Malls expected to add 6 million sq.ft of operational space in eight key markets

Retail leasing is likely gain added momentum this year, adding around 6 million sqft of operational mall space the key eight markets, taking the overall retail space addition to 6-6.5 million sqft, according to a report.

Estimated leasing in the retail sector is expected to sustain 6.00-6.5 million sqft this year fueled by primary leasing activity property consultant CBRE said in a report.

The leasing expansion will be led by the home décor segment which is likely to expand in online and offline formats, fashion and apparel players and jewellery brands which are seen expanding their footprint. Emerging as an alternative to traditional cinema halls, the growing interest of consumers in the entertainment category is also likely to lead to more traction in leasing as well, says the report.

However, retailers, including anchor tenants and established brands, are expected to proceed cautiously with expansion plans, as they will prioritise locations with high visibility, strong foot traffic and favourable consumer demographics, says the report. As a result, rental growth is expected to rationalise across both primary and secondary locations.

Driven by robust consumer demand, the retail sector saw remarkable growth in 2023. Looking ahead to 2024, both retailers and consumers are cautiously optimistic. While tier-I cities remain key expansion hubs, promising tier-II markets are attracting new players, the report said.

Retail demand across investment-grade malls, prominent high streets and standalone developments has grown consistently since 2020. Year 2023 reported absorption of nearly 7.1 million sqft, a 47 percent on-year growth in tier-I cities.

Leasing activity was primarily driven by Bengaluru, Delhi-NCR and Mumbai, with the three cities cumulatively accounting for nearly 61 percent share. Meanwhile industrial logistics supply will see an addition of 35-37 million sq.ft in 2024.