20 April 2023, Mumbai
Retail leasing is expected to reach its highest level after the 2019 peak of 6.8 million sq ft, according to a report by CBRE. The report, titled "2023 India Market Outlook," predicts that primary leasing in newly-completed malls will continue to drive retail space demand in 2023.
Supply is expected to increase as a significant amount of pent-up supply is due for completion this year and several investment-grade projects launched by reputable players in the past 1.5-2 years are expected to become operational. The report estimates that supply will touch approximately 6 million sq ft in 2023, the highest in the past five years.
Malls in general receive significant traction from fashion and apparel and homeware brands. Retail brands are scaling up measures to buy mall spaces to target new customers and expand their consumer base. The demand for commercial real estate has been doubling as customer demand continues to rise, proving to be a double-whammy situation for retailers and commercial real estate players.
In the pre-pandemic era, retail space leasing was recorded at 6.8 million sq ft in 2019. However, the pandemic caused a plateau in 2020, with figures of retail leases accounting for 20 lakh square feet. The post-pandemic scenario led to an increase in demand, with 39 lakh square feet being leased in 2021, which rose to 47 lakh square feet in 2022 across the eight major cities.
The report indicates that the National Capital Region has become a favorite expansion zone for brands due to growing connectivity corridors and infrastructural functionalities, which has brought a huge demand to the forefront.
The positive sign of growth in the commercial real estate revival is the expansion of retail brands.
