Ay, caramba! China’s shopping malls lure big foreign brands

The world's first Simpsons Store, in Beijing

The world’s first Simpsons Store, in Beijing

With a thriving consumer market, Shanghai remains attractive to retailers including big international brands, according to property consultancy Cushman & Wakefield’s latest retail market report. High-profile store openings in recent months include China’s first LEGOLAND Discovery Center in the Parkside Plaza shopping center; two new Apple stores, at Global Harbor and Hopson One; and a Pret A Manger shop – Shanghai’s second – in Jing An Kerry Centre.

Looking ahead, coffee snobs in Shanghai will be able to enjoy the first Starbucks Roastery outside the US next year. The Roastery, a massive 2,700-square-meter venue showcasing the process of roasting and brewing coffee, will launch in the landmark mixed-use HKRI Taikoo Hui project in central Jing’an district. Shanghai will also host a Simpsons Store in the second half of this year, following the launch of the world’s first such store in Beijing in May (coming soon to Xian too).

HKRI Taikoo Hui (not a photo)

HKRI Taikoo Hui (not a photo)

Here are a few key trends we are seeing in retail property across China:

1) China is building shopping malls like there’s no tomorrow. Mainland China is reckoned to have nearly 4,000 shopping malls, a number that is expected to reach 10,000 by 2025. Agency data indicates that over 17 million square meters of shopping malls are slated to launch through the end of 2017 in just the country’s first-tier cities and major provincial capitals.

2) Suburban markets in first-tier cities are emerging retail hotspots. The two Apple stores mentioned above opened in non-core areas of Shanghai, as did the LEGOLAND Discovery Center, which according to Cushman & Wakefield was “able to attract a huge amount of footfall from different districts and has helped the landlord improve its overall occupancy rate,” despite its suburban location in Shanghai’s Putuo district.

LEGOLAND Discovery Center in Shanghai

LEGOLAND Discovery Center in Shanghai

New retail space in the second half of this year will mostly be concentrated in suburban areas such as Shanghai’s Minhang district and Beijing’s Daxing, Fengtai, and Tongzhou districts, driven mainly by population growth, increasing spending power, and expanding transportation networks in the suburbs.

3) F&B is driving new space absorption. China has a famously gustatory culture, and most Chinese go to malls to eat, not to shop. This is reflected in the high and rising proportion of shopping mall floor space dedicated to food and beverage (F&B) in China. The recently renovated Printemps Department Store on Shanghai’s Huaihai Road is not unusual in offering nearly 40% of its space to F&B tenants. Retail landlords tend to encourage F&B occupancy to boost footfall, highlighted by a flurry of new food and drink outlets in first-tier cities in Q2, such as the first Shenzhen and Guangzhou locations of The Coffee Bean & Tea Leaf.

New Japanese restaurant in Beijing's Taikooli Sanlitun

New Japanese restaurant in Beijing’s Taikooli Sanlitun