Mall operators are now heading for small cities teeming with customers

Tier-2 cities such as Indore, Lucknow, Ahmedabad, Jaipur, Udaipur, Chandigarh and Mohali are set to see supply of close to 2 million sq ft of grade A malls, as retailers are pushing to open stores in smaller cities amid increasing demand.
“Brands have realised where the customer base is and want to move there. We are opening in Indore and Ahmedabad this year, and there is a lot of demand from our existing malls in tier-2 cities,” said Rajendra Kalkar, president-west at Phoenix Mills, which operates more than half a dozen malls in Mumbai, Pune and Bengaluru, and in some tier-2 cities.

Leasing across high streets and malls in India is expected to soar past the pre-Covid-19 levels this year and could see a 25% jump year-on-year in new store openings in 2022, according to international property consultant CBRE.

“Rising disposable income and exposure have led to tier-2 and tier-3 cities driving the growth of malls in the country,” said Shibu Philips, director-shopping malls, Lulu Group India. “We at Lulu chose to enter the northern retail market of the country with Lucknow due to the major consumer shift that we have witnessed from tier 2-3 markets. We are soon planning to expand to cities like Varanasi, Prayagraj and Ahmedabad in near future.”

Developers such as Phoenix, Omaxe, Bhumika, Trehan Iris, Sushma and Unity have planned to open malls in these cities, and many of them have also planned expansion to cater to the increasing demand.



“Both international and domestic brands are increasingly looking for space in aspirational cities as consumer moved there during pandemic. Although many offices have reopened, a substantial population continues to work from home and they continue to shop, leading to increase in consumption,” said Prateek Mittal, executive director, Sushma Group.

Sushma group plans to deliver 150,000 sq ft of its 350,000 sq ft project in Chandigarh’s Zirakpur and plans to expand its retail presence.

“India’s youths, both on the consumer and supplier side, are driving the retail growth story in tier 2-3 cities. Their willingness to spend and experiment in entrepreneurship have led to a rise in demand for retail spaces in the last few years,” said Jatin Goel, director, Omaxe Ltd.

Omaxe has seen its leasing activity grow in Faridabad, Lucknow, New Chandigarh, Amritsar and Patiala.

Delhi-based Unity group is planning to open two malls in Mohali.

Rajasthan’s Udaipur and Jaipur have also emerged as upcoming retail hubs.

Delhi-based Bhumika group has advanced the construction of phase 2 of its 350,000 sq ft retail space in Udaipur mall as majority of phase 1 has already been leased out which will become operational in August.

“In addition, we will deliver a mall in Alwar and exploring tie-ups in Jaipur Jodhpur, Kota, Bikaner, Ajmer and Delhi-NCR (National Capital Region),” said Uddhav Poddar, managing director, Bhumika Group.

With the easing of the pandemic, economic recovery has quickened and encouraged retailers to roll out their store expansion plans which they had put on hold with the outbreak of Covid-19. It comes even as the contribution of e-commerce to total sales has nearly doubled every quarter from the beginning of the pandemic.

“As more and more people are shifting base to tier-2 and 3 regions, a plethora of opportunities has opened up for the retail real estate sector. The availability of huge chunks of land at cheaper rates, appreciating prices and progress for the future have been luring big retail chains and malls to come up in these regions,” said Ashish Narain Agarwal, CEO of PropertyPistol.com, a brokerage firm.