Bengaluru Sees 39% YoY Growth with 1 Million Square Feet of Retail Leasing in H1 2024: Report

Bengaluru, often hailed as India's IT capital, has recorded a significant boost in retail leasing during the first half of 2024, marking a 39% growth in both high street and mall spaces compared to the previous year. According to a report released by property consultancy CBRE on July 30, the city saw an impressive 1 million square feet of retail space leased between January and June 2024, up from 0.8 million square feet during the same period in 2023.

The retail sector's absorption was primarily driven by the fashion, apparel, and food and beverage categories, which collectively accounted for 55% of the total leasing activity. Specifically, fashion and apparel led the way with a substantial 40% share, followed by the food and beverage sector at 15%, and homeware and department stores contributing another 12%. This surge in demand reflects a growing appetite for diverse retail experiences among consumers in Bangalore and other major cities.

Pan-India Retail Leasing Hits Five-Year High

The upward trend in Bengaluru mirrors a broader national pattern, with retail leasing activity across India's top eight cities reaching a five-year high during the first half of 2024. The CBRE report noted that a total of 3.1 million square feet of retail space was leased across these cities, marking a 7% year-on-year increase from the 2.9 million square feet recorded in the same period in 2023.

Bengaluru emerged as the leader in this surge, accounting for 34% of the total retail leasing activity nationwide. Chennai followed with a 13% share, while Delhi-NCR and Hyderabad each contributed 12% to the overall figures. The continued expansion of retail space in Bangalore underscores its position as a key player in India's commercial real estate market, driven by the city's dynamic economic environment and consumer base.

New International Brands Enter the Indian Market

The first half of 2024 also saw the entry of several new international brands into the Indian market, further fueling demand for retail space. Notable entrants included Charles Tyrwhitt, Maison Margiela, Time Vallée, and Franck Provost. These brands chose strategic locations in major cities like Bangalore, recognizing the growing consumer base and the city's potential as a retail hub.

The report highlighted that the ongoing introduction of high-quality retail spaces is expected to continue stimulating an uptick in overall space take-up in the coming quarters. This trend is likely to be particularly pronounced in cities like Bangalore, where consumer demand remains robust and vacancy levels in key malls are low.

Anticipated Growth in Retail Space in H2 2024

Looking ahead, the second half of 2024 is expected to witness a further increase in retail space supply, particularly in Tier I cities. The CBRE report noted that approximately 0.5 million square feet of new retail space was added in these cities during the first half of the year. This trend is set to accelerate in the latter half of 2024, with several investment-grade malls slated to open in cities like Bangalore, Hyderabad, and Mumbai. These new developments are projected to add between 3 to 4 million square feet of retail space, catering to the growing demand from both consumers and retailers.

In Tier II cities, retail space absorption also showed promising growth, with Indore and Kochi leading the charge. These two cities accounted for approximately 56% of the 0.4 million square feet of retail space leased in Tier II locations during the first half of 2024. The report emphasized that leasing activity in strategic locations across these cities is expected to remain steady, driven by a healthy mix of primary and secondary leasing.

Direct-to-Consumer Sector Thrives Amid E-Commerce Boom

The report also highlighted the rapid growth of the direct-to-consumer (D2C) sector, which is benefiting from increased e-commerce activity, improved last-mile logistics, and a rising consumer base comprising millennials and Gen Z. This trend is particularly evident in cities like Bangalore, where tech-savvy consumers are increasingly opting for online shopping experiences.

While airports are witnessing considerable retail development, the report pointed out that there is still significant untapped potential in other transit hubs such as metro stations, railways, highways, and bus stations. The expansion of retail opportunities in these areas could further drive the growth of the retail sector in metro cities.

As the retail landscape in India continues to evolve, cities like Bangalore are poised to play a central role in shaping the future of the industry. With new retail spaces coming online and consumer demand showing no signs of slowing, the outlook for the remainder of 2024 remains positive.