Bengaluru's Retail Sector Growth Accelerates: 1 Million Square Feet Leased in First Half of 2024

Bengaluru, India's IT capital, has demonstrated a remarkable growth trajectory in retail leasing, reflecting broader trends in the country's commercial real estate sector. According to a recent report by property consultancy CBRE, the city recorded an impressive 1 million square feet of retail leasing during the first half of 2024, marking a significant 39% increase compared to the same period in 2023. This surge underscores Bengaluru's burgeoning appeal as a prime destination for retail investments and highlights shifting consumer and business dynamics in the region.

Sector-wise Distribution and Growth

The report's detailed breakdown reveals that fashion and apparel segments led the retail leasing surge, commanding a dominant 40% share of the total leased space. This dominance reflects the ongoing popularity and growth of fashion retailers in the city, driven by rising consumer demand and a robust retail environment. Following fashion and apparel, the food and beverage sector accounted for 15% of the total absorption, indicating a strong consumer inclination towards dining and experiential retail spaces. Homeware and department stores also contributed notably, securing a 12% share of the leased space.

This sector-wise distribution illustrates a diversified retail landscape in Bengaluru, with substantial interest spanning various consumer needs and preferences. The city’s retail environment has evolved to accommodate a wide range of retail categories, from high-end fashion boutiques to essential home goods and dining establishments.

National Trends and Bengaluru's Leading Role

On a pan-India scale, retail leasing reached a five-year high during the first half of 2024, with a total of 3.1 million square feet leased across the top eight cities. This national figure represents a 7% year-on-year increase from the 2.9 million square feet recorded in the same period of 2023. Bengaluru’s contribution to this national surge is noteworthy, as it accounted for a substantial 34% of the total retail leasing, significantly outpacing other major cities such as Chennai (13%), Delhi-NCR (12%), and Hyderabad (12%).

The city's leadership in retail leasing reflects its growing economic vibrancy and attractiveness to both domestic and international retailers. Bengaluru’s status as a major IT and economic hub continues to bolster its appeal to retailers seeking to capitalize on the city's dynamic consumer base and robust commercial infrastructure.

Impact of New International Brands

The first half of 2024 also saw the entry of several new international brands into the Indian market, with Bengaluru being a focal point for these expansions. Notable new entrants included Charles Tyrwhitt, Maison Margiela, Time Vallée, and Franck Provost. The arrival of these brands highlights Bengaluru's growing reputation as a destination for global retail players and reinforces its position as a key market for international expansion.

The influx of these international brands not only diversifies the city’s retail landscape but also enhances the consumer experience by introducing global fashion, luxury, and lifestyle offerings. This trend is expected to continue, further enriching Bengaluru's retail ecosystem and driving additional leasing activity.

Outlook for the Second Half of 2024

Looking ahead, the retail leasing outlook for the second half of 2024 appears promising. The report anticipates an increase in supply as several investment-grade malls are set to commence operations in key cities, including Bengaluru, Hyderabad, and Mumbai. These new developments are projected to add between 3 to 4 million square feet of retail space, contributing to a sustained upward trend in retail leasing.

In Bengaluru, the anticipated increase in retail space supply is expected to further stimulate leasing activity, as retailers seek to secure prime locations in newly developed malls and commercial complexes. The city's ongoing infrastructure development and growing consumer base are likely to support continued growth in retail leasing throughout the remainder of the year.

Tier II Cities and Emerging Trends

While Tier I cities like Bengaluru continue to lead in retail leasing, Tier II cities have also demonstrated notable growth. During the first half of 2024, Tier II cities collectively recorded a retail space take-up of 0.4 million square feet, with Indore and Kochi emerging as significant contributors. Indore and Kochi together accounted for approximately 56% of the absorption in these cities, indicating a growing retail interest in emerging urban centers.

This trend highlights the expanding retail opportunities in Tier II cities, driven by increasing urbanization, rising disposable incomes, and evolving consumer preferences. As retail infrastructure continues to develop in these cities, they are likely to attract more leasing activity and contribute to the broader growth of the retail sector.

Conclusion

Bengaluru’s remarkable 39% growth in retail leasing during the first half of 2024 underscores the city's thriving retail environment and its role as a major commercial hub in India. The diverse sector-wise distribution of leased space, the entry of international brands, and the positive outlook for the second half of the year all contribute to a dynamic and evolving retail landscape.