Retail space dries up in B'lore as shops compete for space

Competition for quality space toughens in Bangalore as major supermarket retailers such as Reliance Fresh, Subhiksha, Spencer's and FoodWorld are aggressive in their expansion.

The city, buoyed by this demand, is witnessing construction of 12 malls totalling 4.6 million square feet space in key select city pockets. This supply is to enter the market by 2008-end. In addition to the malls, retail development is taking place inside the residential localities as well.

With strong demand for space, the overall vacancy rates in the city has dropped to historic low of 0.3 per cent in first-two quarters of 2007. This huge demand is mainly driven by categories like groceries, fashion, sports, food and beverage (F&B) and jewellery.

According to international property consultants Jones Lang LaSalle Meghraj report, "The city is witnessing high demand and limited supply. This has seen rents climb higher, showing an increase of 7.1 per cent over first quarter levels. Average rental value in prime malls are around Rs 150 per square feet per month. Coveted high streets in Jayanagar, C M H Road and 100 feet road in Indiranagar have witnessed a 15 per cent quarter-on-quarter increase in rental."

The city in the last two quarters has witnessed addition of three malls ¿ one in CBD and two in the suburbs. 'Lido Mall' with built up area of 1.25 lakh square feet in the city centre is a multi-tenanted project which houses medium to high-end retailers. 'Cosmopolitan Mall' in the suburb has built up an area of 1.50 lakh square feet and has been leased by a single occupier "" Future Group to house Pantaloons brands and has catchment area of in and around Whitefield. Esteem Mall on Bellary Road with built up area of 1.25 lakh square feet has multi-tenants.

"The strong space uptake in both available and future projects show that domestic and international retailers are showing great confidence in the city," Mayank Saksena of Jones Lang LaSalle Meghraj said

He further said, "The new bye-law is not favourable for retail development. The builders are either changing it to IT office space or residential project or selling the land. This may put more pressure on availability of retail space in the city."

As for the Bangalore's retail property outlook, demand for prime retail projects is expected to remain strong. This coupled with restricted supply of organised retail space will keep vacancy levels low across the micro-markets. In the absence of ready space, high pre-leasing activity is expected to be high.