Stable mall supply volume to keep Chengdu’s vacancy rate falling
Renewal and upgrade will be the main focus of malls in traditional urban areas.
The shopping mall average vacancy rate in Chengdu, China is expected to fall in the next few years as the new supply volume in the city’s retail market is projected to be stable over the same period, according to a Savills report.
About 400,000-square metre (sqm) shopping malls are expected to enter Chengdu retail market in the second half of 2021, although the citywide average vacancy rate is not expected to display considerable fluctuations due to the even distribution of new supply.
“In the next three years, about half of the new supply in traditional urban areas will be located in the Financial City, Dayuan, and City East submarkets,” the report stated.
According to Savills, since available land resources within Chengdu’s traditional urban areas are becoming more scarce, existing retail projects’ renewal and upgrade would be the focus of the market in these areas.
“With industry development and population growth in the markets surrounding traditional urban areas, more high-quality and diverse retail projects are expected to open in these areas,” the report said.
The citywide shopping mall average vacancy rate fell 0.8 percentage points (ppt) quarter-on-quarter (QoQ) to 8% in the second quarter (Q2) of 2021, as landmark projects in the city’s prime retail area started large-scale tenant upgrades in Q2 2021, and the overall tenant quality of projects in Chunxi Road was enhanced.
The prime retail area’s average shopping mall vacancy rate also dropped by 0.4 ppt QoQ to 8.0%.
“Shopping malls in the City South, City East, and Financial City submarkets adjusted tenants frequently in Q2 2021, and their vacancy drops were bigger than other submarkets across the city, driving the average shopping mall vacancy rate of non-prime areas to decrease by 0.8 of a ppt QoQ to 8.0%,” the report added.
In terms of supply during the quarter, Chengdu Incity in Jianshe Road entered the market, with a total gross floor area of 102,000 sqm, pushing Chengdu’s total shopping mall stock to 6.7 million sqm.
The new project enlarged the retail property stock of the traditional commercial submarket, Jianshe Road, and also promoted the renewal of the submarket, offering consumers more diverse purchasing choices and shopping experiences in the region, Savills said.
Owing to the strong regional influence and attractiveness of Chengdu’s retail market and high-quality projects, many famous brands from home and abroad entered the market during the quarter. Debut retail brands were mainly street fashion brands, the report noted.
For instance, popular fashion brand collective store, Knowin, opened at Atrium (Phase Two); and North American sneaker collective brand, Solestage, launched its first Southwestern store at Sino-Ocean Taikoo Li.