Malls offer space to offices as retail demand lags

Malls in north India are offering space to offices as supply grows faster than demand for retail space. Some malls are either not finding buyers or are being occupied by inappropriate business units.

"This is because of the over-supply of retail space. When a mall offers space to an office, it is a sign of sickness," said Pranay Vakil, chairman, Knight Frank India, a real estate consultant.

A recent Knight Frank report says, "The large amount of existing retail space and the quantum of mall space lined up in Gurgaon has been a reason for concern and debate for some time now."

The report cites examples of retail-specific projects being converted into mixed-use development with "a combination of retail and office or hotel floors". Orchid Plaza, Central Plaza , Orchid Agora and Time Towers are some examples of the "new movement" in Gurgaon.

In Mumbai, too, there are a few instances of malls turning sick. One such mall was revived by fine-tuning the location of the escalators.

"This particular mall has a multiplex theatre in it. By changing the exit way of the multiplex audience, we have ensured more footprints in the mall. This has helped turn around the mall," said an expert, who declined to name the mall.

According to real estate researchers, over 110 million square feet of space will be available across India for the organised retail industry by December 2008. The retail boom is spreading to Tier-2 and Tier-3 cities and 361 projects are under way. Of this, 227 are in the top seven cities and the rest in Tier-2 and Tier-3 cities.

Besides, 35 hypermarkets, 325 large department stores and over 10,000 outlets are also under development.

The biggest mall is coming up in Noida. This project, Citi Center, will have 5 million square feet. In Mumbai's eastern suburbs, three malls are coming up and each of them will have more than 1 million square feet of space.

"The new and upcoming malls must be innovative if they want to succeed," said another real estate expert. For instance, in Dubai, Mall of Emirates maintains a pocket of minus 2 degree Celsius in the centrally air-conditioned premises. The objective is to offer a different experience to shoppers in the desert city.

"Malls in India must also start experimenting. Without innovation, it will be difficult for many large malls to survive," he said.