‘Malls driving tier-II cities’ retail growth, seeing spatial corrections’: CareEdge

Office stock will exceed 1,250 million square feet (msf) by 2028. South India’s stock will be over 45% of this, with Bengaluru leading the growth rate curve amongst top cities, according to a CareEdge webinar on Thursday.

Growth will continue across asset classes.

For example, when it comes to warehousing, last-mile (or dark stores) and port-linked warehousing will see the maximum growth. Girish Singhi, Co-Chief Investment Officer, Welspun One, pointed out that last-mile warehouses are seeing a supply-demand mismatch.

Interestingly, malls will also see strong growth despite the growing relevance of online shopping. Even as brands enter e-commerce, they still need somewhere to showcase their brand, explained Kaishal Gupta, Group Chief Financial Officer, The Phoenix Mills Limited.

However, he added, there is a lull on the multiplexes side caused by growing preference for OTT platforms. Instead of 10-12% of space being allotted to multiplexes in malls, 5-6% is being allotted. Other entertainment options are replacing multiplexes, such as gaming or fine-dining.

Malls are driving the retail growth story in tier-II cities, said Singhi.

While expansion is certain to continue, so is rental escalation, primarily due to construction costs and increasing preference for green buildings, as per CareEdge.