The Chinese market hasn’t been particularly fertile ground for U.S. mall developers.
Take the case of Simon Property Group Inc., the biggest mall owner in the U.S., which also has had success in Europe with its investment in a controlling stake in French retail landlord Klepierre SA. China has been more troublesome.
In 2005, Simon Property announced plans to invest in a joint venture to build shopping centres in China. But four years later, it sold its stake in the venture and the operations of four shopping centres, for $29 million to its partners.
Simon said at the time that it may take a long time for middle-class consumers to fully emerge to shop. But a few years later, Simon signed a memorandum of understanding with a Chinese developer, Bailian Group, to build an outlet centre near the Shanghai Disney Resort. That partnership never materialised.
Taubman Centers Inc., another big U.S. mall owner based in Bloomfield Hills, Mich., has had more success breaking into China. The company opened its first centre there in April, a seven-story shopping centre in Xian in northwest China. That 90,000-square-meter (968,752-square-foot) mall is 100% leased and occupied. Tenants include Coach, Gap, Zara and Toys R Us.
Taubman is scheduled to open its second property, a six-story mall, in Zhengzhou in central China in March. The Zhengzhou mall will be 90% occupied when it opens, according to the company.
Taubman executives said that they are careful in picking projects that address market needs. “We’re not aiming to be the flavour of the month, we want the building to last,” said Rene Tremblay, president of Taubman Asia.
A person familiar with Taubman’s thinking said the company has no plans to add additional malls in China in the near future.