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Despite almost zero supply in the first quarter of 2014, Ahmedabad saw a rise in mall vacancy levels due to relocation of certain brands. According to developers and experts, while availability of quality space remained a concern in main street locations in Ahmedabad, mall rentals are also under pressure due to high mall vacancy levels.
"Most of the retailers take space hoping to enhance their market share. But when newer malls come and offer better reach and marketing programs along with attractive leasing arrangements, this results in retailers moving out of the existing mall to the new mall. This is what has happened in recent times in Ahmedabad leading to rising vacancy levels in certain malls," said Prodipta Sen, Executive Director - Marketing, Corporate Affairs & Retail at Alpha G:Corp that manages the Alpha One Mall in Ahmedabad. The Alpha One Mall currently boasts of almost 100 per cent mall occupancy.
In the latest report from global consultancy Cushman & Wakefield, the total fresh mall supply by the end of 2014 is projected to be approximately 14 million square feet (msf) approx. in the top eight cities of India, of which 13.6 million square feet is still under construction. This is nearly 200 per cent more than the supply received in 2013 which was recorded at almost 4.6 msf. For Ahmedabad, the mall vacancy rose to 31.6 per cent, according to C&W, due to brand relocation for Q1 of calendar year 2014.
"Increasing vacancy levels were observed in a few malls along SG Highway in Ahmedabad, as some of the brands relocated to other locations. The trend resulted in mall vacancies increasing by 1.3 percentage points to 31.6 per cent at the end of the first quarter.
Despite increasing vacancies, the landlords were observed to hold on to the rentals. The mall rentals remained stable across all sub-markets during the quarter," the report stated.
However, industry experts state that in recent times though mall supply has not been added in the city, mismanagement by investor-run malls and poor brand and space mix have also resulted in stagnancy.
"The newer malls that came up in recent times have been managed by owners and have a good space mix since they have other facilities such as high end multiplex and restaurants that ensure consistent footfalls. On the other hand, there have been malls where ownership has changed hands and are only dependent on retail space for footfalls. These malls are facing stagnancy and competition from the newer ones, with certain brands even relocating to the latter," said Neeraj Tomar, head - Ahmedabad operations of Jones Lang LaSalle India (JLL).
