Retail News Update

Shining granite floors, chic eateries and glitzy showrooms are addictive. And that is what perhaps pulls you every weekend to the swanky mall just around the corner. You and your family might end up having a great time and with a much lighter wallet. And that’s not surprising especially when mall developers and retailers are working round-the-clock to create an experience that attracts customers. But it’s not just the customer who’s paying a premium for the experience — the retailers too have to fork out their share.

With so much of buzz around the malls today, it is no surprise that the best of malls will also command the dearest of rentals. So, SundayET comissioned global real estate consultancy Cushman and Wakefield (C&W) to find out the malls that are on the top of the charts in 11 large cities of the country, namely Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Bangalore, Pune, Chandigarh, Ahmedabad, Kochi and Lucknow.

The most expensive mall was determined by the ground floor rental values on carpet area for a standard vanilla store among operational and upcoming malls. This methodology takes into consideration retail malls in a given area that may vary given the specifics of a certain city and the overall nature of retail construction in a particular location. The ranking takes into consideration only the most expensive mall in the respective city.

While DLF Emporio Mall — which is coming up in upmarket south Delhi — was found to the most expensive in the city, Phoenix Mall in south of Mumbai emerged as the dearest in the financial capital. Malls in central locations such as Chennai City Centre mall in central Chennai and The Collection Mall in central Bangalore emerged as the most dear in these cities.

Luxury mall, DLF Emporio, coming up in 2008 in South Delhi’s Vasant Kunj area will house high-profile brands such as Armani, Versace, Hugo Boss, Louis Vuitton, Christian Dior, Dolce & Gabbana, Escada and Cartier. At a rental of Rs 900-Rs 1,000 per sq ft per month, this will clearly be the most expensive mall in the country!

The recently opened Select Citywalk in Saket follows a close second, commanding rentals between Rs 650-Rs 750 per sq ft per month. PVR Cinemas, Pantaloons, Crossword and Esprit are the main tenants here. Says Rajneesh Mahajan, national head, Retail Services, C&W, “Locations like south Delhi have always been much sought after as retail destinations in the city. And now with Saket and Vasant Kunj offering mall options for retailers, south Delhi has sustained itself as one of the most expensive and exclusive shopping destinations in the country.

Besides location, a well designed mall with the right trade and tenant mix also decides the positioning and rental values of the mall. Easy accessibility, infrastructure and developer competency are other key factors that can instil confidence in retailers and hence support higher prices.”

B P Dhaka, COO, Parsvnath Developers, feels that other than a proper tenant mix, personalised services in malls are necessary too and help to differentiate one from the other. “A proper tenant mix for any class of people is essential. Besides that, the focus should be on what a customer wants while entering the store, the ambience plays a vital role,” he said.

Mr Dhaka added that,”Customer should be seen as the brand ambassador, he should be pampered…malls which combine all these factors are not surprisingly also the most expensive due to the quality experience that they offer.”

Phoenix Mall in Mumbai’s Lower Parel turns out to be the most expensive mall in the financial hub. With tenants such as Bigbazaar, Lifestyle and Pantaloons, rentals in Phoenix are roughly around Rs 662 per sq ft per month. Inorbit Mall in Malad is the second most expensive in the city with rentals at approximately Rs 450 per sq ft per month.

A lack of availability of mall spaces in the city has led to high mall rentals in these areas. In fact, there are no new malls expected in CBD and off–CBD locations in the next two or three years. Lower Parel will see a few more high value retail construction entering the market by 2009-2010, most of which will be constructed on erstwhile mill lands.

City Centre Mall in Kolkata, located at Salt Lake Sector 5, is a booming IT destination which has a big potential to be a top retail destination. Moreover, the area does not have any other organised mall development within the vicinity, thereby increasing the demand. Rentals vary between Rs 340 -Rs 400 per sq ft per month and Shoppers Stop, KFC, Nike, Colours of India, T Junction and Airtel are some of the tenants in the mall. Forum Mall on Elgin Road follows closely at between Rs 300-Rs 350 per sq ft per month. Presence in the CBD area and a good mix of medium to high end brands makes the mall command these rentals.

The first option for retail in Chennai has always been malls located in central Chennai. Chennai Citi Centre Mall located at R K Salai, is the only mall that has a multiplex in it. While INOX runs the multiplex, the anchor store is Lifestyle with Landmark, Giordano, Adidas, Wills Lifestyle, Helvetica and Zodiac in smaller formats. Rentals here vary between Rs 160-Rs 250 per sq ft per month. Prices in Central Chennai continue to rise as there is a demand for space by old as well as new retailers looking at expansion or moving into Chennai.

On account of the short mall supply in Bangalore, the pricing of micro markets for malls, is primarily determined by the positioning of the mall and the infrastructure committed by the developer. An upcoming mall on Vitthal Mallya Road, The Collection, in central Bangalore is the most expensive mall with rentals at Rs 600 per sq ft per month. Positioned as a luxury mall coming up by 2008, it will house top notch brands like Louis Vuitton, Gucci, Fendi, Mont Blanc, Omega and Zegna.

Perceived as a premium mall location by retailers and consumers, the mall commands high rentals also due to a shortage of operational malls in the region. Orion Mall in north Bangalore’s Yeshtwantpur area follows a close second with rentals between Rs 500-Rs 560 per sq ft per month. Being developed as a destination mall, it has achieved a differentiation by creating a premium 42 acre project with high-end 1500 apartments, inside the project.

In Chandigarh, the industrial area has come up as a sought after retail destination after Realtech Group’s City Emporio and Uppal’s upcoming Centra Mall. The close vicinity to Tribune Chowk, gives the city’s industrial area an edge over other developments which are primarily being developed on the outskirts of the city.

Hence developments from Uppal and Realtech are being leased out at higher rentals than the project announced by groups like DLF and MGF. City Emporio located on Phase I, industrial area is the most expensive in the city with rentals roughly at Rs 430 per sq ft per month. Tag Heuer, Samsonite, Zodiac and Lacoste are some of the tenants in the mall. Centra Mall in the same area follows second at Rs 390 per sq ft per month.

GVK1 Mall located on Banjara Hills in West Hyderabad is the most expensive with rentals ranging between Rs 170-Rs 180 per sq ft per month. And it’s not difficult to see why. With catchment that include high income residents of Banjara Hills & Jubilee Hills and a good brand presence, high mall rentals in this area do not come as a surprise. Significant retailing activity has also been witnessed here over the last 3-4 years which again makes this location gain an advantage.

A substantial retail development is being witnessed in Pune with major retail development happening in areas of western, eastern & Off CBD Corridor. Magnum Mall on Moledina Road is the most expensive in the city with rentals varying between Rs 320-Rs 340 per sq ft per month. Westside, Levis and Spiker are some of the primary tenants in the mall.

In Kochi, organised retailing is concentrated on M G Road and Marine Drive attracting footfalls from all parts of the city and this makes Summit Mall the most expensive with rentals at approximately Rs 90 per sq ft/ month. The zone is the prime location in the city, that taps the local residential catchment, thereby making sound locations for mall development.

Alfa1 Mall coming up next to Vastrapur lake and in close proximity to CG road is currently the most expensive mall in Ahmedabad with rentals as high as Rs 185 per sq ft per month for ground floor. Alfa 1 is spread over 8 lakh sq ft and has gained importance as it has secured some of the most prominent anchors such as Shopper’s Stop, Hyper City, Fame. It is a well zoned project with a good tenant mix. There are currently 4 operational malls in the city with Iscon Mega Mall being the second most expensive mall commanding Rs 150 – Rs160 per sq ft per month.

Fun Republic in Lucknow is the most expensive mall commanding a rental of Rs 190 per sq ft per month. There are very few operational malls in this region with more expected to come up by mid 2008. The country is riding high on mall mania. With organised retail taking shape and big retail giants entering major metros and smaller cities, it is no surprise that retail development is moving at a fast pace in the country.