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Changing retail landscape creates expansion opportunities in shopping districts.
Hong Kong, 31 July 2016 – With the Rio de Janeiro Olympics kicking-off on 5 August, sports-focused retail brands have been busy expanding their presence in the city to gain a winning edge. Sportswear and health-orientated retailers have been leading the charge, actively expanding in prime shopping districts. More than 100,000 sq ft of new retail space in shopping malls and street-level shops was taken by sports-focused retail brands over the last 12 months, according to JLL's latest Retail Atelier report.
Sports-focused brands were the most active in the leasing market in the first half, with five street shops covering more than 32,000 sq ft being concluded during the period. A new Nike store with a total floor area of 12,000 sq ft will open in Tsimshatsui, while rival Adidas leased over 48,000 sq ft in Central, Causeway Bay and Tsimshatsui for their own flagship stores.
Shopping mall landlords were also actively entering the sports sector with several, including IFC in Central, Times Square and Hysan Place in Causeway Bay and Pacific Place in Admiralty, introducing more sports-focused retail brands into their malls, which have traditionally been positioned more towards luxury brands.
Other beneficiaries of the renewed interest in sports and health have been gyms. The sector has shifted away from larger, commercial fitness centres towards more niche, personalised training centres, which are able to capture a wider, and more diverse, slice of the market. This trend was reflected in the closure of California Fitness in July, with smaller fitness enterprises keen to take up the space vacated by the gym giant. Pure Fitness, meanwhile, has doubled its footprint in Hong Kong over the last three years alone, diversifying from gyms into yoga studios and into F&B.
Terence Chan, Head of Retail at JLL, said: "Hong Kong people have become much more health-conscious in recent years and now have a stronger demand for sports goods. With this year's summer Olympic Games, the enthusiasm for people to do sports is even greater. Luxury, watch and jewellery retailers have found maintaining profitable stores a challenge over the last 18 months and are increasingly considering portfolio consolidations and seeking rental reductions. The changing retail landscape is creating real estate opportunities for sportswear retailers that are still thriving in this market. They are now in a position to take up prime locations at competitive rents, in locations which may have previously been unobtainable to them. As a result, we expect the sport sector to continue to be aggressive in its expansion this year."
Cathie Chung, National Director of Research at JLL in Hong Kong, said: "Studies have found that Hong Kong employees endure the longest working hours in the world. Little wonder locals are increasingly living by the mantra: work hard, play hard. The market for sportswear and sporting goods in Hong Kong is potentially immense. Latest government statistics suggest that about 60% of the local population does not engage in adequate physical activity, which the WHO defines as 150 minutes per week of moderate-intensity aerobic activity. For a city with a population of 7.3 million, that represents a significant growth market. Space requirements from sports brand retailers will continue to be a major demand source going forward, helping to support the city's retail occupancy level."
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