Shopping centers doing well

Development of shopping centers was largely positive last year but dipped in lower tier cities. 
Shopping centers doing well
Ding Yining / SHINE

Growth of shopping centers was largely positive last year but dipped from a year earlier due to flat rents at lower tier cities, a recent study says.

The overall development index for shopping centers stood at 64.5 points, down 4 points from a year ago but still in the positive range above 50, according to a joint report by the China Chain Store & Franchise Association and commercial real estate consultancy CBRE.

CCFA chairman Pei Liang told the China Shopping Center & Chain Brand Development Summit that shopping centers need to offer unique value that is not available at stand-alone or other types of stores.

"Operators need to help merchants operate and attract more foot traffic, such as offering logistics services for food and beverage vendors," he noted.

Occupancy rates at second and third tier cities have not improved in the past year, but cities like Shanghai and Beijing still have a huge attraction to brands opening brick-and-mortar stores.

Shopping outlets are the most popular category, with the top 20 domestic outlet operators recording a 25 percent sales increase to 51 billion yuan (US$7.4 billion).

As for market outlook, as many as 60 percent of landlords remain cautiously optimistic on rent increases, revenue and profitability but over half of them estimate a pickup in operating costs.

Nearly two thirds of landlords worry that more new openings in second and third tier cities in the next two or three years will mean more competition and more pressure on their operations. 

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