Skip Ribbon Commands
Skip to main content

News Release


Shoptalk-a JLL retail newsletter May 2014

​China Summary

· The market is experiencing intensification of three intersecting forces: 1) intense competition from high volumes of new supply; 2) slower economic growth; and 3) the rapid shift to buying goods online, particularly in the apparel sector. This has affected leasing at new shopping centers.
· Landlords of shopping centers in non-core areas are offering increasingly generous terms to attract tenants and push up occupancy levels.
· In contrast, top-performing properties continue to amass pricing power, and are able to raise rents and carry out upgrade programs. Brands are keen to expand their existing stores in such properties.
· Our recent survey revealed that fewer than 30 wholly-owned shopping centers could be considered "ghost malls", out of a total of over 600 operating in 28 markets.
· The problem is more widespread in the strata titled world – Changzhou's glut of strata-titled "beached whale" shopping centers is an extreme example of how retail oversupply manifests in China's Tier 3 cities, in which cheaply built, low-end retail properties are getting left behind as the market evolves.
· While much has been made of the luxury slowdown – and indeed openings of top-tier luxury stores slowed or stopped in most cities – mainstream retailers are still expanding aggressively: Uniqlo, H&M, Burger King, Starbucks, The Grandma's, Innisfree and Cafe Benne were the top expanders nationally in 2013.
· Some of the world's largest fashion brands are still as keen as ever to tap the full potential of China's retail markets. In addition, the cities surveyed unanimously reported strong expansion in F&B and entertainment.
Shoptalk pic.png
Source: JLL Research (Real Estate Intelligence Service), 4Q13                      
shoptalk pic2.png
Source: JLL Research (Real Estate Intelligence Service), 4Q13
*Metropolitan = contiguous urban area, consumer = population earning over 30k RMB per annum in constant 2005 currency terms.

Markets Highlight

• Although the major luxury houses halted new store openings in Shanghai, some of them expanded their existing high-performing stores in mature properties
• High end cosmetics brands were active opening boutique beauty stores in shopping malls
• New entrants continued to appear in the market, F&B tenants expanded aggressively
• Rock Bund in Huangpu district opened this quarter with 70% occupancy
• Star Plaza opened in the southwest part of the city near the Shanghai South Railway Station

• The vacancy rate in the core market increased moderately as several malls chose not to renew leases in order to adjust their tenant mixes
• Demand for new space by luxury retailers was not evident; while luxury brands instead preferred to expand their existing stores
• Demand from fast fashion and light luxury sectors continued to be strong
• F&B continued to be the main driver of leasing demand
• City Mall in the Third Embassy area converted all of its space to offices, while some other malls converted part of their retail space to office use
• Shimao Gongsan in the Third Embassy Area was converted from a department store to a shopping mall with an occupancy rate of 95%

• Mainstream retailers, especially F&B operators with fresh offerings, continued to expand in downtown centers
• Several instances of tenant closures were seen in some underperforming malls
• An improvement in occupancy levels was seen in malls with sufficient residential or working populations
• Mall owners focused on fine-tuning their trade mix to introduce more F&B operators new to Guangzhou
• Mall of the World (South Zone) opened in Zhujiang New Town with 70% pre-commitment

• Luxury brands actively opened new stores in Chengdu in 1Q14
• Entertainment and services sectors saw strong expansion
• Chengdu IFS opened with 90% occupancy in the core submarket
• Yangguang Center opened in the Dongda St. and Extension submarket with 90% occupancy
• Vacancy in the New South Area increased due to immature population base

• Due to slow leasing progress in 1Q14, the latest mall opening in Hexi had low occupancy
• More regional centers are available to service the needs of nearby residents; eroding Xinjiekou's stronghold on mid-range shopping
• Three large scale outlet malls are scheduled to open in the coming two years in the suburban areas of the city