Primary leasing in newly-completed malls to be key driver of retail space demand in 2023
Retail leasing is expected to touch 5.5 – 6 mn sq ft in 2023, the highest level after the 2019 peak of 6.8 mn sq ft, according to a CBRE report – ‘2023 India Market Outlook’. It is expected that primary leasing in newly-completed malls will remain the key driver of retail space demand in 2023.
The supply scenario is set to improve as not only a significant amount of pent-up supply is lined up for completion during 2023, but several investment-grade projects launched by reputed players in the past 1.5-2 years are also expected to become operational in 2023. As per the report, it is estimated that supply would touch ~ 6 mn sq ft in 2023, the highest in the past five years.
Commenting on the same, Vikas Bhasin, Managing Director, Saya Homes, says, “Brand tie-ups and space occupations add an interesting flair and enamour to malls. As a dynamic and people-friendly enjoyment centre, we are always looking for ways to enhance customers’ experience. Retail brands are scaling up measures to buy mall spaces to target new customers and expand their consumer base. This will further put commercial real estate on an advanced growth level, capitalising on the demographic strengths, strategic project locations, and viability of malls as full-fledged entertainment zones.”
Malls in general receive significant traction from fashion & apparel and homeware brands and onboard them to increase customer footfalls and add new attractions to them. A CBRE report that preceded this study depicted a sharp rise in buoyant demand from domestic and international brands dealing in fashion and luxury in 2022, quelling the post-pandemic economic vicissitudes.
Sanchit Bhutani, Managing Director, Bhutani Grandthum, says, “Commercial projects, offering a mix of office and retail spaces, are valuable investment propositions for brands having the desire to widen their reach and make up for the losses incurred in the pandemic times. There has been a continuous rise in retail space deal closures between brands and commercial realty developers over the years after the recession of pandemic effects. Consumers are warming up to different fashion and lifestyle brands and thronging to these commercial hubs to buy their favourite products and clothing. It is proving to be a double-whammy situation for retailers and commercial RE players as customer demand is quite high.”
Ajendra Singh, VP-Sales and Marketing, Spectrum Metro, says, “High-street commercial spaces seem to be the flavour of all investment seasons. The lucrative discount offers and deal announcements are attracting retail brands to different commercial real estate categories. Newly opened mall segments and phases are gathering a great response as they will allow brands to engage, create new consumer pools, and expand territorially in different parts of NCR.”
In the pre-pandemic era, retail space leasings were recorded at 6.8 million sq ft in 2019. It reached a plateau situation in 2020 when the figures of retail leases accounted for 20 lakh square feet. The post-pandemic hyphenated activity bounced the space demand, scoring 39 lakh square feet in 2021. It rose to 47 lakh square feet in 2022 across the eight major cities.
Pankaj Kumar Jain, Director of KW Group says, “Retail brand expansion is a positive sign of growth in the commercial real estate revival. A stupendous growth in demand has been sufficed by abundant availability and supply. The National Capital Region has been a brand’s favourite expansion zone. Growing connectivity corridors and infrastructural functionalities have doubly brought a huge demand to the forefront. It will continue to rise in the coming years as well.”