Retail sector leasing grows 130%, retailers set to diversify locations this year, says report

CBRE South Asia Pvt. Ltd., the real estate consulting firm, has announced the findings of its report, ‘India Market Monitor – Q1 2023’. The report highlights the growth, trends, and dynamics across various segments of the real estate sector in India.

According to the report, retail sector leasing grew by 130% Y-o-Y to 1.5 mn sq. ft. in Jan-Mar’23. Supply during this period increased by 474% Y-o-Y to 1.1 mn. sq. ft.

During the Jan-Mar’23 period, Ahmedabad led the absorption with a 27% share, followed by Delhi-NCR at 26%, and Bangalore and Chennai at 14% each. The cumulative leasing share of the three cities in total leasing stood at 81%. Ahmedabad saw the highest supply with a 73% share during Jan-Mar’23, followed by Delhi-NCR at 20%.

According to the report, the Fashion & Apparel segment had a majority share in total leasing activity at 31%, followed by Homeware and Department Stores at 19%, F&B at 11%, Luxury at 8%, and Consumer Electronics at 5%. 

Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, said, "Retail supply this year is expected to surpass 2022 levels owing to pent-up supply addition, with several investment-grade projects launched in the past two years set to become operational in 2023. This would give a fillip to primary leasing, which is likely to be the main demand driver for retail space in 2023.”

Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, “We believe that retailers will seek spaces beyond conventional malls and high streets to diversify their location plans, thereby enabling supply chain modifications and facilitating customers to shop for any product at any time. Furthermore, omnichannel initiatives such as metaverse and social commerce will witness greater traction."

Retail Market Outlook: 

• Retail supply to surpass 2022 levels owing to pent-up supply addition; several investment-grade projects launched in the past 1.5-2 years also set to become operational in 2023
• This would give a fillip to primary leasing, which is likely to be the main demand driver for retail space in 2023
• Retailers to look beyond traditional malls and high streets to diversify their location strategies which will facilitate supply chain transformation so that consumers are able to shop for any product, any time
• Use of metaverse (to enhance customer experience) and social commerce (involves leveraging social media sentiments) to emerge as key omnichannel strategies
• Retailers likely to continue to 'right-size' stores not only to engage customers but also to provide a wide range of choices in stores 

Pics courtesy: Freepiks