Developers expect mall occupancy to improve as retailers renew deals

New Delhi | Mumbai: Developers expect occupancy at Indian malls to increase in line with the pace of unlocking early next year even though vacancies climbed through most of 2020 at major Indian cities, with the exception of Mumbai. “The retail segment has been doing good post unlock and recovering faster than any other segment of the real estate sector,” said Abhishek Bansal, executive director, Pacific Group. About 10 brands are on the verge of completing fit-out in 30-45 days, and that will take the occupancy to 97-98% in its three malls in Delhi-NCR. Vacancies at malls in the NCR, Pune, Bengaluru, Chennai and Hyderabad have risen between 50 and 530 basis points (bps) compared with the year-ago period, data by ANAROCK Research showed. Mumbai bucked the trend, with vacancy at malls in the Maximum City shrinking 390 bps.Mall owners also have seen retailers renew their leases and a few who had vacated their premises are now looking for space. One major attraction for retailers is the new revenue-share model that has reduced their high fixed monthly outgo. “Some retailers are holding on to their leases because rather than starting afresh when the situation improves and spending more on set up, they prefer to hold on and enter into win-win deals with the mall owners,” said Anuj Puri, chairman, ANAROCK Property Consultants.While malls reopened mostly since June, top markets — including Delhi and Mumbai – permitted shopping only a month later. That led consumers to shift to online channels.Consumers increasingly prefer online purchases but the brands expect physical retail to bounce back to pre-Covid levels in the next few months. As a result, top brands are proactively opening stores to exploit the low rental costs and less competition.“A lot of top malls in metros and top cities corrected their portfolio by shrinking spaces as well as easing out low-performing brands and reassigning to top-performing, category leading brands,” said Sanjeev Mohanty, managing director, South Asia, Middle East and North Africa, Levi Strauss & Co. It has more than doubled its store size in many cases while also relocating to better positions in the mall. “This also led to higher and better realisation for mall developers since they shifted to strategic revenue share deals now as compared to high fixed rentals pre-Covid,” he added. Also, mixed-use property is gaining traction, said M3M, which signed up nearly 150 brands in its mixed-use properties in Gurugram, leasing around 5 lakh sq ft of space. “The model that provides all amenities to customers under one roof has emerged as a preferred model for the commercial segment owing to its self-sustainability. In the retail segment, high-street retail is gaining momentum as compared to malls,” said Pankaj Bansal, director at M3M. 79886187

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