Indian apparel retail sector dominates leasing business in Q1 2024

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

The data concerns rentals in organized shopping centers and major shopping streets. About 70 per cent of the leasing volume took place in Mumbai, Delhi NCR and Bengaluru.

In the fashion segment, growth was driven by mid-market brands with a significant share of 40 percent, closely followed by value brands with 38 percent. As stated in the report, this highlights the strong growth potential in the Indian apparel retail market.

The food and beverage segment also experienced significant growth, accounting for more than one-fifth of leasing activity. Food brands that provide unique and memorable culinary experiences accounted for 38%. segment.

“Over the last few years, India’s organized retail market has seen a surge in new properties, leading to an increased pace of new facility launches in urban centers and emerging cities,” said Rahul Arora, director, office leasing and retail services in India.

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

National brands were very visible, gaining a significant 76 percent share of the retail rental business. According to the report, seven international brands have also decided to open their first stores in India, with Delhi NCR and Mumbai being the preferred locations.

Most of these brands belonged to the beauty and cosmetics category, which has seen unprecedented growth in recent years. In addition to global brands, leading national retail chains have also entered this segment and enjoy an extraordinary response from consumers.

According to JLL India, most of the domestic retailers’ stores are multi-brand stores (MBOs), which also makes it easier for global beauty brands to enter the Indian market. Indian Beauty and Cosmetics premium brands are expanding globally, opening stores in cities such as Dubai and London, thereby expanding their reach in overseas markets.

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“Prime high-volume retail spaces continue to enjoy strong demand across the country as both international retailers and leading domestic brands demonstrate strong appetite for premium retail properties,” said Samantak Das, chief economist and research director JLL India.

The report indicated that high-end shopping centers had a low vacancy rate of around 6 percent, but mid-market retail developments had a higher vacancy rate of around 20 percent. Efforts have been made to revitalize unprofitable and poorly managed retail properties, and some have been transformed or changed to meet changing market demands.

The majority of the future 45 msf retail supply is lease-based, which allows developers to have greater control over the quality of the tenant mix and the day-to-day management of the property, thereby enabling them to achieve higher rents.