×

Retail Leasing Gaining Traction

Torbit - January 22, 2023 - - 0 |
Retail Leasing Gaining Traction

Given the strong supply pipeline and high domestic demand, retail leasing is likely to strengthen further, though global headwinds might cause some short-term disruption. Going forward, Tier 2,3, and even Tier 4 cities will gain traction to drive leasing volumes.

According to a latest CBRE report, retail leasing grew by 21% Y-o-Y in 2022 to 4.7 mn sq. ft.  Supply in 2022 stood at 1.4 mn sq. ft. Overall, Bangalore and Delhi-NCR had a major share (61%) in leasing activity , while Chennai, Hyderabad, and Pune had a 9% share each. Supply addition in Bangalore was the highest, with a share of 86%, followed by Pune (14%) . Key sectors that drove leasing activity in 2022 were fashion & apparel, food & beverage (F&B), hypermarkets, homeware & department stores.

On a quarterly basis, retail leasing stood at 1.6 mn. sq. ft. with a growth of 79% in the Oct-Dec quarter over the Jul-Sep quarter, while the supply in Oct-Dec quarter stood at 1 mn. sq. ft. During the Oct-Dec 2022 quarter, the report highlights that Bangalore (41%), Delhi-NCR (27%), Chennai (9%), and Hyderabad (7%) led the absorption. On a pan-India basis, Bangalore recorded the highest share of mall completions, with a share of 79% in Q4 2022, followed by Pune (21%). Key sectors that drove the leasing activity in Q4 were fashion & apparel (37%), homeware & department stores (12%), hypermarkets (10%), F&B (10%), and luxury (7%). The report highlighted quarterly rental growth (mall) in select pockets of Delhi-NCR (Noida 12-16%, Vasant Kunj 8-12%, Saket District Centre 8-12%) and Bangalore (East 3-8%). A 5-9% rental growth in the high streets of Kammanahalli/HRBR Layout in Bangalore and Sector 29, Gurgaon was also recorded.

In Q4 2022, the regional share of leasing activity was led by domestic corporates (73%), EMEA corporates (11%), APAC corporates (11%), and American corporates (5%). According to Anshuman Magazine, Chairman & CEO, India, SE Asia, Middle East & Africa, CBRE, Indian economy is  likely to remain  steady despite tightening monetary conditions and recessionary global headwinds .Given the robust supply pipeline planned for 2023, and strong domestic consumption, leasing activity is anticipated to remain high. Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, is of the opinion that going forward, retail leasing is expected to gain traction in Tier 2,3 and even  Tier 4 cities as retailers and landlords are  looking to leverage the purchasing power of these towns and cities. 

Retail outlook:

  • Leasing likely to strengthen further, given the strong supply pipeline and strong domestic demand, although global headwinds might cause a short-term anomaly
  • Entry of more international brands, especially in the F&B space, likely while expansionary demand from domestic brands to continue
  • Tier-II, III and even IV locations to gain traction as retailers look to leverage the spending power of these towns and cities
  • Hybrid shopping focusing on the convergence of offline and online is likely to remain a key retailer strategy
  • Domestic brands to strengthen their presence across all retail categories, with consolidation, acquisition and partnerships remaining key to their expansion strategies observations

Leave a Reply

    Join our mailing list to keep up to date with breaking news