Demand spread across premium malls and key high streets

• Food & Beverages, department stores and Beauty and Fashion segments were the major demand drivers in both malls and prime high streets during the quarter. The high street locations like Porur, Adyar and Velachery witnessed new leases and store openings, whereas prominent malls located in Velachary and OMR Egattur saw maximum traction in 4Q23.
• National brands that continued to expand their presence in the city accounted for the largest shares in quarterly leasing activity in 4Q23.

No completions during the quarter

• The quarter witnessed no new completions. With no new supply and existing malls witnessing space take-up, the overall city-level vacancy dropped by 40 bps q-o-q and stood at 11.6%.
• The superior malls in the city, like Palladium, Phoenix Marketcity, Forum Mall, VR Chennai and Express Avenue, continued to witness low vacancy rates, while mid-tier malls recorded higher vacancy levels.

Rents stable q-o-q

• Overall city-level mall rents remained stable during the quarter. However, average rents were up 3.7% on a y-o-y basis. Going forward, we expect healthy retail demand and new supply additions of premium malls to drive rent movement upwards.
• Capital values witnessed a marginal uptick of 1.0% q-o-q and, on a y-o-y basis, were up by 7.1%, indicating a positive trend in the overall value of quality assets. This upward movement in capital values reflects strong market performance and suggests favourable conditions for investors and property owners.

Outlook: F&B and apparel to drive demand

• Healthy economic conditions and rising disposable incomes among young professionals have supported the growth of retail sales across various categories. Most activity has been visible across F&B, apparel, department stores, electronics and leisure categories. This has encouraged brands and retailers to expand their footprint in response to growing demand.
• While retailers are likely to prioritise right-sizing stores to optimise customer engagement, they are also looking to transform the omnichannel customer experience by blending online and offline retail experiences. Even store expansion strategies are expected to continue to be a mix of prime malls and high streets in key existing and upcoming catchment areas, based on the relevant demographics.