The report, measuring shopping-center development in 168 major cities, highlights that China remains the most active market in terms of delivery of new space, accounting for two thirds of construction globally last year. Cities such as Chongqing, Shenzhen, Chengdu and Shanghai all have in excess of 32 million square feet of space under construction in more than 30 projects in each city.
Emerging markets such as Manila, Moscow, Mexico City and Bangalore remain highly active. However, activity in the emerging Eastern European markets such as Russia have slowed due to economic and political uncertainty.
Meanwhile, retail development in North America, specifically in the U.S., remains relatively muted due to the more mature retail markets of the continent. Mexico City finished 2015 as the highest ranked North American city for retail space under construction at No. 16 overall. New York City ranked highest of U.S. cities at No. 22 globally with 4 million square feet under construction. Many U.S. investors have focused in recent years on renovating and expanding their strongest existing centers rather than building large, new centers.
“With exceptional levels of construction in Asia, and a growing imbalance between retail supply and demand in many global markets, we will witness further rent and improvement allowances in favor of retailers in Asia,” said Anthony Buono, chairman of CBRE’s Global Retail Executive Committee and executive managing director for retail services in the Americas. “Conversely, in the U.S. and Canada, historically low levels of construction have restricted retailers’ expansion options, creating strength in rental rates and stoking demand for alternative formats such as urban markets and transit corridors.”
Across the board, global shopping center completions have started to slow as parts of the global retail market experience an imbalance between significant supply and demand. Globally 115.2 million square feet of new space opened in 2015, down from 130.2 million square feet in 2014. Development activity in Europe continues to be slow in comparison to Asia – only a quarter of cities surveyed in EMEA saw the completion of a new center last year, and the levels of completions slowed down from 28 million square feet to 17.2 million. EMEA accounted for 15 percent of total completions globally in 2015 with the vast majority of space being built in Russian cities.
Moscow is once again the only market outside of Asia that appears in the top 10 of global shopping center completions. Last year, developers completed nearly 4.4 million square feet of space in seven centers in Moscow.
Mexico accounts for 46 percent of the North American retail development pipeline. The U.S. includes 15 major centers under construction, highlighted by high-profile projects in and around New York City such as the American Dream at Meadowlands, Westfield Group’s World Trade Center retail center, the Shops at Hudson Yards in Manhattan and the City Point mixed-use development in Brooklyn.
Timely, incisive articles delivered directly to your inbox.