Developers across China are building over 800 mixed-use shopping complexes spanning 300 million square meters, but they’re becoming harder to fill as brands have slowed down expansion plans. This is causing some experts to think the shopping mall construction boom in China is a bubble waiting to burst as developers will struggle to find tenants to occupy their storefronts.
In a recent video, Wei Gu of The Wall Street Journal interviews Carlby Xie, head of China research at Colliers International on why Chinese cities are experiencing a shopping mall building spree despite cooling retail growth.
“Retailers have been attracted to the growth in people’s income and their evolving sophistication in terms of taste,” says Xie, “but at the same time, urban planners may have been a little bit too optimistic in how much retail space these factors actually translate into.” He believes that there is an oversupply of malls in China, especially in Tier 2 cities such as Shenyang, Chengdu, and Tianjin.
Xie feels that even as demand remains strong among consumers for mall staples such as fast fashion, food and beverage (F&B), and entertainment, there still might not be enough stores to fill these malls. “We’ll be cautious about the growing vacancy rates in these assets, or in these cities as well,” he says.