Research + Studies
The retail real estate industry is central to Latin America’s economic and social wellbeing, generating jobs, a substantial portion of the region’s GDP and safe places for people to gather and socialize, notes a just released ICSC report.
Retail sales alone contribute 17.2 percent of Latin America’s GDP, excluding food service, motor vehicles and fuel. Those sales also provide a substantial stream of tax revenue — $134.3 billion in 2016 — that funds critical public works and services, according to the report, titled The Socio-Economic Impact of Latin American Retail Real Estate. Additional revenues are raised through retail real estate property taxes, as well as personal and corporate income taxes.
Retailers alone are among the region’s largest employers, accounting for one in seven jobs — nearly 40 million in total. Additional employment is created by those working in other capacities in the retail real estate industry, such as in shopping center management, maintenance and nonretail food- and service-tenant jobs, the report notes.
The industry has grown robustly in recent years, in tandem with the region’s economies and burgeoning middle class. Today there are almost 60 million square meters of gross leasable shopping center area, amounting to 99 square meters per 1,000 people. That is small, compared with the U.S., but a lot more is on the way: The industry will add over 26 million square meters of GLA between 2016 and 2021, according to Euromonitor. This growth will be vital in order to serve a steadily growing number of consumers: Over the past decade Latin America’s population grew by 63 million, to a total of nearly 600 million by 2016 — an increase of almost 12 percent. (In comparison, the U.S. population grew by 7.6 percent during that period.) By 2022 the region’s 30-to-39-year-olds are expected to increase their total consumer spending by 107 percent compared with what they were spending 10 years earlier.
The vast majority of retail sales take place in physical stores. Of the $796.7 billion in total retail sales across Latin America in 2016, 93.1 percent occurred in brick-and-mortar shops.
But there is a lot more to shopping centers in Latin America than just shopping, the report notes: They also offer safe places for people to gather and socialize. The full report may be viewed here.
By Edmund Mander