CBRE forecasts retail leasing to touch 6-6.5 million square feet in 2022, twice the 2021 quantum. Total investment grade mall stock topped 77 million square feet.
Retail leasing in India jumped 166 per cent on-year during the first half of the current year 2022, indicating that retailers are now regaining confidence to expand operations, said CBRE in a recent report. Not only this, CBRE now expects retail leasing in full year 2022 will be twice that in the previous year. “It is evident that retailers have regained confidence and are set for expansion mode,” said Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE.
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“We anticipate that going forward, domestic brands will remain proactive in relocations / expansions, and a strong appetite from international retailers will continue,” he added. CBRE forecasts retail leasing to touch 6-6.5 million square feet in 2022, twice the 2021 quantum. Total investment grade mall stock topped 77 million square feet.
What’s driving the growth?
In terms of cities, Delhi-NCR and Pune, followed by Bengaluru and Hyderabad, are leading the leasing activity, accounting for more than 70 per cent of the overall retail space take-up, the report said. In fact, Delhi-NCR leasing has gone back to pre-pandemic levels and this growth is led by domestic brands. Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, “We expect nearly 5.5 – 6.0 million sq feet of new investment-grade malls to become operational during the year, an annual growth of nearly 40 per cent. Accounting for nearly an 85 per cent share in the overall investment-grade mall completions, Hyderabad, Delhi-NCR, and Bangalore are expected to dominate retail supply addition in H2. Moreover, Mumbai and Chennai are also anticipated to witness supply addition.”
In terms of segments, fashion and apparel continued to drive the leasing activity with a share of 32 per cent in H1 2022 and the other categories to follow included supermarkets (12 per cent) along with homeware and department stores (12 per cent). While the entertainment category was one of the most impacted during the pandemic, it has emerged as one of the top demand drivers during the said period with an 11 per cent share of the overall demand.
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Rentals rise in proportion to the demand increase
The CBRE report also pointed out that rental values increased on a half-yearly basis in select micro-markets across most cities, due to strong demand from retailers across malls and high-streets. Among high streets, rents rose by about 5-12 per cent across select locations in Delhi-NCR, Bengaluru, Hyderabad, and Pune, and about 1-3 per cent in Mumbai, it said. Further, mall clusters in Pune and Delhi-NCR witnessed rental increase of 5-11 per cent on a half-yearly basis, and 1-3 per cent across one mall cluster in Mumbai.
Key retail trends in focus
– Domestic as well as international brands will remain bullish on expansion and will drive leasing activity.
– Pent-up supply is expected to come on stream during H2 2022, registering a 40 per cent growth Y-o-Y.
– Thematic stores, promotional events and expanded display areas will grow for retailers to be able to offer more engaging, immersive and convenient experiences to consumers.
– Landlords will focus more on tenant mix which would include service-oriented retailers.
Retailers will rely more on omnichannel strategies to sell and deliver goods.
– Partnerships will take an upper hand among retailers in order for retail brands to continue to explore new business models and concepts, etc.
