Most upmarket brands are chasing the premium 8-10 properties located across the prime locations of the National Capital Region (NCR), Mumbai and Bengaluru, which averages around 6% in these cities, according to Ashutosh Limaye, research head at property consultant Jones Lang LaSalle (JLL).
With demand for commercial space in these malls rising, owners are using their increased bargaining power to reduce contract periods and amending lease agreements to a performance-based model, whereby the owners can exercise the right to relocate or evict a brand if the latter fails to generate a certain amount of business in a given period of time. Also, the contract tenure is being reduced to anywhere between two and five years for lesser- known retailers as against a period of 9-10 years in the past.
For instance, India’s most valuable realty firm DLF Ltd, which runs DLF Promenade, DLF Place and DLF Emporio malls in NCR, is now signing six-year contracts with retailers as against nine-year leases in the past.
“Developers will now have the upper hand and can command more aggressive deals, where their downside is better protected, both in the short and long term,” said Pankaj Renjhen, managing director (retail services) at JLL India.
At Select Citywalk mall, brands such as Pantaloons and Shoppers Stop moved to higher floors or resized their stores to make way for global entrants.