A wave of international retailers have announced major store closures across China, including the likes of Ikea, Zara, Zara Home and Lane Crawford. As many big international brands are moving their China business online, shopping centre vacancies are on the rise, and rent prices are falling. The same is happening with office space across China’s top-tier cities.
Much of the focus of China’s property market woes has been on private apartments. Yet, both retail and office space are also facing serious problems. The rapid expansion of office space development across China appears to be finally hitting a limit. Meanwhile, a similar thing is playing out in shopping malls. This is in part a result of Beijing’s push towards online retail, but also a result of overall weak consumption.
It’s getting tougher and tougher for foreign brands operating in China. Shopping malls, while adapting to the changes by focusing more on restaurants, education centres and nail salons, are likely to continue to decline. Office space faces an even bigger challenge, as those international companies which have typically required the most space are cutting back. In the coming months, there are likely to be more headlines relating not only to private property developers, but also to those who build and operate office and retail spaces.