Secondary space take-up drove retail demand in Mumbai during Jul-Dec ‘22
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 H2 2022’. According to the report, backed by strong footfalls, demand for quality retail space across prime malls and high streets witnessed an uptick in Mumbai.
Among the key retail categories, leasing was mainly driven by Fashion & Apparel with a share of 30% in total absorption, followed by Luxury (15%) and Food & Beverage (10%).
Key transactions recorded during Jul- Dec 2022 in the city were:
Asian Paints leased 90,000 sq. ft. in Peninsula Corporate Park (High Street)
Azorte leased 15,000 sq. ft. in Nexus Seawoods (Mall)
Reliance Digital leased 9,000 sq. ft. in independent development (High Street)
On a pan-India basis, according to the report, retail leasing grew by 21% Y-o-Y in 2022 to 4.7 mn. sq. ft., while supply in 2022 stood at 1.45 mn. sq. ft.
In Jul-Dec 2022, retail leasing grew by 5% on a half-yearly basis and was at 2.43 million sq. ft across key investment–grade malls, high streets and standalone developments. Supply grew by 129% on a half-yearly basis and was at nearly 1.0 million sq. ft. during the Jul- Dec 2022 period.Bangalore and Delhi-NCR, followed by Chennai and Mumbai, led leasing activity, together accounting for almost 80% of the overall space take-up during Jul- Dec ‘22.
Fashion and apparel retailers continued to expand their footprint, accounting for a share of more than 42% in overall leasing in Jul-Dec ‘22. Other prominent categories that continued to drive leasing activity during the period included food & beverage (~12%), along with hypermarkets (~7%). The entertainment category, which was impacted the most during the pandemic, also emerged as one of the top demand drivers with ~6% share in the overall space take-up.
The report elaborates on how shoppers returned to physical retail as cities began reopening after tapering of COVID-19. Since then, shoppers have been increasingly opting for ‘hybrid commerce’ – a mix of offline + online retail. CBRE’s Live-Work-Shop survey, whose findings will be released later this month, also indicated a strong preference for offline + online retail, with more than 90% of respondents stating that they shopped via multiple channels.
Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, said, “The Indian retail sector is recovering, and we anticipate that it will continue to gain momentum through 2023. Even amid difficult global economic conditions, international brands are expanding not only in tier-I cities but also penetrating tier-II & III cities as they see India as a potential market"
Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, “As the cities started to reopen after the pandemic, many shoppers returned to physical retail and since then have adopted ‘hybrid commerce’. Sales in Jul-Dec ‘22 surpassed the pre-pandemic levels owing to increased consumer confidence leading to a hike in spending. Leasing momentum is expected to further pick up in Jan-Jun ‘23 owing to anticipated space take-up in newly completed malls.”
Rental values inched up on a half-yearly basis in certain micro-markets across most cities driven by robust retail demand. Among high streets, rents rose by about 4-8% across select locations in Delhi-NCR, Bangalore, by 4-12% in Ahmedabad, and by about 1-3% in Mumbai. Meanwhile, prominent mall clusters in Delhi-NCR and Bangalore witnessed rental growth of 3-15% and 2-6%, respectively.
The report highlights that even though supply addition has decreased by 69% Y-o-Y during the review period, pent-up supply is expected to become operational in the first half of 2023, and the overall supply for the year is predicted to exceed the pre-pandemic levels.
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