Vacant mall retail space jumped 58% across eight cities in 2023

The retail landscape in major Indian cities is witnessing a troubling trend, with a significant increase in vacant retail spaces within abandoned shopping malls. A recent report highlights that the number of shopping malls classified as 'Ghost Shopping Centers' has risen sharply, indicating a growing challenge for the retail sector.

Increase in Ghost Shopping Centers

In 2023, the count of deserted shopping malls—those with more than 40% vacancy—escalated to 64 across eight prominent cities. This marks an increase from 57 such malls in 2022. Collectively, these malls encompass approximately 13.3 million square feet of leasable space, a substantial rise from 8.4 million square feet in the previous year. This surge represents a 58% increase in area, leading to an estimated devaluation of Rs 6,700 crore or USD 798 million.

Distribution of Vacant Spaces

The National Capital Region (NCR) has the highest concentration of ghost shopping centers, accounting for 5.3 million square feet. Mumbai follows with 2.1 million square feet, while Bengaluru has 2 million square feet of such vacant retail space. Interestingly, Hyderabad is the only city among the eight to report a decrease in ghost shopping center stock, which fell by 19% to 0.9 million square feet in 2023.

Regional Insights

Kolkata experienced the most significant rise in ghost shopping centers, with an increase of 237% year-on-year, albeit from a smaller base. The distribution of these ghost malls across the top eight cities is as follows: Delhi-NCR has 21, Bengaluru 12, Mumbai 10, Kolkata 6, Hyderabad 5, Ahmedabad 4, and both Chennai and Pune have 3 each.

Implications for Retail Property Owners

Analysts stress the necessity for an enriched retail experience to attract shoppers, emphasizing the importance of physical retail spaces. While Grade A malls continue to perform well with strong occupancy, foot traffic, and conversion rates, Grade C assets and ghost shopping centers are struggling. This situation urges landlords to consider revitalizing these underperforming properties or divesting them to mitigate losses.

Practical Takeaway

For homebuyers, tenants, and investors, the rise in ghost shopping centers signals a shift in the retail market landscape. Understanding the dynamics of retail spaces can inform investment decisions and highlight potential opportunities in revitalizing or repurposing these properties. Keeping an eye on the performance of Grade A malls versus ghost centers can provide insights into future trends in the real estate market.