With the pandemic far behind and life back on track, shoppers are back in malls. The last few months have witnessed a massive increase in footfalls, which is only expected to go up. As a result, the mall management has started reversing the concessions they had provided to the shop owners. They have also begun to demand 10-15% higher rentals than pre-Covid levels.
“Covid has dealt a severe blow to physical shopping. It had kept away shoppers for a significant period and led to the massive popularity of e-commerce. While quite a few closed down, many struggled to stay aloft. Naturally, mall operators had to take a compassionate view and offer significant discounts on rental and other sops such as revenue sharing to support the shop owners. Thankfully, those days are behind us. And with shoppers back in malls, it’s time we bring rentals at par with the market levels,” says Abhishek Bansal, Executive Director, Pacific Group.
According to industry experts, mall rentals are expected to cross the pre-pandemic levels.
“The commercial segment is poised for major growth, and new launches are being taken up sooner than ever. There is a huge jump in leasing for shops and offices. According to a report, the total office leasing in major Indian metros rose by 61 per cent, reaching 18.2 million sq ft in the Q2 of 2022. We expect the graph to go up and so will mall rentals,” says Sanchit Bhutani, Managing Director, Bhutani Grandthum.
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The situation is similar in Tier 2 & 3 cities. Except that, post-pandemic has witnessed an upsurge in retail outlets, especially in the prominent Tier 2 towns.
“With NCR accounting for one-third of the total operational mall stock, the post-Covid recovery in malls has been phenomenal. As per the latest reports, footfall is estimated to cross pre-Covid-19 levels in 2023. Consequently, the management, which had offered discounts to the store owners during the pandemic, is now offering lease deeds as per the current business trends in the shopping malls,” says Ravinder Choudhary, Assistant Vice President, Vegas Mall.
According to a Knight Frank report, 25 million square feet have been leased between January and June this year, translating to a 107 per cent jump, year-on-year. “A remarkable feature of the post-pandemic period is an increase in high-street launches. While spaces in high streets are affordable compared to malls, of late, with the shoppers back, these spaces have also witnessed an increase in rentals. I also want to add that the rentals are still on the lower side in emerging areas,” says Ajendra Singh, VP, Sales & Marketing, Spectrum Metro.
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As people throng to malls in large numbers – shopping, eating, watching movies and having good times — it shows an excellent future for the commercial segment, both retail and offices. Even though rentals have increased, they are still hovering around the pre-pandemic levels, creating a win-win situation for mall operators and retailers.