(Bloomberg) -- Shopping malls in China’s financial hub are seeing a surge in vacancies after Covid 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% in the second quarter, above a “warning line” of 5%, said China Real Estate Information Corp., 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% of its shops shuttered, CRIC said. The 2.7-million-square-foot mall, just a few minutes away from the world’s second-tallest office tower, has been one of the most popular shopping centers since it opened more than two decades ago. 

Malls are getting hit hard by Covid 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% in the second quarter from the first.

Global brands are feeling the pain too. Burberry Group Plc and Richemont reported sales drops of at least a 35% in China for their more recent quarters. Starbucks Corp.’s China revenue sank more than 40% in the three months ended July 3. 

(Updates with details about mall rent drops in fourth graph)

©2022 Bloomberg L.P.