Retail decline in the US and Britain can’t be blamed on e-commerce alone. Look at China
- The continuing closure of shopping malls and high street stores in the West stands in sharp contrast to the integrated model, a mix of online and bricks-and-mortar retail, now spurring an industry boom in China
In the global commercial property investment market, retail is distinctly out of favour. In the first quarter of this year, transaction volumes in the sector plunged 21 per cent year on year, compared with a 7 per cent decline in the more resilient office market, according to data from property adviser Jones Lang LaSalle.
The rapidly diminishing appeal of retail stems from the bloodbath at shopping malls in America and on high streets in Britain, the world’s largest and fifth-largest retail markets respectively.
Many hedge funds believe the industry is the next “big short”, potentially bigger than the subprime mortgage debacle that led to the 2008 financial crisis.
In Britain, stores are closing daily on the nation’s high streets, with insolvencies up more than a fifth since 2016 and more than 1,200 retailers collapsing last year, according to data from Bloomberg. Department stores have been hit particularly hard, causing rents in UK shopping centres to fall sharply. Only eight centres came to market and were sold last year, the lowest transaction volume on record, Jones Lang LaSalle notes.
