SHANGHAI (BLOOMBERG) – Shopping malls in China’s financial hub are seeing a surge in vacancies after Covid-19-zero lockdowns hammered consumer demand, adding to the woes of developers and asset managers owning them.

Vacancy rates in the city’s malls climbed to 7 per cent in the second quarter, above a “warning line” of 5 per cent, said China Real Estate Information Corp (CRIC), citing research of 20 major malls.

The worst hit was Super Brand Mall, which sits at the heart of Shanghai’s Lujiazui financial district. It saw 34 per cent of its shops shuttered, CRIC said.

The 2.7 million sq ft mall, just a few minutes away from the world’s second-tallest office tower, has been one of the most popular shopping centres since it opened more than two decades ago.

Malls are getting hit hard by Covid-19 as China’s economy slows and consumer demand wanes.

After traumatic lockdowns in April and May, health authorities in Shanghai still deploy “temporary control measures” that sometimes could confine people in shopping venues with little advance notice.

That has led mall rents in major areas to plummet more than 30 per cent in the second quarter from the first.

Global brands are feeling the pain too.

Burberry Group and Richemont reported sales drops of at least 35 per cent in China for their more recent quarters.

Starbucks’ China revenue sank more than 40 per cent in the three months ended July 3.