No new malls space helps lower mall vacancy to 14.5%: Cushman & Wakefield
Nov 06, 2013
Source : The Economic Times


KOLKATA: The overall vacancy levels in malls declined by 0.6 percentage to 14.51% on account of consistent leasing activities while supply has been only 0.77 msf gets added in Kolkata and Pune, states a latest report by Cushman & Wakefield.

Healthy transaction activity led to reduction in overall mall vacancy of Pune and Kolkata despite the addition of fresh mall space in both the cities. Pune witnessed the opening of a new mall measuring 700.000 sf, while Kolkata witnessed the partial opening of a mall with only anchors and mini-anchor stores operational at 70,000 sf.

Increased leasing activities and lack of infusion of new mall space led to a 1.8 % dip in Bengaluru's mall vacancy. Chennai and Ahmedabad witnessed marginal reduction in mall vacancy. Mumbai and NCR however recorded slight increase in vacancy levels due to ongoing churn in various malls.

As per Q2 2013 estimates, 9 malls were expected to be operational by Q3 2013. However, a total of 7 malls, admeasuring 2.62 million square feet (msf) were deferred. Bengaluru and Chennai witnessed deferment of two malls each totalling to 710,000 sf and 461,000 sf respectively. In Bengaluru, one mall got deferred due to construction delays while the other went on hold due to liquidity issues.

Out the two malls in Chennai, one got deferred to early next quarter due to delay in construction completion, while the other mall had to be deferred due to lack of sufficient demand from retailers. Pune also saw postponement of 430,000 sf of mall space due to lack of demand from retailers mainly due to locational constraints of the project. Hyderabad witnessed deferment of 425,000 sf mall supply to early Q4 2013 due to construction delays.

A mall space of 225,000 sf was deferred in NCR to later quarters because of delays in acquiring necessary regulatory approvals for operation.

According to C&W, mall rentals increased by 7-10% in Lower Parel (Mumbai), South Delhi (NCR) and Gurgaon (NCR), primarily due to high persistent and low availability of space. In South Delhi malls, the ongoing churn further propelled the rental appreciation.

Whilst internal restructuring of a mall in Mysore Road (Bengaluru) led to 11% quarterly rental drop, 8% drop was noted in Hadapsar (Pune) owing to oversupply of mall spaces. Ongoing metro work led to 7% rental decline in Chennai-CBD malls. The increased supply caused by churn coupled with limited demand led to 4-5% negative rental growth at malls in Mulund (Mumbai) and Koregaon Park (Pune).

Given the limited availability of retail space in Vashi's (Mumbai) main street, the rentals steeply climbed up by 17% over the last quarter fuelled by high demand, especially from F&B retailers. For the same reasons, rentals inched northwards by 11% in Park Street (Kolkata), by 8% each in Usman Road -North (Chennai) and DLF Galleria (NCR) and by 6% in VIP Road (Kolkata) over the previous quarter.

Main streets like South Extension I & II (NCR), Connaught Place (NCR), MG Road (Pune) and Koregaon Park (Pune) recorded 2-4% appreciation in quarterly rentals owing to the ongoing churn and newer transactions at higher price points. Despite healthy enquiries, Bund Garden Road in Pune witnessed the main street rentals slumping by about 7% in a bid to ensure transactions being closed. Main street landlords in Velachery endeavoured to lure more retailers by reducing the rents by about 4% over the previous quarter.

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