Retailers snap up premium real estate amid limited supply

New Delhi: Retailers across the board held quality real estate in the first half of calendar year 2023, resulting in a decline in vacancy levels in malls in the country, according to a report by real estate consulting firm Anarock.

In the first half of the year, however, there was limited supply of quality real estate in the top tier malls in the top seven cities in the country, with an incremental supply of 0.2 million square feet during the period. This supply is expected to increase in the coming quarters.

Meanwhile, gross leasing stood at 2.8 million square feet, according to the report.

As a result, vacancy rates at malls were at 6% in the first half of the year. This represents a significant recovery from the 13% vacancy rate in 2020, reflecting strong demand for retail real estate in the country.

There are 88 ‘Grade-A’ malls in India. Post-pandemic vacancy levels have fallen sharply due to strong leasing due to retailers’ aggressive expansion plans, along with limited availability of quality retail spaces, according to the report. Vacancy rate is the percentage of empty space in a given location.

“Leasing activity for the period has surpassed the previous year’s levels and is expected to post the best numbers ever, post-pandemic, for the entire year. Currently, the sector is facing challenges such as shortage of quality retail real estate, which However, due to the strong pipeline of retail assets coming from organized retail operators, this challenge should disappear soon,” said Anuj Kejriwal, CEO & MD, Anarock Retail.

After seeing a jump in the previous calendar year, however, rents remained unchanged in some markets. Rents in the first half of the calendar year remained the same in Mumbai, Delhi-NCR, Pune, Hyderabad, and Chennai compared to the same period a year ago, but fell by 5-10% year-on-year in Kolkata and Bengaluru . , according to the report released on Wednesday.

Clothing and accessories retailers led leasing activity in the first half of the year, followed by entertainment and food and beverage companies.

“The sharp fall in vacancy levels to 6%, from the peak of 13% during the peak of the pandemic, creates a strong revival of the sector, thanks to the strong growing demand across all categories. On the ground, we see huge enthusiasm from mall operators and retailers alike to strengthen their presence in existing markets and move into newer cities The retail scene has clearly grown into tier-2 & tier-3 cities now, due to the realignment of workforce location , along with tier-2 & tier-3 cities. improved internet demand and penetration,” Kejriwal said.

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Updated: 15 November 2023, 07:11 PM IST

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