14 retail malls to exit space shortly: CII-JLL study

AHMEDABAD: As many as 14 malls together having 3.5–4.5 million sq ft will withdraw from retail operations in near future, a CII-JLL report on India’s real-estate sector said.

The report, Is Indian Real Estate Heading towards a Tectonic Shift, predicts a correction in the retail space in the near future, with bad malls exiting and those doing well performing even better.

With some malls exiting the space, the business of other malls will improve. This is a much-needed course correction, which will continue to happen for some time, the report said.

The vacancy rate across malls in major Indian cities is high at 20%, it said. But successful malls have less than 10% vacancies, with a few ones operating at near-full capacities.

The poor performers are either converting into Grade-B office space or getting demolished. According to the report, poorly performing retailers exit malls midway through their lease contracts, while in some cases, the landlords initiate churn to improve their portfolio of tenants. On an average, when business is good, churn rates of around 15-18% have been recorded. In India, the range was 4-8% in well-managed malls during the initial years, the report said.

Meanwhile, lease contract periods have shortened to 2-5 years now from 9-20 years seen in the mid-2000s, it said.