centers across the globe last year than in 2015, yet momentum appeared to wane in many countries as retailers strive to find the right balance of brick-and-mortar and e-commerce operations.

“In the omnichannel era, retailers are focused on ensuring that they have the optimal mix of brick-and-mortar stores and e-commerce operations, so they are using sophisticated analytics and market knowledge to choose the best store sites rather than the most store sites,” said Anthony Buono, Chairman of CBRE’s Global Retail Executive Committee.

Meanwhile, construction activity overall has slowed in many markets amidst a more cautious approach by investors and occupiers. The global pipeline of retail centers under construction declined by 22% y-o-y to 33.5 million sq. m. at the end of last year, according to the CBRE report.

The Asia Pacific region, particularly China, remains the global hotspot for retail construction totaling 26.6 million sq. m.—79% of the global total. Of this, China accounted for 19.7 million sq. m.

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More than 90% of Asia Pacific cities hosted large-scale retail construction in 2016 compared to 56% of cities in the Americas and 14% in Europe, the Middle East and Africa.

“The Chinese retail market is showing some signs of recovery. Leasing demand is stabilizing despite oversupply concerns,” said Joel Stephen, Senior Director, Advisory & Transactions, Retail, CBRE Asia. “Retail markets are thriving across Asia Pacific, with strong demand supporting construction in markets like Melbourne, Brisbane and Ho Chi Minh City.”

China’s largest volumes of retail space under construction are in Shenzhen and Shanghai, which together account for about 40% of the pipeline in China. Elsewhere, retail construction remained relatively limited in India, especially tier-one cities like New Delhi and Mumbai, whilst major retail markets in Asia such as Tokyo, Hong Kong and Seoul, are all anticipating mix-used development in their CBD locations.

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