Retail Surge: Demand for Mall Spaces in India Exceeds Supply for Third Year Running
Click to start listening
Synopsis
The Indian retail sector is thriving as demand for mall space consistently surpasses supply for the third year in a row, revealing an ongoing expansion and increasing competition among retailers for prime locations.
Key Takeaways
- Demand for mall space in India exceeds supply.
- Vacancy rates in malls have dropped to 7.8%.
- Rental values are on the rise due to competition.
- Major growth expected in NCR and other cities.
- Retailers favor larger store sizes for better customer experience.
Mumbai, March 19 (NationPress) The retail industry in India is experiencing robust growth, with the demand for mall spaces outpacing supply for the third consecutive year, according to a recent report released on Wednesday.
The leasing activity remains strong as retailers are eager to broaden their footprint in organised retail environments across key urban areas.
A report from Anarock Retail indicated that in 2024, over 6.5 million square feet of organised retail space were leased, greatly surpassing the availability of new stock.
This trend has resulted in a significant drop in vacancy rates, which currently sit at only 7.8 percent in shopping malls. Consequently, rental prices have risen sharply, reflecting the heightened competition among retailers for sought-after retail spots.
Retailers are also gravitating towards larger retail spaces to improve customer engagement. Areas between 2,000 and 5,000 square feet have noted the highest volume of leasing transactions.
Meanwhile, spaces sized between 1,000 and 2,500 square feet are also in demand due to the scarcity of available options in malls.
Within various retail sectors, the beauty & personal care and departmental store segments observed an 11 percent increase in leasing activity during the latter half of 2024.
Apparel and accessories continue to lead, comprising 40 percent of all leasing deals during this timeframe.
The drop in vacancy rates is particularly pronounced in premium malls, where occupancy has nearly reached its limit, the report revealed.
Vacancy levels have decreased from 15.5 percent in 2021 to just 7.8 percent in 2024, demonstrating a strong demand for retail space.
Looking forward, the report forecasts that approximately 37.7 million square feet of new mall space will be introduced between 2024 and 2028.
The National Capital Region (NCR) is projected to see the most significant supply, accounting for nearly 47 percent of forthcoming mall developments.
Other major urban centers such as Mumbai Metropolitan Region (MMR), Hyderabad, and Bengaluru are also expected to witness considerable growth in organised retail space.
"Rental prices in malls and on high streets are rising and are likely to keep increasing until new quality supply comes online," stated Anuj Kejriwal, CEO and MD of Anarock Retail.
