1. The city gets its second upscale mall; momentum for mall leasing is strengthening.
Nearly 310,000 square feet of grade-A mall space were leased in the city during the final quarter of 2023. The majority of the lease activity was made up of anchor businesses in the fashion and food and beverage sectors occupying space in eastern suburban malls and the inner city. With over 60% of the leasing volume, the fashion and food and beverage segments led quarterly leasing, with the accessories and lifestyle market following closely behind. Nearly 670,000 square feet of mall space were leased annually in the city in 2023, mostly due to term renewals of established companies in the fashion, food and beverage, accessories, and lifestyle segments.
Numerous worldwide luxury retail brands are expected to debut in the city with the opening of a recently constructed luxury retail complex in November in a prime suburban location. The percentage of vacant city mall space decreased slightly to 8.3% this quarter, even with the addition of additional retail space. Malls in the superior category still have low vacancy rates of 1.10%. By year’s end, approximately 1.12 million square feet of Grade A supply should be operational throughout suburban micromarkets. In the next quarters, a delay in retail supply is anticipated to lower city vacancy rates.
2. Main Street Leasing Contributions to Fashion and Furnishings Segments in Q4
Strong lease activity was seen on the main streets in Mumbai, where over 87,000 square feet of new stores opened. The majority of lease volume was made up of the fashion segment, mostly in areas like Bandra and Colaba. In these submarkets, brands from the furniture and furnishings and health and wellness industries were present. Over 310,000 square feet were leased on the city’s main roadways in 2023—a significant increase over the previous year.
In 2023, main street lease activity was driven by segments such as F&B, Fashion, and Accessories & Lifestyle.
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3. Rentals on prominent streets and malls increase in Q4.
Due to active term renewals and a shortage of available space, citywide mall rentals have been rising on a quarterly basis. Due to strong demand, notable main roadways in desirable areas also saw a 2-6% increase in rental growth this quarter. Despite the planned Grade A mall that will greatly increase the city’s mall inventory, it is anticipated that mall leases will mostly stay range-bound in the future. This is primarily because high levels of pre-commitments are anticipated in these malls.
