Indian fashion retail sector dominates leasing activity in Q1 2024

The fashion and apparel sector dominated retail store leasing in the first quarter of 2024 contributing 40 per cent to the total leasing volume of 1.1 million square feet across top seven cities by the retail sector, JLL India said in a report.

The data pertains to leasing in organised retail centres and prominent high streets. Around 70 per cent of the leasing volume was in Mumbai, Delhi NCR, and Bengaluru.

In the fashion segment, growth was driven by mid-segment brands, which captured a significant share of 40 per cent, closely followed by value segment brands at 38 per cent. This underscores the robust growth potential in India’s fashion retail market, the report said.

The food and beverage segment also experienced significant growth, contributing to over a fifth of the leasing activity. Experiential dining brands, delivering unique and memorable dining experiences, accounted for 38 per cent of the segment.

“The organised retail market in India has witnessed a surge in new developments over the past few years, leading to a heightened velocity of launches across urban centres and emerging cities,” said Rahul Arora, Head of Office Leasing & Retail Services, India.

“This has motivated retailers to expand their footprint into newer micro-markets, bringing them closer to consumers,” he added.

Domestic brands were highly visible capturing a substantial 76 per cent share of the retail leasing activity. Encouragingly, seven international brands also chose to open their first stores in India, with Delhi NCR and Mumbai emerging as preferred locations, the report said.

Majority of these brands were in the beauty and cosmetics category, which has experienced unprecedented growth in recent years. Apart from global brands, leading domestic retail chains have also ventured into this segment and are seeing remarkable response from the consumers.

According to JLL India, most of these stores by domestic retailers are multi-brand outlets (MBOs), which also facilitate the entry of global beauty and cosmetics brands into the Indian market. Premium Indian Beauty and Cosmetics brands are expanding globally, with store openings in cities like Dubai and London, thus broadening their reach in foreign markets.

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“Prime retail spaces with high footfall continue to be in robust demand across the nation, as both international retailers and leading national brands display a strong appetite for superior-grade retail developments,” said Samantak Das, JLL India’s Chief Economist and Head of Research.

The report said that in top-quality retail centres, vacancy levels were low at around 6 per cent, but average retail developments experienced higher vacancy rates of approximately 20 per cent. Efforts were underway to revitalize non-performing and poorly managed retail developments, with some being repurposed or transformed to meet evolving market demands.

Majority of the upcoming retail supply of 45 msf is lease-based that allows developers to have greater control over the quality of the tenant mix and day-to-day management of the property, thus enabling them to command higher rentals.