Retail leasing touches 1.6 mn sq ft in the third quarter of 2024; High street rentals see growth of 15% YoY in Q3 2024
Main street rentals in Gurugram’s Galleria Market witnessed a 20% growth both q-o-q and y-o-y while rentals in Khan Market jumped 7% in the same time frame.
Retail leasing of 1.6 mn sq ft was recorded in the third quarter of 2024 with Hyderabad, Delhi NCR, and Mumbai leading the volume. High streets and not malls dominated the leasing landscape, accounting for 68% of the total retail space leased this quarter. Also, high street rentals witnessed an average growth of around 15% in the quarter.
According to the Cushman & Wakefield Q3-2024 Retail MarketBeat Report, high streets dominated the leasing landscape, accounting for a 68% of the total 1.6 million square feet (MSF) leased this quarter, with Hyderabad, Delhi-NCR, and Chennai accounting for 70% of the total mainstreet leasing volume.
Strong demand on high streets has pushed rental growth, particularly in Delhi NCR, Bengaluru, Chennai and Kolkata, where rates surged up to 15% year-on-year, it showed.
While Delhi-NCR clocked a rental growth of 13-15%, Bengaluru witnessed a growth of 12-14% and Mumbai 5-6%, it said.
In Q3 2024, Delhi NCR recorded retail leasing volumes of 0.3 million square feet. Gurugram accounted for 44% of the quarterly leasing, followed by Delhi at 42% and Noida at 14%. Superior malls continued to report tighter vacancies around 3%. On the rental front, main street rentals in Galleria Market (Gurugram) witnessed a remarkable 20% growth both quarter-over-quarter and year-over-year, while rentals in Khan Market jumped 7% in the same time frame.
Leasing activity in malls remain subdued
In contrast, leasing activity in malls remained relatively low, constituting just 32% of the total leasing volume. The lack of new mall supply in Q3-2024, with no fresh mall commencements, contributed to this subdued leasing activity. Owing to the prevalent demand-supply dynamics, the report further highlights the tightening vacancy rates, with Grade-A malls across major cities witnessing a significant decline, it said.
Foreign brands prefer Grade A malls
The vacancy in Grade-A malls have also tightened due to high demand from international brands, which continue to prioritise these locations over main streets. According to the report, foreign brands accounted for around 30% share in leasing volume in malls for YTD ’24.
In terms of overall leasing volume for the sector, which stood at 5.5 mn sq ft YTD in 2024, foreign brands captured a 15% share.
In terms of supply, while the third quarter of 2024 saw no new mall supply enter the market, the fourth quarter is expected to bring much-needed retail space with approximately 1.8 mn sq ft of Grade-A malls anticipated to open, primarily in Mumbai, Delhi-NCR, and Pune, providing fresh options for retailers amid tightening vacancy, the report showed.
Also Read: High street rentals see growth of 15% YoY in Q3 2024
“The Indian retail sector is evolving rapidly, and main streets continue to record high leasing due to limited mall supply. The strong demand-supply dynamic has driven rental growth, particularly in Delhi NCR and Pune. Malls, however, faced a quieter quarter due to a lack of supply—a gap that we expect to be addressed in Q4. Retail leasing trends, led by fashion, F&B, and accessories, reveal a clear shift toward more discretionary spending, highlighting the evolving lifestyles of Indian consumers,” said Saurabh Shatdal, Head Retail and Managing Director, Capital Markets, Cushman & Wakefield.
Retail leasing in Mumbai
Malls in Mumbai recorded a healthy leasing volume of 0.16 mn sq ft in Q3 2024, an increase of 76% increase year-over-year. Prominent malls in the suburban areas contributed significantly, accounting for 64% of the total leasing activity during the quarter. With approximately 1.7 million square feet of Grade-A mall supply projected over the next 12 months, nearly 70% is expected to be delivered in the short term. Prominent main streets, including Linking Road, Borivali-LT Road, Colaba Causeway, and Kemps Corner, saw a year-over-year rental appreciation of 5-7%.
Retail leasing in Bengaluru
Bengaluru saw retail leasing volumes of 0.2 million square feet in Q3 2024, reflecting nearly a 10% year-over-year growth. Malls contributed significantly to this activity, accounting for approximately 44% of total leasing. Main street leasing reached 0.11 million square feet, a 5% increase year-over-year, contributing 56% to the overall leasing volumes. The city-wide mall vacancy rate also fell to 11.2% from 12.6% in the previous quarter, it showed.