The trend in the absorption of retail space in malls
remained dormant in third quarter as limited options in existing malls have
made the Chennai city’s high street locations more attractive to
retailers.
Vacancy Rates..!
According to a survey by Jones Lang LaSalle India,
Significant amount of mall space in the advanced stages of construction,
preleasing in upcoming malls is taking place at a brisk pace. Therefore, the malls scheduled to become
operational over the coming quarters are expected to open with good occupancy
levels,
Vacancy rates in 3rd quarter remained stable at 11.2%
given the lack of major leasing activity in the quarter. They have been declining for the last year as
Chennai has seen no new malls entering the market for almost 12 months (one
year) now.
During 3rd quarter, Pothys, a large Chennai based
Textail, leased about 60,000 square feet at GN Chetty Road in T Nagar,
Chennai. In addition, retailers such as
Sony Center & Blackberry ready - made store opened stores in CBD locations,
while a prominent eat out outlet, Adyar Ananada Bhavan, opened a restaurant in
Chrompet on GST Road.
Retailers on Chennai’s high streets have started
preparing to cater to increased demand during the upcoming festive season,
erecting temporary structures to accommodate their expanded product portfolios
& extra inventory.
Supply..!
No new supply was added in 3rd quarter, although a
massive 20 lakh square feet is expected to be on the market in the short term
as Prestige’s Forum Mall in Vadapalani, the Market City Mall and the PS Grand
Mall in Velachery, and the Ten Square Mall in Koyambedu are all expected to
become operational over the next 6 months.
Domestic macro-economic conditions and, more importantly,
the lack of quality mall space resulted in no major transactions in the
quarter, which in turn kept financial indicators stable.
Nevertheless, with pre-leasing taking place at
significantly higher rates, it is expected that rents may increase in the short
term as the new malls become operational.
Cautious leasing by retailers largely kept high street
rents stable, although emerging high street locations on GST Road, Velachery
& the neighbourhood are expected to
see rental growth in the short term.
Src: Jones Lang LaSalle India
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