Mall rents rise as demand outpaces supply: Anarock

Bengaluru: Spurt in online shopping notwithstanding, mall space demand has continued to witness strong leasing momentum, according to a report by Anarock Retail out on Wednesday.

Demand has outpaced supply in 2024, marking the third consecutive year of this trend.

During the year, over 6.5 million square feet (msf) of organised retail space was leased across major cities, surpassing the supply of new stock significantly.

This has led to a reduction in vacancy rates in malls to 7.8% in 2024 from 15.5% in 2021, causing rental values to increase.

Driving the growth of the Indian retail sector are macroeconomic factors of rapid urbanisation, rising affluence, and evolving consumer preferences, said the report.

Retailers are also seen shifting their preferences to larger stores, and those with spaces between 2000-5000 square feet (sq ft)recording the highest share of transactions. Stores ranging from 1,000 to 2,500 sq ft are seeing increased demand due to limited availability in malls.

The beauty and personal care and departmental store segments witnessed an 11% surge in the July to December (H2) period of 2024. Apparel and accessories continue to dominate, accounting for 40% of leasing transactions in H2 2024.

The future for malls

Gross leasable area during 2024-2028 is expected to hit about 38 msf.

The National Capital Region (NCR) alone will make up almost 47% of this, said the report. Other states contributing big chunks are Mumbai Metropolitan Region (16.74%), Hyderabad (14.85%), and Bengaluru (13.87%).

Key high street locations include Linking Road, Mumbai and South Extension, Delhi (lease rates at Rs 800-1000 per sq ft), Lajpat Nagar, Delhi (Rs 350 - 450 per sq ft), and MG Road, Bengaluru (Rs 250-350 per sq ft).

The targeted goal is for dining, entertainment, and all other experiential facets to dovetail seamlessly with active shopping, pointed out the report.