As we mentioned in a previous post, the closing of anchor stores like Sears, Macy’s and J.C. Penney doesn’t bode well for the future of the American mall. But are malls also struggling in other areas of the world?
According to A.T. Kearney’s 2014 Global REtail Development Index, global mall construction grew by 20% in 2013. ICSC estimates that around 45 million square feet of new retail projects were built in the Asia-Pacific region in the first three quarters of 2014 and 220 million square feet are under construction across Asia.
Asia is hot for mall development for several reasons. According to The Economist, China’s real GDP is forecast to grow an average of 7% per year and eventually overtake the U.S. GDP growth rate in the year 2021. Add to that the growing trend in Asia toward urbanization and a huge increase in the middle class, and the continent is exploding with retail development opportunities.
Don Edrington, managing director for SRS Asia, said, “The new wealth in China and the consumer’s heavy desire to acquire brands contribute to the growth of malls here. The thing that stuck with me the most since I have been here is that the shopping mall is relatively new to Asia, and there is such an opportunity to grow them in so many heavily populated markets.”
American retail developers are responding. For example, Taubman is developing two malls in China and a third in South Korea. In late 2013, private equity firm Blackstone Group announced that it would buy a 40% stake in SCP Company, Ltd., a Chinese mall developer.
Examples of additional markets experiencing explosive mall development include:
Cairo – 1.8 million square meters of mall retail space is forecast to be completed in 2015, double the level in 2014.
Latin America – Brazil is building 38 more malls, while Mexico has 45 retail projects of various types and sizes under development. Colombia, Chile, Uraguay and Peru are all adding mall space.
Russia – There are more than 100 shopping centers coming on-line between 2013 and 2015. As one type of development struggles in America, it thrives in other countries, and U.S. developers are taking increasing advantage.
By Janie French, Director of Business Development.