CBRE: Global Shopping Center Pipeline Up 7.4%

Global retail space under development increased 7.4 percent last year to 451 million square feet, reported CBRE Group, Los Angeles.

Anthony Buono, CBRE Executive Managing Director for Retail Services, noted that “exceptional” construction activity and a growing imbalance between retail supply and demand in Asia may lead to renters’ markets there. “Conversely, in the U.S. and Canada, historically low levels of construction have restricted retailers’ expansion options, creating strength in rental rates and stoking demand for alternative formats such as urban markets and transit corridors.”

U.S. retail development remained relatively muted due to the more mature retail markets of the continent, CBRE said. New York City ranked highest of U.S. cities at No. 22 globally with 4 million square feet under construction.

“Many U.S. investors have focused in recent years on renovating and expanding their strongest existing centers rather than building large, new centers,” CBRE said.

Mexico accounted for 46 percent of the North American retail development pipeline, CBRE said. The U.S. has 15 major centers under construction, highlighted by high-profile projects in and around New York City such as the American Dream at Meadowlands, Westfield Group’s World Trade Center retail center, the Shops at Hudson Yards in Manhattan and the City Point mixed-use development in Brooklyn.

“Shopping center development remains active across Asia,” said Natasha Patel, Director of EMEA Retail Research with CBRE. “However, the notable change this year is the slowing in the number of completions.” She said China accounted for two-thirds of retail construction globally last year.

Emerging markets such as Manila, Moscow, Mexico City and Bangalore also remained highly active while emerging Eastern European markets such as Russia activity saw slowing activity due to economic and political uncertainty, CBRE said. But Moscow is once again the only market outside of Asia that appears in the top 10 of global shopping center completions. Last year, developers completed nearly 4.4 million square feet of space in seven centers in Moscow.

“In Western Europe and the U.S., a lack of quality space continues to be an issue,” Patel said. “Extensions, refurbishments and repositions of existing assets continue to be the focus in both regions in a bid to continue to attract key brands and consumers alike.”