Malls, malls everywhere still nowhere to go!

January 27, 2012 / By  

The last few months I kept noticing a lot of mid sized office and mixed use buildings in Mumbai going under the hammer. Not very surprising considering the wave of redeveloping real estate that has swept the city. What is so unusual about them then? Well, it is the proposed development- stand alone retail formats. The plots are just perfect, inside thick residential areas, abutting sub- arterial roads, and of a size to construct a hundred thousand square foot spread on three levels.

Not confined to Mumbai only, but almost all cities in India are witnessing the same. The reason? Substantial retail mall space getting built but only half of it is worth a glance from retailers! We are still stuck with the mistakes we made three or four years ago by jumping on the bandwagon and creating too many malls without reason. Few understood that building and running malls is a science and terms like catchment, location, supply bench marking, and mall management matter in a mall’s success.

So, we have quite a few mediocre shopping centres without the best of locations or catchments, designed experimentally and sold by strata. These are ruins of hastily commissioned projects where no retailers want to come thus piling up on vacant retail space. Adding to this problem, there are very few new launches that can lure retailers on project merit.

The retail industry in India is healthier than ever, rearing to scale new heights, confident of its markets spread in 53 cities housing more than a million people each. 2011 witnessed a supply of 13.8 million sq ft and 10.7 million sq ft of absorption (JLL Real Estate Intelligence Service, 4 Q 2011) that is 130% of that for the years 2009 & 2010 put together. Retailers are in the market again looking for space, willing to invest with long term business plans, offering a premium for even half-decent properties only to find all worthy properties consumed fully, good properties on hand being leased overnight and delaying decisions by a few days means dimming hopes of business expansion due to a totally external factor of lack of good space to sell their wares!

And just imagine what will happen when the FDI into multi-brand retail opens up!

With delays in completion and few retail conducive projects being launched, for retailers, it is malls, malls everywhere and still nowhere to go! So, enough is enough they say and start scouting for stand alone properties. With their eyes on old mansions, mixed use buildings, small office blocks in decent locations as well as emerging locations, big format retailers and giant chains are mandating property firms to broker deals for them. High streets were never out of form, now they come back with a vengeance. Properties which with retrofitting can enable you to start selling in no time are fast becoming precious assets of big retail companies. Even constructing glass cubes on plots that house “the building next door” is felt worthwhile rather than waiting for sensible malls to come as retailers do not want to remain static.

The stand alone stores are set to give shoppers a personalised experience and caring attention that many shoppers fear missing in malls; happy shopping!

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