India’s retail boom: Mall space demand outstrips supply for 3rd consecutive year in 2024
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The Indian retail sector continues to grow robust in H2 2024, driven by macroeconomic factors of rapid urbanisation, rising affluence, and evolving consumer preferences. The industry has seen significant leasing momentum, with demand consistently outpacing supply for the third consecutive year.
In terms of leasing momentum, over 6.5 million sq ft of organised retail space were leased across major cities in 2024, surpassing the supply of new stock significantly. This has led to a reduction in vacancy levels in malls to 7.8%, causing rental values to increase, the latest report by Anarock shows.
The data on store size preferences show retailers have shifted their preferences to larger stores, with spaces ad measuring between 2,000-5,000 sq ft, recording the highest share of transactions. Stores ranging from 1,000 to 2,500 sq ft are seeing increased demand due to limited availability in malls.
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The trends on the store category shows the beauty & personal care and departmental store segments seeing an 11% surge in the second half of 2024. Apparel & accessories continue to dominate, accounting for 40% of leasing transactions in H2 2024.
Vacancy in prominent malls continues to decline, with superior malls operating to nearly 100% capacity. Vacancy rates have dropped from 15.5% in 2021 to 7.8% in 2024, according to the data.
Anuj Kejriwal, CEO & MD - ANAROCK Retail, says, "Significant upcoming supply is planned in NCR, MMR, and Hyderabad, accounting for nearly 78% of the total supply. Notable mall developments include World Mark, Aerocity with 30 lakh sq ft, Ramsons Trends Square Mall, Bangalore with 10 lakh sq ft, and Orion Mall, in Kokapet, Hyderabad – also with 10 lakh sq ft. Rental values across malls and highstreets are on the rise and are expected to continue their upward climb until new good quality supply is added."
The key high street locations include MG Road, Bangalore (lease rates at Rs 250-350/sq ft), South Extension, Delhi (lease rates at Rs 800-1000/sq ft), and Linking Road, Mumbai (lease rates at Rs 800-1000/sq ft).
Major tenants based on total area leased include Lifestyle International (15,69,760 sq ft), Reliance Projects & Property Management Services (15,02,823 sq ft), and PVR Limited (11,14,427 sq ft).
The retail sector's growth is leading to ever-increasing organised retail space leasing across the country. The report shows malls and shopping complexes of all stripes are pulling out all the stops to transform into multi-faceted experience zones that go far beyond shopping. "The targeted goal is for dining, entertainment, and all other experiential facets to dovetail seamlessly with active shopping, and this requires retailers and brands to shift to bigger spaces in larger-scale malls that can offer the requisite experience to patrons."
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