Ahmedabad records highest rise in mall vacancy in 2014

The city's mall vacancy up by 1.8% to stand at 32.1%, due to low preference for poor quality mall space

The retail space in real estate market of Ahmedabad witnessed a slow year due to highest increase in mall vacancy among top eight cities in 2014. According to the latest report by Cushman & Wakefield, a global real estate consultancy, at the end of 2014, Ahmedabad's mall vacancy grew by 1.8 per cent to stand at 32.1 per cent, due to low preference for poor quality mall space.

The total eight cities including Delhi, Mumbai, NCR, Kolkata, Bengaluru and Chennai, among others saw only 1.7 million square feet (msf) of fresh mall space being infused in the calendar year 2014.

Leading cities of India saw an addition of only 5 new malls of which Pune noted the influx of 2 malls adding upto 500,000 square feet (sq ft) of mall space. Hyderabad (500,000 sq ft), Bengaluru (310,000 sq ft) and Delhi-NCR (250,000 sq ft) witnessed an infusion of 1 mall each. Kolkata saw an addition of 120,000 sq ft to the city mall inventory.

In Ahmedabad, limited availability of quality mall space kept the transaction activity in Ahmedabad low. Increasing vacancy levels in a few poor quality malls on S.G. Highway led to city's overall mall vacancy increasing by 1.8 percentage points over the last one year and was noted at 32.1 per cent.

"There has been a period of low activities in the mall supply across the country as the developers are cautious of taking up retail projects which are high gestation and high investment as retailers still remain concerned on uptake and are therefore cautious with their expansion plans in India. Having said that, any new retail location that has appropriate catchment areas have witnessed good levels of activities," said Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield.

The total supply that was estimated to enter the market in 2014 was approximately 12 msf of which less than 15 per cent came into existence amounting to indefinite deferment of approximately 25 malls across key cities of India. Maximum number of malls (9) were deferred in Delhi-NCR totalling to 6.7 msf of new mall space, which is 56 per cent of the total mall space deferred. Though Bengaluru, Pune and Kolkata witnessed some supply during this year, a large quantum has been deferred. Bengaluru lost out on 7 planned malls while 4 malls were deferred in Pune. Kolkata witnessed the deferment of 1 mall while Chennai and Hyderabad both witnessed the deferment of 2 malls each.

The delays have happened due to a variety of reasons, mostly from approval construction linked delays in Pune, Hyderabad, Bengaluru, Kolkata and Delhi-NCR. However, low demand has also led to the deferment of some malls in Delhi-NCR, Bengaluru and Chennai.

However, leasing activities in the existing and new mall spaces remained stable with vacancy levels remaining similar to the previous year recording a very marginal drop in vacancy at 0.2 per cent. The average vacancy level stood at 14.3 per cent.

In Ahmedabad, despite rising vacancies, landlords kept the rentals for these malls steady during the last year.

Since higher preference for main-street format was noted in Ahmedabad, it did not witnessed any mall supply during 2014 and currently has just one under-construction mall.