Mall executives and real estate consultants said leading malls have increased rents, especially for retail brand categories that attract more customers.
Many retailers, struggling with competition from e-commerce businesses, have been hit hard during the shutdowns. Some did not survive and left space. But with the pandemic receding, offline stores have made a comeback, as shoppers flock to malls to purchase items such as electronics, cosmetics and clothing that many shoppers prefer to smell and touch. before buying.
“In some categories like beauty, cosmetics, electronics and fashion, in some good malls, we saw rentals up 10-15% from 2019-20. But these are categories brands and malls, not a general trend. In the malls of Delhi, Mumbai and Bangalore, sales have picked up very strongly. We have seen a slight increase in the number of rents,” said Pankaj Renjhen, CEO and Co-CEO of Anarock Retail.
Well-located malls, he said, could have one of their best years as pent-up demand helps revive business.
DLF Malls said its properties now command a premium. “Rents are going up 20%. So if we have a dead end lease, we take 20% of a premium. I believe this is increasing because our properties are unique and have gone from strength to strength during covid. We signed 130 new leases during the pandemic,” said Pushpa Bector, Executive Director, DLF Retail.
As a general rule, shopping centers increase their rents by 15% every three years. “It was put on hold for 12-18 months during the covid period. It’s over now,” said Mukesh Kumar, Managing Director and Chief Executive Officer of Quest Properties India Ltd, which operates shopping malls in Kolkata.
Kumar, also chairman of the Shopping Center Association of India, said all concessions to tenants had been withdrawn.
“The new deals are proceeding at normal pace. Whatever the market rate or whatever it was before covid, we apply it today plus 10% in some cases,” he said.
Most brands, he said, are seeing a big comeback, with stronger, well-established brands even asking for bigger spaces. “There has been growth in terms of revenue for most brands – almost 15-20%, compared to the pre-pandemic period. So rentals are up,” he added.
Retail businesses reported a 23% increase in sales in April compared to pre-pandemic levels in April 2019, suggesting a surge in consumer demand, according to data released by the Retailers Association of India. last week. Quick-service restaurant chains recorded the strongest recovery with a 45% jump in April sales compared to the same month in 2019, followed by retailers of electronics, appliances, sporting goods and clothing.
It is therefore not surprising that real estate has become more expensive. “When we started the offline journey, we actually thought that due to covid the rents would go down and it would be easy to find locations for the stores. That didn’t happen. been a struggle. A lot of the big brands in the market are still expanding. I think rents have been 15-20% higher than before covid,” said Sidhant Keshwani, CEO and Managing Director of the brand. of ethnic clothing for women Libas.
With rent collections estimated at more than 85% of pre-pandemic levels, the October-December quarter was the best for mall operators since the pandemic began. The third wave of the pandemic this year, however, resulted in an estimated 20-25% drop in shopping center rentals in the January-March quarter, according to estimates by ratings agency Icra.
However, business has since rebounded. “We follow the leases signed for tenants who have been there. And for new leases, rentals are subject to market conditions and malls,” said Abhishek Bansal, executive director of Pacific Group, which operates malls in Delhi-NCR.