Coimbatore to gain as Chennai’s mall space runs out

CHENNAI: Concerned that only 8.3% of the total available mall space in Chennai is left to occupy, big brand retailers are turning to tier-II cities such as Coimbatore for brand expansion, according to real estate and property consultancy firm

Jones Lang Lasalle

(JLL).

In a report, “Fuelling the retail revolution - the paradigm of emerging cities,” released on Friday, JLL identified cities like Jaipur, Chandigarh, Bhubaneswar, Kochi and Coimbatore among others as likely to benefit from retailer investment in coming years as malls withdraw from tier-I cities like Mumbai, Chennai and Delhi.

“Increased land price (in tier-I cities) which makes it difficult for retailers to own real estate and high lease rentals has made retailers to seek out options beyond metro cities," said

Ramesh Nair

, CEO and country head, JLL. From 2015 until the end of Q3 2017, 8.9 million sq ft of mall space was withdrawn in cities like Delhi-NCR, Mumbai and Chennai besides Pune, the report noted.

Chennai, the report said, between Q4 of 2017 and 2021, is expected to supply 2.7 million sqft of retail space but the net absorption will be 2.9 million sqft. JLL had in March 2017 also noted that malls in metros were either shutting or converting the space for use as banquet halls, offices, etc.

Identifying Coimbatore as an emerging retail centre, it said high streets (areas commanding premium lease) like

Cross Cut Road

and

Oppanakara Road

had the potential to attract bigger brands. Anchor retailers may also prefer launching outlets via the franchisee (ownership and operation) model “to reduce input cost of real estate” as a precautionary play in tier-II cities, it added.

The availability of an international airport and a smart city tag is a plus for Coimbatore.

The expansion into tier-II cities is also good news in terms of employment as the demand for labour will rise. Retail sector is among the top three employers in the country and, according to the

National Skill Development Corporation

, is expected to employ around 5.6 crore people by 2022.

“India’s economic potential is in the growth of smaller cities. Being a key component of this development, retail has the ability to drive future growth and add value to the overall infrastructure of these cities,” said

Chandrajit Banerjee

, director general, CII.

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