Retail leasing doubled in 2021: CBRE

Absorption across Grade A malls and high streets in 2021 has doubled to 3.2 million sq ft compared to 1.5 million sq ft taken up in 2020 as retail sector made a strong comeback after being hit badly by Covid-19 induced lockdown, according to CBRE’s India market monitor 2021.
Q4 2021 saw the most leasing with leasing activity growing by almost 250% q-o-q to 2.1 million sq ft across Grade A malls and high streets in Q4 2021.

“Retail sector had bounced back quite well and this year we will see more activity in the segment,” said Anshuman Magazine, Chairman & CEO - India, South East Asia, Middle East & Africa, CBRE.

As per the report, Bangalore, followed by Mumbai, dominated the annual as well as quarterly leasing activity; together accounting for about 55% and 70% of the space take-up in 2021 and Q4 2021, respectively.

Investment-grade mall supply in 2021, is also up by about 124% y-o-y to reach 4.1 million sq. ft and investment-grade mall completions in Q4 2021, reached3.4 million sq. ft - making it the strongest quarter in terms of supply addition.

Key demand drivers were fashion and apparel (28% in 2021), (29% in Q4 2021), homeware and department stores (9% in 2021), (4% in Q4 2021), supermarkets (14% in 2021), (13% in Q4 2021) and F&B (8% in 2021), (8% in Q4 2021).

“While demand from categories such as QSRs, supermarkets, electronics and consumer durables are expected to sustain, other categories such as fashion & apparel and beauty are likely to pick up owing to pent-up demand,” said Magazine.

According to Magazine, Omicron has impacted the recovery, but it is expected to be short term.

Warehousing is another segment which has performed well and it will continue to grow.

Leasing activity in the warehousing segment grew by almost 57% y-o-y to cross 30 million sq. ft. during 2021.

62% combined share of Bangalore, Delhi-NCR and Mumbai which dominated space take-up in 2021

“Warehouse leasing expected to remain strong in 2022, led by continued growth of e-commerce and 3PL firms, against the backdrop of macro-economic recovery and rise in manufacturing investments. Overall absorption expected to cross 35 million sq. ft. in 2022; supply to cross 30 million sq. ft,” said Magazine.

Warehousing space take-up in tier II cities likely to continue gaining momentum, driven by growth of omnichannel retail and increasing urbanisation.

According to CBRE, office leasing momentum expected to continue in 2022 with a combination of pent-up and expansionary / consolidation-led absorption, as occupiers start to realign their business strategies after a long hiatus post the pandemic.

Overall absorption expected to cross 40 million sq. ft. in 2022; supply to cross 50 million sq. ft.

“We anticipate that this sustained drive in leasing activity would continue to bring a new focus on high-quality buildings by developers to differentiate their assets and attract occupiers,” Magazine said.

Positive momentum in new launches and sales is expected to continue in 2022 in the residential segment with strong project pipeline amidst robust demand likely to support an appreciation in asset prices.

Mid-end and affordable segments will continue to drive sales and high-end / premium segments could also see greater traction.

As per the report, number of units sold in 2021 jumped over 70% y-o-y to reach 2 lakh and quarterly housing sales increased by 23% in Q4 2021, causing the number of sold units to reach the 62,000 mark.

Pune, followed by Mumbai, Delhi-NCR, and Hyderabad, drove sales activity across the seven major cities in 2021, accounting for a share of over 80%.