Retail space supply dropped to 83% in 2012 even as brands continued to expand

There was an 83 per cent drop in supply of organised retail space across key cities in 2012, according to a CBRE report. The report says approximately 2.5 million sq. ft of fresh retail space entered the market in 2012, mainly in Bangalore, Kolkata and Pune, against over 15 million sq. ft in 2011.

However, leading brands and retailers pursued expansion plans aggressively and increased their presence in Tier I and Tier II, III cities. Developers focused on attracting tenants and reducing existing vacancy levels, rather than launching new projects.

Said Anshuman Magazine, CMD, South Asia, “Despite the large dip in prime retail space supply, the good news is that retailers continued with their expansion plans.

This is indicative of retailers taking a long-term view of the economy. The welcome move to allow FDI in retail contributed to the positive sentiment.”

High street formats continued to dominate the retail landscape, while most luxury retailers preferred to operate from five-star hotels and premium malls.

International retailers are also expanding focus to include Hyderabad, Chennai, Kolkata, Pune and Chandigarh.

Major cities continued to witness steady expansion by international apparel and F&B retailers.

Several well-established international mass market brands have also entered tier II locations, partly due to lack of space in Tier I markets.

Domestic retailers are expanding steadily in Tier I locations but fierce competition with international brands for prime space in core locations is pushing some to Tier II cities.

Fashion remains the high growth sector, followed by international food and beverage outlets, both fast food and fine dining.

Luxury retailers remain focused on Tier I cities, but are refining strategy for India, which has seen some consolidate and reduce store sizes.