Leasing of retail space across 8 cities rose 21% last year, says CBRE

Leasing of retail real estate space during last year rose 21% to 4.7 million square feet across eight major cities mainly on rising demand from Food and Beverage (F&B), fashion and apparel retailers

Leasing of retail real estate space during last year rose 21 per cent to 4.7 million square feet across eight major cities mainly on rising demand from Food and Beverage (F&B), fashion and apparel retailers, according to CBRE India.

The absorption of retail space in 2021 calendar year stood at 3.9 million square feet across Ahmedabad, Bengaluru, Chennai, Delhi-NCR, Hyderabad, Kolkata, Mumbai and Pune.

The data denotes space take-up in investment-grade malls, prominent high streets and standalone developments.

The leasing of retail space is still below 2019 (pre-COVID) level at 6.8 million square feet during 2019. The demand of retail space plunged to 2 million square feet in 2020 calendar year due to the nationwide lockdown to control the COVID pandemic.

Real estate consultant CBRE South Asia noted key sectors that drove leasing activity in 2022 were fashion & apparel, F&B, hypermarkets, and homeware & department stores.

"The Indian economy is likely to remain steady despite tightening monetary conditions and recessionary global headwinds. Even though a challenging scenario across developed economies, retail leasing activity scaled a new high in 2022," Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa of CBRE, said.

Given the robust supply pipeline planned for 2023 and strong domestic consumption, the leasing activity is anticipated to remain steady, he added.

"We also expect more international brands, especially in the F&B space, to enter the country," Magazine said.

As per the data, the absorption of retail space in Ahmedabad rose to 0.10 million square feet in 2022 from 0.03 million square feet in the previous year.

The leasing activity in Bengaluru increased to 1.92 million square feet from 1.68 million square feet.

Chennai saw an increase in demand of retail space to 0.45 million square feet from 0.26 million square feet, while Delhi-NCR witnessed surge in leasing to 0.96 million square feet from 0.36 million square feet.

The absorption of retail real estate space in Kolkata increased to 0.18 million square feet from 0.10 million square feet. Leasing of retail space rose to 0.43 million square feet from 0.19 million square feet.

However, the leasing activity in Hyderabad fell to 0.31 million square feet from 0.64 million square feet.

In Mumbai, too, the demand fell to 0.39 million square feet from 0.66 million square feet.

"Going forward, we expect retail leasing to gain traction in Tier II, III, and even IV cities as retailers and landlords are looking to leverage the purchasing power of these towns and cities," Ram Chandnani, Managing Director - Advisory & Transactions Services at CBRE India, said.

Activity in these cities will remain strong from domestic retailers, with international retailers expected to be more active in the apparel and QSR segments, he added.