Mauling of Malls

Glitzy and fashionable malls have been a highy visibile and inviting sight in India since the last 10 years . In the NCR area of Delhi, malls were being constructed at a hectic space where ever land was available. Gurgaon's famous MG Road , also known as Mall Road has 18 malls coming up of which 6 are already functional. However, with the downturn of the economy, there has been a reversal of fortunes of mall owners. Footfalls have fallen and the rush of customers of a year back is now missing.
Lack of demand for space has forced malls to drastically reduce rentals. Malls today are facing problems of empty spaces. Ambi Mall - the huge over 1 KM of shopping space mall has an occupancy of only 30 percent while the upmarket MGF Saket has a 40% occupancy.
Rentals in almost all malls across the country have come down by 10 -30 percent . In Noida, Great India Place has seen rentals down by 15 to 20 percent.
Major retailers are taking advantage of this fall in rentals and are renegotiating terms of lease with the developers. Many retailers are also now looking at a revenue sharing model with mall owners. The Economic Times has quoted Vikas Gupta, CEO and MD, Lacoste India - " Best practices are coming out now. Revenue share model, zoning, clarity on super carpet and nature of contracts with both sides being equal partners are now gaining popularity."
At this point, all major development in mall space has come to a halt. Of the 400 malls that were to be operational by this year, only 150 have come up. The rest have either halted work or deferred plans and the result is that over 25 million sq ft of retail space across cities is currently on hold under various stages of construction .
Retail in India and malls in particular are going through a tough learning phase. Hopefully, in time success stories will again be the flavour of the day.