India’s retail property market sees bright spot in New Delhi’s main streets 

Several new retail stores opened during Q2, as well as 10 new showrooms for Tata Motors.

According to a report by Cushman & Wakefield, main streets were the bright spot in Delhi NCR’s retail sector, which was hit by a second lockdown owing to the resurgence of COVID. The city recorded 0.1 msf of new store openings in main streets with fashion & apparel and home décor & furnishing as the key demand drivers. 

Here’s more from Cushman & Wakefield:

Retailers including Fabindia, Redtape, Aether among others opened new stores in the city’s main streets. A large B2C concept store in West Delhi providing a one-stop shop for building material products was a key highlight of retail leasing during the quarter. Furniture e-retailer WoodenStreet opened two experience stores in Golf Course Road, Gurugram and sector 104, Noida. Online retailers opening physical stores despite the shift in consumer purchase behavior patterns during the pandemic is testimony to the resilience of this space. 

Tata Motors inaugurating ten new showrooms on a single day across Delhi NCR was another major highlight for main street retail leasing during the quarter. Hypermarkets, which have continued to scout for good space opportunities despite the pandemic, also drove a part of the main street leasing demand. The coming quarters are likely to see more leasing activity from this segment as hypermarket brands continue to expand their space footprint on the back of strong demand. Limited activity was witnessed in malls, especially as these remained closed due to lockdown for a large part of the second quarter. 

Adidas Originals inaugurated its first company-owned Exclusive Brand Outlet in Ambience Mall, Gurugram. Nature’s Basket opened a store in South Point Mall, Gurugram during Q2. Prominent malls in the city have begun to witness footfalls as high as 60 – 65% during weekends. Adherence to safety measures including adequate physical distancing and stipulated seating capacity in F&B outlets are added advantages with malls that lend an assurance to the customers and aid footfalls. 

Multiplexes are opened selectively in malls across the city and dearth of new content continues to be one of the challenges faced by them. Retailer churn was an ongoing market phenomena with some brands vacating spaces due to the challenging business environment. This in turn presented lucrative space opportunities for some of the stronger brands that are eyeing the current tenant-favorable market conditions as an opportune time to expand their presence. Integration between online and offline retail models continues to be seen as a necessary condition to thrive in the current times and brands continue to formulate strategies for the same. 

No new supply addition in the city; vacancy largely stable 

No new mall supply was added to the city’s mall inventory which stood at 26.8 msf. The city’s overall vacancy was largely stable at 16.96% in the second quarter. North Delhi is expected to see addition of a new development by the end of Q4, and that is in advanced stages of completion currently. 

Rental negotiations remained a tricky issue between retailers and landlords 

Rental renegotiations remained a key highlight of landlord – retailer conversations with rent collections coming under pressure. The situation is equally challenging for both sides due to the prolonged market uncertainty. While mall operators and retail landlords have tried to be accommodative since the start of the pandemic, many retailers continue to face challenges in the current business environment. Renegotiations and waivers were agreed upon a case-to-case basis during the quarter. Some of the new transactions closed at staggered rentals, with the agreed upon rental increasing gradually on a periodic basis. However, the extent for such accommodation is expected to shrink as business activity revives going forward.