The retail sector leasing witnessed a year-on-year growth of 46 per cent in the January-September 2023 period with total absorption across the 8 Indian cities at 4.73 million sqft, compared to 3.23 million sqft in January-September 2022, said CBRE South Asia. Fashion & apparel and home & department stores accounted for over 50 per cent share in leasing, said the CBRE report, ‘India Market Monitor Q3 2023’. In terms of cities, Bangalore, Delhi-NCR, and Pune collectively accounted for a share of over 61 per cent in leasing activity during this period. Supply addition also recorded a 577 per cent YoY increase in Jan-Sep’23, crossing 2.98 million sqft.
During the nine-month period (Jan-Sep’23), fashion & apparel sector’s share in leasing stood at 34 per cent, home & department stores at 17 per cent, and food and beverage at 13 per cent. Delhi-NCR, Chennai and Pune led leasing activity in the fashion & apparel category, while home & department store leasing was highest in Pune, Ahmedabad, and Mumbai. Bangalore recorded the highest leasing share of 30 per cent during the Jan-Sep’23 period, followed by Delhi-NCR at 19 per cent, Pune at 12 per cent and Chennai at 11 per cent.
During the Jul-Sep’23 quarter, total leasing stood at 1.84 million sqft. The combined share of Bangalore and Pune in retail space leasing stood at 59 per cent. Bangalore emerged as the frontrunner in leasing, capturing a significant 35 per cent share, followed by Pune with a 24 per cent share and Hyderabad with a 14 per cent share. Delhi NCR also had a 11 per cent share in total leasing during this period. Fashion & apparel brands led leasing activity with a 33 per cent share in the total leasing in the top 8 cities during Jul-Sep’23, while leasing by homeware and department stores accounted for 22 per cent share in total leasing, CBRE said.
The top 8 cities also saw a 100 per cent YoY growth in mall completions with Pune leading the growth in supply addition with a 58 per cent share, followed by Delhi-NCR at 19 per cent. During this period, the share of leasing activity was led by domestic firms (68 per cent), followed by retailers from EMEA (22 per cent), APAC (8 per cent), and America (3 per cent).
“As we step into the last quarter of the year, we are delighted to witness the remarkable growth in retail absorption and supply addition. With the surge in newly available spaces and the onset of the festive season, we anticipate a continued upswing in space utilization. The retail sector is on the brink of a remarkable transformation, where retailers are keen on revamping the in-store experiences with cutting-edge technology, personalized services, and space optimization,” said Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE.
“Although we expect consumer spending and retail sales to stabilize compared to the unprecedented growth of the previous year, we foresee continued growth in categories such as restaurants, hotels, transportation services, vehicle purchases, as well as apparel and footwear,” he added.
Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, “As construction costs continue to challenge the industry, we anticipate a surge in redeveloping and reimagining existing spaces, particularly in prime locations with strong occupancies and rents. With malls becoming entertainment centres, footfalls in brick-and-mortar stores are expected to continue rising. Secondary leasing in the retail sector is also expected to remain strong and primary leasing is likely to continue gaining momentum, given the strong supply pipeline and the festive season. Additionally, we foresee Tier-II cities gaining momentum as retailers seize the opportunity to enter these promising markets, capitalizing on their potential for growth while managing operational costs. This strategic move allows them to enhance brand presence, foster customer engagement, and offer value through in-person shopping experiences.”