Delhi’s robust retail leasing underpinned by F&B, fashion segments

New leases and store openings totalled 0.24msf in Q2.

Store relocations and churn activity were the key activities in Delhi NCR’s retail sector in Q2. New leases and store openings in malls totalled 0.24 msf in Q2.

According to Cushman & Wakefield, footfalls have reached 80 – 90% of the pre-COVID levels across prominent malls in Delhi NCR, while select malls have also seen the footfalls reaching 100% of the pre-COVID levels. This is aiding the strong recovery in the retail sector. 

Here’s more from Cushman & Wakefield:

Similar to the previous quarter, food & beverage was an active retailer category for space take-up in Q2. The quarter saw transactions by retailers such as Taco Bell, Chai Point, Costa Coffee among others in malls in South Delhi and Gurugram. German lifestyle retailer, Birkenstock, bolstered its retail footprint with a new store in Select City Walk, Saket. Retailers including Jaypore, W, Mulmul, Thevasa in the fashion & apparel segment and Adidas, Skechers, Puma in the athleisure category were other active retailers in malls during the quarter. 

Main streets recorded new leases and store openings to the tune of 0.1 msf, particularly in key markets such as Khan Market, Green Park, Greater Kailash, Punjabi Bagh etc. Canadian QSR chain Tim Hortons will mark its foray into India with multiple stores signed in key markets across Delhi and Gurugram. Pet care & grooming is an emerging retailer segment in the city with new store openings by Heads Up for Tails and Zigly in West and South Delhi markets. 

No new mall space addition during the quarter 

Delhi NCR’s mall inventory stood at 26.5 msf with no new mall supply during the quarter. City-level mall vacancy declined marginally to 15.6% at the end of Q2. New mall space of around 0.24 msf is expected to be complete in Noida by the end of 2022, while another key development in Gurugram is scheduled for completion in early 2023. 

Mall rentals largely stable, select main street rents witness growth 

With improvement in footfalls and sales, no further rental relaxations are being given to retailers. New leases in malls are getting signed at near-market rentals as had prevailed prior to Covid. Main streets like DLF Galleria in Gurugram witnessed a 7 - 8% q-o-q growth in rents, attributed to the high retailer preference for spaces in such prominent areas. Rentals in such main streets are expected to appreciate further in coming quarters. On the other hand, the micro-market of sector 29, Gurugram recorded a 7 – 8% q-o-q decline on the back of store shutdowns and declining preference for this area.