Malls would have a larger catchment area in these Tier-II and Tier-III cities. Here's more!
Real Estate

Malls would have a larger catchment area in these Tier-II and Tier-III cities. Here's more!

Expansion of brick-n-mortar retail is also underway outside metros. Between 2006 and 2017, Tier-II cities reportedly received close to five times the investment of Tier-I cities, which <span style="font-weight: bold;">Anuj Kejriwal, Managing Director &amp; CEO, Anarock Retail</span> ascribes to 'investors and mall developers realising the potential of these smaller markets and trying to make their presence felt.' <p></p> <p>According to <span style="font-weight: bold;">Pratik Mantri, Director, Mantri Developers,</span> developers have been quick to spot the potential in Tier-II cities&nbsp;<span style="font-size: 13.3333px;">'</span>to gain first-mover advantage, as once a mall establishes loyalty through convenience it becomes hard to disrupt.'</p> <p>Demand-supply economics is at play in this growth. On the one hand, there is a 'dearth of quality malls, more so in Tier-II and Tier-III cities', to quote <span style="font-weight: bold;">Jayen Naik, Vice President-Malls, Nexus Malls.</span> On the other hand, the demand for retail space has spilled over to Tier-II and Tier-III cities, driven by 'an increasing consumer base with increasing spending potential', according to <span style="font-weight: bold;">Bimal Sharma, Head, Retail Services, CBRE.</span> </p> <p>To a certain extent, e-commerce has furthered the growth of malls especially in Tier-II and Tier-III cities, Naik believes, 'by generating interest in brands and pushing first-time trials by aspirational customers, which inevitably spurs the desire for an experience that only the brick-n-mortar format can deliver'.</p> <p>From the perspective of brands, the key drivers of retail space in Tier-II and Tier-III cities are the fact that 'these cities are hitherto uncharted locations and have relatively lower real-estate costs (compared to metros)', says Sharma. </p> <p>Tier-I cities are facing low vacancy levels, space saturation, crippled infrastructure and high rentals, adds Kejriwal, calling Tier-II and Tier-III the country's future growth engines with the potential for the market size to grow more than 10 times. He sees big prospects for retail expansion in Tier-II cities such as Lucknow, Coimbatore, Chandigarh, Mangaluru and Ahmedabad.</p> <p><span style="font-weight: bold;">Anshul Pahuja, Vice President, Business Development, Pacific Development Corporation,</span> cites Lucknow, Kanpur, Dehradun, Mathura, Agra, Jaipur, Chandigarh and cities in Punjab as some of the Tier-II cities with great potential. Sharma counts Jaipur, Chandigarh, Kochi, Bhubaneshwar and Nagpur as the retail sector's next happening destinations.</p> <p>But the bright prospects may well extend beyond these cities. 'In the next decade, we expect to see malls of about 4-5 lakh sq ft develop in every city with a population of about 500,000,' says Naik, relying on the 1:1 ideal ratio between the size of a mall and the size of the population in the catchment area to estimate the size.</p> <p>But if these malls would have a larger catchment area, larger even than malls in metros, they could be bigger. For instance, a mall in Mohali could attract visitors from the Chandigarh capital region as well as nearby cities in Punjab, Haryana and Himachal Pradesh, explains <span style="font-weight: bold;">Aashish Agarwal, Senior Director (Head-Consulting), Colliers International India, </span>provided it is developed as a destination.</p> <p></p>

Expansion of brick-n-mortar retail is also underway outside metros. Between 2006 and 2017, Tier-II cities reportedly received close to five times the investment of Tier-I cities, which <span style="font-weight: bold;">Anuj Kejriwal, Managing Director &amp; CEO, Anarock Retail</span> ascribes to 'investors and mall developers realising the potential of these smaller markets and trying to make their presence felt.' <p></p> <p>According to <span style="font-weight: bold;">Pratik Mantri, Director, Mantri Developers,</span> developers have been quick to spot the potential in Tier-II cities&nbsp;<span style="font-size: 13.3333px;">'</span>to gain first-mover advantage, as once a mall establishes loyalty through convenience it becomes hard to disrupt.'</p> <p>Demand-supply economics is at play in this growth. On the one hand, there is a 'dearth of quality malls, more so in Tier-II and Tier-III cities', to quote <span style="font-weight: bold;">Jayen Naik, Vice President-Malls, Nexus Malls.</span> On the other hand, the demand for retail space has spilled over to Tier-II and Tier-III cities, driven by 'an increasing consumer base with increasing spending potential', according to <span style="font-weight: bold;">Bimal Sharma, Head, Retail Services, CBRE.</span> </p> <p>To a certain extent, e-commerce has furthered the growth of malls especially in Tier-II and Tier-III cities, Naik believes, 'by generating interest in brands and pushing first-time trials by aspirational customers, which inevitably spurs the desire for an experience that only the brick-n-mortar format can deliver'.</p> <p>From the perspective of brands, the key drivers of retail space in Tier-II and Tier-III cities are the fact that 'these cities are hitherto uncharted locations and have relatively lower real-estate costs (compared to metros)', says Sharma. </p> <p>Tier-I cities are facing low vacancy levels, space saturation, crippled infrastructure and high rentals, adds Kejriwal, calling Tier-II and Tier-III the country's future growth engines with the potential for the market size to grow more than 10 times. He sees big prospects for retail expansion in Tier-II cities such as Lucknow, Coimbatore, Chandigarh, Mangaluru and Ahmedabad.</p> <p><span style="font-weight: bold;">Anshul Pahuja, Vice President, Business Development, Pacific Development Corporation,</span> cites Lucknow, Kanpur, Dehradun, Mathura, Agra, Jaipur, Chandigarh and cities in Punjab as some of the Tier-II cities with great potential. Sharma counts Jaipur, Chandigarh, Kochi, Bhubaneshwar and Nagpur as the retail sector's next happening destinations.</p> <p>But the bright prospects may well extend beyond these cities. 'In the next decade, we expect to see malls of about 4-5 lakh sq ft develop in every city with a population of about 500,000,' says Naik, relying on the 1:1 ideal ratio between the size of a mall and the size of the population in the catchment area to estimate the size.</p> <p>But if these malls would have a larger catchment area, larger even than malls in metros, they could be bigger. For instance, a mall in Mohali could attract visitors from the Chandigarh capital region as well as nearby cities in Punjab, Haryana and Himachal Pradesh, explains <span style="font-weight: bold;">Aashish Agarwal, Senior Director (Head-Consulting), Colliers International India, </span>provided it is developed as a destination.</p> <p></p>

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