Retail firms struggle to find quality real estate

Steep rentals, pick-up in pace of expansion by brands have squeezed supply

- Suneera Tandon

Brands across various industries are increasingly finding it difficult to secure high-quality real estate as a result of steep rentals, and an increase in the store expansion plans of both large and small brands.

Several major retailers have attributed their post-covid expansion plans to make up for the slower pace of growth in 2020 and 2021. Now, with improved mobility and return of consumers to physical outlets, the pace of real estate expansion has picked up, outpacing the available supply in the market.

Furthermore, the pandemic has caused delays in several large-scale retail projects, leading to a shortage of available properties. For instance, in 2022, retail absorption recorded a rise of nearly 4.7 million sq. ft over a year ago. In contrast, supply additions declined in 2022 from a year earlier, with only four malls covering approximately 1.4 million sq. ft. becoming operational in Bengaluru and Pune, according to data from CBRE.