Mall Vacancies in India Drop to 8.3%: What’s Driving the Retail Resurgence?

Mall vacancies in India have witnessed a significant decline in H1 2024, down from 15.5 per cent in 2021 to 8.3 per cent in the first six months of this year, according to a latest report by Anarock. The research company has attributed the fall to the retail sector’s unprecedented growth amid favourable economic factors and rising affluence.

It stated that apparel & accessories and food & beverages categories remain the dominant segment. In addition, exclusive stores for watches & jewelry have also witnessed remarkable growth during the year, accounting for 6 per cent of the total retail leasing volume.

"Vacancy in prominent malls continues to be on the decline owing to limited supply and robust leasing. Superior malls across the country are operating almost full capacity. Major national and global brands are keen to take up quality spaces in successful malls and high streets across cities,” said Anuj Kejriwal, Anarock Group CEO & MD of Retail, Industrial & Logistics segment.

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He said retailers and brands continue to prefer smaller spaces as nearly 70 per cent of the leases were for spaces admeasuring up to 2,500 square feet.

“As fresh supply gets added in the coming years, larger spaces will garner an increasing share of total leased area. The highest share of upcoming supply is planned in NCR, MMR, and Hyderabad in the next five years. Together they account for over 85 per cent of the total incoming supply,” he added.

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The first half of the current year mirrored the leasing momentum seen in the past two years, with over three million square feet leased across the country’s major cities. The next few years will witness major supply addition across all these cities, with the NCR accounting for the majority, the report said.

Retail Space Demand in India

Leasing of retail space in shopping malls and prominent high streets rose nearly 5 per cent during January-September this year across eight major cities, as per Cushman & Wakefield data.

It showed that the absorption or leasing of retail space in Grade-A malls and main high streets across the top eight cities stood at 5.53 million square feet during January-September 2024 against 5.29 million square feet in the preceding year's corresponding period.

These eight cities are -- Delhi-NCR, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad, Pune and Ahmedabad.

Among cities, Hyderabad's prominent high-street locations saw strong demand for retail space, with the leasing of 1.72 million square feet during January-September 2024 against 1.60 million square feet in the year-ago period.