Mumbai to see 1.6msf of prime retail supply by year-end

This supply pipeline will be in the suburban micro markets.

During the second quarter of the year, Mumbai witnessed retail leasing activity of around 109,000 sf in malls. According to a Cushman and Wakefield report, the majority of the leasing activity was in the form of new space take-ups. 

“About 44% of quarterly leasing activity was concentrated in prime city locations like BKC and Lower Parel. The fashion segment drove quarterly leasing with around 70% share in leasing volume,” the report added.

Here’s more from Cushman and Wakefield: 

H1-2023 witnessed total leasing activity of close to 266,300 sf driven by space take ups by Fashion (57%) and F&B (20%) retailers. Prominent fashion brands increased their presence across the city sub-markets over the last six months. 

Two prominent international café brands have opened their first stores at prime city locations like Lower Parel, BKC and Andheri during the quarter and they are expected to expand their presence across the city. 

On the back of steady leasing momentum, city-level mall vacancy declined to 8.3% from 8.7% in the previous quarter. Superior category malls enjoy tight vacancy levels of 1.10% on the back of strong retailer preference. 

No new mall supply was recorded during this quarter. But close to 1.59 msf of Grade A supply is expected to be operational by the end of this year in the suburban micro markets. This supply addition is likely to result in a marginal increase in vacancy levels in the upcoming quarters. 

F&B drove main street leasing in suburban markets 

Prominent main streets in Mumbai witnessed good leasing activity during the quarter with close to 89,200 sf of store openings. The F&B sector accounted for the majority of leasing volume (45%), primarily across locations like BKC, Bandra, Powai, Goregaon and Thane. In H1-2023, witnessed a total leasing of 194,000 sf, largely driven by F&B segment retail. 

Malls and main street rentals improve further 

City-wide mall rentals witnessed an average 2-7% rise on a q-o-q basis, on the back of fresh demand and term renewals. Prominent main streets in the prime locations have also witnessed a rental appreciation of 1-6% during this quarter on the back of robust retail space demand, which is expected to continue. 

Despite low vacancies across superior retail malls, mall rentals are expected to remain range-bound going forward because of the upcoming Grade A malls that will enhance the city’s mall inventory significantly.