Chennai’s retail sector is gaining momentum with vacancy levels declining from 14.0% in Oct-Dec 2011 quarter to 13.5% in Jan-Mar 2012 quarter. The largest deal was by French Home furnishing retail chain Ebony Gautier, which took around 10,000 sq ft space in Express Avenue mall.
According to Jones Lang LaSalle’s quarterly survey, mall format stores in the CBD were in demand during the latest quarter. Canon Image studio, Gem palace, Lasya, Kryolan, Timex, Eye T world were some of the brands which occupied vacant spaces in Ramee mall during 1Q12.
Ground floor of office buildings continued to attract retailers, during 1Q12, Spectrum Shopper’s leased out around 1,900 sq ft of space in Ambit IT Park, Ambattur industrial estate.
Lack of new mall space helped high streets to gain healthy leasing during the quarter. LG opened two stores, one in Nungambakkam high road and another in Chrompet. Louis Philippe, Van Heusen and Zimson opened shops in Adyar, while Harley Davidson and Apple opened there stores in Nungambakkam. Roshan Lal women’s ethnic wear and Helios opened shops in Shanti colony, Anna Nagar, whereas Reliance Trendz opened its shop in Chrompet.
No new supply was added in the city during 1Q12. Ten’s square mall coming up in Koyembedu, is ready for fit-outs and expected to come up during 2Q12. This will add around 150,000 sq ft of mall space taking the total supply of mall space close to 3 million sq ft.
No sales transactions have been recorded in the retail malls sector over the past few quarters as new malls in Chennai operate in the lease model.
Due to limited size of the market, Chennai retail segment including high streets deliver high returns on investments, which forces the investors to hold on to their investments.
With the Union budget putting more money into the hands of avid shoppers, retailers are bullish about the surge in sales in the coming months.
JLL expects vacancy levels to rise in the next 12 months amidst the supply of more than 2 million sq ft. of mall space. Though vacancy rates are expected to surge, absorption in the new malls are also expected to improve amid flourishing residential and commercial activity in the suburbs.
Rental and capital values are likely to improve in select pockets of suburbs and in prime locations, while they will remain stable in the peripheral areas.