Retail leasing in Ahmedabad stood at approx. 0.03 million sq. ft. in H1 2022

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Retail leasing in Ahmedabad stood at approx. 0.03 million sq. ft. in H1 2022.CBRE South Asia Pvt. Ltd, India’s leading real estate consulting firm, today announced the findings of its latest retail report, ‘CBRE India Retail Figures H1 2022’. According to the report, retail absorption in Ahmedabad improved on an annual basis, backed by robust demand across various sectors. Among the key retail categories, leasing was driven mainly by Consumer Electronics with a 70% share in total absorption, followed by Health & Personal Care (12%) and Fashion & Apparel (10%).

Key lease transactions recorded in the city were:

  • RealMe leased 13,000 sq. ft. in high street
  • Unicorn Apple Flagship Premium Reseller leased 3,650 sq. ft in Ahmedabad One Mall

Led by sustained demand, rental values increased on a half-yearly basis in the high streets of CG Road and Sindhu Bhawan Road. In H1 2022, both global and domestic retailers launched their stores in the city. Additionally, several prominent national retail developers have announced plans to launch malls in the coming quarters that is expected to boost investment-grade mall supply in the city.

The report indicates that the retail sector leasing in India increased by about 166% Y-o-Y crossing 1.5 million sq. ft. As of H1 2022, the total investment grade mall stock crossed over 77 million sq. ft.  

The report points out that among the cities, Delhi-NCR and Pune, followed by Bangalore and Hyderabad, led the leasing activity, together accounting for more than 70% of the overall retail space take-up. As per the report, pent-up supply is likely to enter the market during H2 2022, and the total supply for the year is anticipated to surpass the pre-pandemic levels. Leasing momentum is expected to pick up in H2 2022 owing to the anticipated space take-up in newly completed malls.

The report also observed that due to strong demand from retailers across investment grade malls and prominent high streets, rental values increased on a half-yearly basis in select micro-markets across most cities. Among high streets, rents rose by about 5-12% across select locations in Delhi-NCR, Bangalore, Hyderabad, and Pune, and about 1-3% in Mumbai. While prominent mall clusters in Pune and Delhi-NCR witnessed rental growth of 5-11% on a half-yearly basis, a marginal increase of 1-3% was reported across one mall cluster in Mumbai.

Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said“It is evident that retailers have regained confidence and are set for expansion mode. We anticipate that going forward, domestic brands will remain proactive in relocations/expansions, and a strong appetite from international retailers will continueWe foresee retail leasing to touch 6-6.5 million sq. ft. in 2022, twice the 2021 quantum. Additionally, owing to the tremendous growth potential, we expect many international brands to launch stores in tier II and III markets.

Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, “We expect nearly 5.5 – 6.0 million sq. ft. of new investment-grade malls to become operational during the year, an annual growth of nearly 40%. Accounting for nearly an 85% 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. Among the consumer segment, fashion and apparel retailers will continue to expand their physical sales networks and pay particular attention to enhancing flagship stores.”

Retail Outlook/Other observations

  • Expansionary demand set to strengthen leasingDomestic brands are likely to remain proactive in relocations and expansions. Among international retailers, brands with sound local market intelligence and established management teams are anticipated to drive leasing activity. On the other hand, new-to-market brands are likely to remain cautious and collaborate with domestic partners to launch in India. Overall leasing is expected to reach around 6.0 – 6.5 million sq. ft. in 2022.
  • Pent-up Supply addition expected in H2 2022Pent-up supply is expected to come on stream during H2 2022 as 5.5 – 6.0 million sq. ft. of new investment-grade malls are anticipated to become operational during the year, registering a 40% growth Y-o-Y.
  • Experiential retail to remain In-Focus: Thematic stores, promotional events, and expanded display areas and showrooms are expected to grow in 2022, and retailers will continue to create engaging, immersive, and convenient experiences that would give customers a reason to visit stores.
  • Innovation in tenant mix: The last two years have resulted in a rise in demand for service-oriented retailers, including beauty, medical, pet, childcare, and entertainment. Keeping in view the larger consumer experience, landlords are anticipated to place much greater importance on this sector in their tenant mix and, in doing so, could redefine ‘consumer spaces’.
  • Omnichannel to remain relevant in times to come: Retailers will continue to rely heavily on omnichannel strategies to sell and deliver goods. Some may generate most of their revenue online but leverage a select number of brick-and-mortar showrooms for their products to be viewed and tested. On the other hand, a mall-based retailer that derives most of its revenue from store sales may use online/social media channels to market and sell goods.
  • Retail partnerships to foster: Retailers continue to explore new business models and concepts, including fostering new partnerships and relationships, not only with landlords but also with international players to facilitate their seamless entry into India.

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