Retail leasing in Bengaluru grows by 39% in H1 2024 to 1 mn sqft: CBRE

Real estate consultant CBRE's latest report, "India Retail Figures H1 2024," reveals a 39 per cent annual increase in retail leasing in Bengaluru's malls and high streets from January to June 2024. The fashion and apparel sector led tenant growth, followed by food and beverage, and homeware and department stores. The report underscores significant trends in India's retail real estate sector.

Retail leasing in India surged to a five-year high in the first half of 2024, reaching 3.1 million square feet across eight cities, according to the report. This represents a 7 per cent year-on-year increase from 2.9 million square feet in H1 2023, marking a significant rebound in retail space demand.

“Retail absorption increased in the first half of the year on an annualised basis. The ongoing introduction of quality supply is expected to continue stimulating an uptick in overall space take-up in the coming quarters. Going forward, ongoing infrastructure development and rising passenger traffic unlock a significant opportunity for nationwide transit retail expansion,” said Anshuman Magazine, chairman and CEO - India, South-East Asia, Middle East and Africa, CBRE.

In H1 2024, Bengaluru, Chennai, and Delhi-NCR led office space absorption, accounting for nearly 59 per cent of total leasing. Investment-grade mall supply is expected to shape future leasing trends, with high demand continuing for secondary spaces in top malls across major cities.

Additionally, in H1 2024, strong demand for fashion and apparel, especially mid-range and athleisure brands, drove retailers' market share to about 39 per cent. The entertainment sector and homeware and department stores were also significant contributors to leasing activity during the period.

The report reveals a booming Indian retail sector, with major international brands entering the market. The UK's Charles Tyrwhitt debuted in Ahmedabad, while French brands Maison Margiela and Franck Provost launched in Mumbai and Bengaluru. Swiss Breitling and American Michael Kors opened in Chennai and Pune, respectively. Domestic firms led leasing activity at 76 per cent from April to June 2024, followed by EMEA (Europe, Middle East, and Africa) retailers at 12 per cent.

In the first half of 2024, Tier-I cities saw the addition of 0.5 million square feet of retail space. The second half of the year is expected to bring a surge in supply, with new investment-grade malls opening in Bengaluru, Hyderabad, and Mumbai, adding 3 to 4 million square feet. Additionally, Tier-II cities like Indore and Kochi led with a combined 56 per cent share of the 0.4 million square feet of space absorbed.

“The ongoing introduction of quality supply is expected to continue stimulating an uptick in overall space absorption in the coming quarters. A growing number of direct-to-consumer (D2C) brands are recognising the importance of establishing a physical presence to complement their online operations. Developers are closely monitoring these brands with robust online customer bases and exploring opportunities to integrate them into physical retail formats,” said Ram Chandnani, managing director, Advisory and Transactions Services, CBRE India.

CBRE’s outlook on India’s retail space reveals that leasing activity in strategic locations is expected to remain robust, driven by consistent demand for quality retail spaces. Growth is notable in segments like jewellery, mid-range fashion, and gaming centres, with millennials fueling expansion. However, with low vacancy rates in key Tier-I malls, new investment-grade supply will influence primary leasing trends.

Luxury retail continues to thrive, driven by evolving lifestyles and an influx of global brands such as Maison Margiela and Time Vallée. Demand from Tier-II and Tier-III cities and e-commerce growth further boost luxury product accessibility.

Moreover, the direct-to-consumer (D2C) sector is surging, leveraging e-commerce and improved logistics. Many D2C brands are adding physical stores to enhance multi-channel shopping experiences.

Transit retail is set for significant expansion, driven by infrastructure development and rising passenger traffic. With India's goal of expanding to 300 airports by 2047, the potential for retail growth, especially in airports, is substantial.