Shanghai's traditional retail market to mix it up
SHANGHAI: As online shopping businesses are grabbing the market share from the traditional retail market, retail mall operators are mixing up the tenant mix by increasing the proportion of food and beverage (F&B) tenants, reported Knight Frank in the Shanghai Retail Market Report 2Q2014.
The second quarter saw strong retail demand boosted by the Labour Day and Dragon Boat holidays in May.
The total increase of retail sales was 8.3% year-on-year (y-o-y) to 71.1 billion yuan (RM37 billion). From January to May, the figure increased to 346.9 billion yuan, a y-o-y increase of 7.5%.
Newly-opened malls such as River Mall in Pudong, attracted many people and garnered 12.5 million yuan during the three-day Labour Day holiday.
Ground floor retail space in Shanghai’s core commercial areas showed a slight decrease by 0.7% to 57.7 yuan per sq m per day.
The report attributed the main reason for the decline to the expiry of leasing contracts for most of the street shops along the western section of Huaihai Middle Road. Apart from that the area is also experiencing high vacancy as a number of retailers chose to leave.
Although street shop rents are showing a decline, rental rates for shopping malls remained stable.
Overall the market showed that average rent for Grand Gateway 66 in Xuhui District showed an increase of 5.6% quarter-on-quarter to 95 yuan per sq m per day, the highest among shopping malls in the city.
Overall vacancy rates in core commercial areas declined by 0.6% to 7.1 %. It is expected that retail market growth in the third quarter will remain stable with steady new supplies and upward retail rents.