Automakers have become the real savior for commercial real estate owners still reeling from the coronavirus pandemic shock.
Instead of opening their stores, electric car manufacturers from China have decided to lease vacant space in shopping malls. They are willing to pay twice as much per square meter as fashion stores can afford.
According to Ellen Wei, head of retail at JLL China, many automakers have already signed long-term leases for prime first-floor space in many malls across the country. For example, one unnamed Chinese electric car brand alone plans to open 400 stores in 20 cities.
After a prolonged downturn in the auto market caused by the coronavirus pandemic, many automakers have seen a surge in sales in the past few months. Startups such as Xpeng and Li Auto raised more than $1 billion each in their initial public offerings in the U.S. this year. And Nio's stock price soared about 1,000% in 2020.
Initially, some electric car makers actively started opening pop-up format stores. Then they turned their attention to empty mall space. It is easier than opening their retail outlets. However, this business cannot do without physical spaces, because before parting with money, potential buyers want to examine the car beforehand, to sit inside it. Particular emphasis is placed on young visitors to shopping centers.
The emergence of new, unexpected customers allows Chinese commercial real estate owners to fill the voids created by the coronavirus pandemic.