Retailers focusing on main streets for new store opening

Retailers are increasingly focusing on main streets in prominent locations across India, with emerging clusters forming around residential and commercial hubs, which is reflecting in leasing activity with high street leases accounting for 70% of total leases in Q2 2024, compared to 30% for mall leases.According to Cushman & Wakefield, the continued dominance of main street retail leasing is owing to limited new mall openings and a strong demand for high-quality retail spaces. The rental growth across prominent main streets in Q2 2024 further underscores their growing appeal. Kolkata, Bangalore, Hyderabad and Mumbai, have all experienced significant year-on-year rental increases, demonstrating strong demand and potential for high street retail in the country.The report also reveals decline in mall vacancy rates across Delhi NCR, Bengaluru, Pune and Ahmedabad during the second quarter. This trend is attributed to the lack of new mall openings and the robust demand for high-quality retail spaces, thereby contributing to a demand-supply imbalance to some extent. Superior category malls (institutional grade or listed developer assets with high experiential quotient), continue to maintain very low vacancy rates (typically in the single digits) across major cities.In terms of supply, while the first half of 2024 saw no new mall supply enter the market, the second half is anticipated to witness a surge in retail space, with an addition of approximately 4.5 million square feet (MSF) of primarily Grade-A malls. Mumbai is anticipated to lead the supply with 1.2 million sq ft, followed by Chennai at 1.2 million sq ft, Delhi-NCR at 1.2 million sq fr and Bengaluru at 0.9 million sq ft.The tightness in the superior grade retail real estate space can be also seen in the retail portfolio of NEXUS Select REIT, where occupancies have reached 98%. The REIT’s stock prices have climbed nearly 30% since its IPO in May 2023, and looking at the under-penetration, it has announced a near doubling of portfolio size over next 5 years. “We anticipate the main street activity to remain healthy. Additionally, the dominance of domestic brands, accounting for 53% of leasing volume, along with the strong performance of fashion and F&B highlight the evolving retail preferences in India,” said Saurabh Shatdal, Head Retail and Managing Director, Capital Markets, Cushman & Wakefield.



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