Mall vacancy in A'bad highest: Cushman & Wakefield

In spite of carrying one of the lowest rental values among metros and tier II cities for malls, Ahmedabad has witnessed highest vacancy in last three months. Moreover, the low rental values in Ahmedabad are also a result of one of the highest mall rental corrections, a recent study by real estate consulting firm, Cushman & Wakefield has stated.

The commercial capital of Gujarat recorded the highest vacancy of approximately 39.4 per cent due to existing retailers vacating space in established malls over the past two to three quarters. Average vacancy across malls in major cities of India increased from 10 per cent in Q1 2009 to 19 per cent in Q2 '09 owing to a slowdown in uptake of mall space and churn amongst the existing clients.

 

Overall, mall supply was only marginally higher by three per cent from the previous quarter and was recorded at 1.14 million sq.ft. Moreover, expected mall supply by end of 2009 reduced to 8.55 million sq.ft. which is approximately 50 per cent lower than estimated at the beginning of the year.

This reduced supply is being attributed to delays in construction projects, deferment of mall space and also some withdrawal of previously announced retail projects.

"The expected supply for malls has been greatly reduced since the beginning of the year owing to reasons such as slowdown in construction and in certain cases complete withdrawal of projects. We are likely to see further corrections going forward as a result of renegotiations. Retailers are looking at changing their business understanding with upcoming malls into a revenue share or minimum guarantee model as an alternate to fixed rental model as previously employed," said Jaideep Wahi, director, agency, retail services, Cushman & Wakefield.

The sharpest decline in mall rental values were recorded in Ahmedabad where Sarkhej Gandhinagar Highway which corrected by 39 per cent over previous quarter, while Vastrapur saw a rental correction of 23 per cent.

Ahmedabad's Satellite Road also saw a correction of 21 per cent as a result of subdued activities from retailers in the city. According to the study, the sheen from Ahmedabad’s retail market has almost completely disappeared as most retailers adopt and wait–and–watch policy towards establishment or expansion in the Ahmedabad market.

Malls as well as main street rentals saw another quarter of significant correction. The only micro market which held steady was the main street of CG Road as it is the most sought after retail location of the city.