Fast-fashion brand Zara has shut down its flagship store in South Mumbai's historic Ismail Building, as it could not afford the rental costs associated with the prime retail space.
Zara leased the space in 2017, for an astonishing ₹2.25 crore per month in rent for the 51,300 sq ft space, amounting to ₹27 crore annually, as per details sourced from real estate data analytics platform CRE Matrix. The initial five months were free of rent. On completing three years of the 21-year lease tenure, the rent escalation was 5% per annum.
According to this calculation, Zara was paying nearly ₹36 crore a year, which translates to ₹9.86 lakh a day.
This high rental expense ultimately contributed to the brand’s decision to exit the location, despite signing a 21-year lease in 2016.
Luxury fashion house Purple Style Labs has now leased the 60,000 sq ft space in the same heritage building for ₹36 crore annually, securing a five-year lease, according to property registration documents obtained by Propstack.com.
Nine-year run comes to an end
Zara opened its Ismail Building store in May 2017, following extensive restoration work conducted by local architects in collaboration with the brand’s in-house architectural team. The store was the largest Zara outlet in India and the only independent one in Mumbai, as the brand's other stores are located in shopping malls.
Despite its prime location at Flora Fountain, the store struggled with profitability due to high operational costs. Retail experts suggest that consumer demographics have shifted, with high-end shoppers now favoring areas like Lower Parel and Worli, where Zara continues to operate at Palladium Mall.
{{/usCountry}}Despite its prime location at Flora Fountain, the store struggled with profitability due to high operational costs. Retail experts suggest that consumer demographics have shifted, with high-end shoppers now favoring areas like Lower Parel and Worli, where Zara continues to operate at Palladium Mall.
{{/usCountry}}"The South Mumbai demographic that can afford Zara has largely shifted to Central Mumbai, particularly in Worli and Lower Parel, where they are likely shopping at Palladium Mall. As a result, South Mumbai has become just another address, while Palladium Mall offers the advantage of higher foot traffic," a retail head from an international property consultancy told HT.com.
A notice posted at the store’s entrance informed customers that the store would cease operations after February 23, directing them to other Zara locations in Mumbai.
"Please be informed that this Zara store will cease operations after the end of business on 23rd February. We will continue to assist you all at our Zara stores in Mumbai and at Zara.com/in," the notice stated.
Purple Style Labs steps in
Purple Style Labs, founded in 2015 by Abhishek Agarwal, has taken over the space for its luxury fashion retail venture, Pernia’s Pop-Up Shop. The firm, which acquired Pernia’s Pop-Up Shop in 2018, specializes in incubating and promoting high-end designer brands. The company houses renowned designers like Tarun Tahiliani, Falguni Shane Peacock, Amit Aggarwal, and Gaurav Gupta.
According to registration documents, the lease for the space includes a structured rental increase: ₹39 crore for the second year, ₹42 crore for the third, ₹43.8 crore for the fourth, and ₹45.6 crore for the fifth. A deposit of ₹18 crore was paid for the lease, with a stamp duty of over ₹53 lakh and a registration fee of ₹1,000.