Home Europe Real Estate Global Retail Construction Rises, China and Mexico Lead the Way

Global Retail Construction Rises, China and Mexico Lead the Way


According to a new report from CBRE Group, Inc., developers completed more retail centers across the globe last year than in 2015, but momentum appeared to wane in many countries as retailers strive to find the right balance of brick and mortar and e-commerce operations.

“In the omnichannel era, retailers are focused on ensuring that they have the optimal mix of brick-and-mortar stores and e-commerce operations, so they are using sophisticated analytics and market knowledge to choose the best store sites rather than the most store sites,” said Anthony Buono, Chairman of CBRE’s Global Retail Executive Committee. “At the same time, an easing of construction volumes likely will benefit retail-center owners by supporting rental rates.”

CBRE’s annual study of global retail construction found that builders completed 134.5 million sq. ft. (12.5 million square meters) of shopping centers globally last year, up 11.4 percent from 2015. Seven of the top 10 markets for retail completions are in China, with Mexico City, Moscow and Melbourne rounding out the top 10.

Meanwhile, construction activity has slowed in many markets. The global pipeline of retail centers under construction declined by 22 percent to 360.6 million sq. ft. (33.5 million square meters) at the end of last year in comparison to a year earlier, according to the CBRE report.

Retail completions in the Americas jumped by nearly 44 percent last year, due mostly to a surge in construction in Mexico. An economic lift from Mexico’s thriving automobile-manufacturing industry helped spur developers to complete 14 million sq. ft. (1.3 million square meters) of retail centers in three major Mexican cities last year. In the U.S., markets delivering the most new supply last year included Houston, New York City and Honolulu.

The Asia-Pacific region (APAC) – and China, in particular – remains the global hotspot for retail construction. More than 90 percent of APAC cities studied by CBRE hosted large-scale retail construction in 2016 compared to 56 percent of cities in the Americas and 14 percent in Europe, the Middle East and Africa (EMEA). Of retail construction completed in 2016, APAC accounted for two thirds.

However, even APAC and China appear to be taking a breather. The APAC pipeline of retail centers under construction was down 24 percent at the end of 2016 from a year earlier. China’s completion of nearly 62 million sq. ft. (5.75 square meters) of retail centers last year was down slightly from the previous year, and half of Chinese malls that opened last year delayed their debuts by at least six months due to sluggish leasing progress.

“The Chinese retail market is showing some signs of recovery. There are short term oversupply concerns in some markets and submarkets, although others remain buoyant,” said Joel Stephen, CBRE Senior Director, Advisory & Transactions, Retail Asia. “Retail markets are thriving across APAC, with strong demand supporting construction in markets like Melbourne, Brisbane, Kuala Lumpur and Ho Chi Minh City.”

Retail construction in EMEA was relatively calm, increasing by 18 percent last year but still trailing APAC and the Americas. Big retail centers came online in Moscow, South Africa and Kyiv in the Ukraine.


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