More malls to exacerbate civic woes

Retail biz faces space crunch
Business Standard

Investors are crowding CBDs since new malls are under construction.

Bangalore is facing a serious shortage of retail real estate space despite investments of Rs 500 to Rs 600 crore flowing in since January.

Since this construction will take some time for completion and no large property is likely to be ready immediately, some companies have begun to take up space in stand alone buildings in the central business district (CBD) areas.

Since new malls in Bangalore are in various stages of construction, key traditional shopping avenues like M G Road, Brigade Road and Commercial Street continue to attract investments.

On account of the easy availability of parking on Vittal Mallya Road, Lavelle Road and Cunnigham Road, some retailing activity has taken off there too.

According to retail analysts, in the last quarter (April to June), about 800,000 sq ft of space has been abosrbed, but, there is still considerable appetite for more.

"With various projects on the drawing board, in the next two years about 2.5 to 3 million square feet of retail space is expected," said Thomas Sebastian, manager-retail Chesterton Meghraj Property Consultants.

The success of The Forum, Sigma, Garuda, Central and Eva malls in the CBD has prompted people entering this sector to look at other options in off-CBD and suburbs to put up projects.

In the process, outer and inner ring road, Jayanagar, Malleswaram, Indiranagar and Bannerghatta road have become hot retail destinations. These areas are expected to grow successfully in future as they are close to office and residential locations.

In terms of rentals, small retail spaces in CBD ranging from 800 to 1,000 sqft command Rs 90 to Rs 120 per square feet. In the off-CBD it is around Rs 70 to Rs 90 per sqft and in the suburbs it is Rs 50 to Rs 70.

FDI in retail, when it comes, will definately alter the city's skyline. Global high-end retail majors are all waiting for some decision. "FDI in retail is expected to impact the city very much as it has experienced all retail formats and is ready to accommodate high-end retailing," said Thomas Sebastian.

According to Knight Frank retail review, the retail market in Bangalore has been slowly maturing and there has been controlled supply. Till end 2004 there was about 1.3 million sqft of retail stock out of which almost 67 per cent had come up in 2003-04. With about eight malls in various stages of planning, about 2.3 million square feet of additional retail supply will be avilable by 2007.