Chennai retail market continues to boom

Chennai retail market continues to boom

Retail sector in Chennai is mostly of high street format and traditional shopping areas. Few malls are located in the city area and there are upcoming malls in other parts of the city and Suburban areas. There is a huge demand for organized retail space due to increase in the population occupied in IT/ITES sector. High street retail activity in Chennai is primarily concentrated in and around Nungambakkam, Cathedral Road & T Nagar. Some other prominent retail areas in the city are the markets of the Anna Nagar, Adyar, Besant Nagar, Purasawalkam and Egmore.

Absorption rates are very high for retail spaces in Chennai and there is no vacancy in newly delivered spaces as well as in the existing retail space. Because of the huge demand for organised retail space in the city and suburbs there is absorption even before the building is completed.

Due to growth in the population working in IT/ITES sector, there is an increase in the demand for large retail spaces. It is expected that by the end of 2010, Chennai is going to witness a steep increase in the number of malls, which would go up to 20 with a total built-up area of 9 million sq.ft. There will be maximum supply in CBD and in suburban areas due to these upcoming malls. Chennai Citi Center located on R K Salai is the only mall completed recently. Significant pre-leasing activity was witnessed in malls under construction, such as Ampa Mall, Coromandel Plaza and Allied Mall. Hence there is increased demand for organized retail space.

Some of the recent transactions as far as retail sector is concerned in Chennai are by Samsonite with 4,500 sq. ft. in Chellam Towers, Shoppers Stop - 15,000 sq. ft. in T.Nagar along Venkatnarayana Road, Fame - 40,000 sq. ft. in Coromandel Plaza and 60,000 sq. ft. in Allied Mall, Naidu Hall - 10,000 sq. ft. in Valasaravakkam, and by Reliance Retail Ltd launching 12 Reliance Fresh stores at various locations in Chennai covering a space of 40,000 sq. ft.

Both capital and rental values are showing an upward trend. Retail spaces in CBD areas command a rate in the range of INR 75-150 per sq. ft. per month for lease and INR 6000-8000 per sq. ft. for sale. Retail spaces in Non CBD (city limits) are available for lease and outright sale at INR 50-90 per sq. ft. per month and INR 5000-7500 per sq. ft. respectively. Rentals and Capital rates in suburbs are prevailing at INR 40-65 per sq. ft. per month and INR 3500-6500 per sq. ft. respectively. Average rental values for retail space at high street locations in the prime CBD range from INR 75-160 per sq. ft. per month.IT/ITES sector developments are the key driving factor for recent increase in the real estate activity in Chennai especially the retail sector. The existing malls in Chennai are reporting very high footfalls due to over congestion in the prime shopping areas like Pondy Bazaar and Purasawakkam. The existing multiplexes are also doing very well. There is a huge demand for retail spaces and the trend is likely to grow in the years to come.

Prime High Street Locations and Retail Rentals

LocalitiesHigh Street LocationsRental (INR/sft pm)Retailers Present

NungambakkamNungambakkam High Road

Khader Nawaz Khan Road100-75

120-150

Nike, Reebok, Pizza Hut, Pizza Corner, Landmark, VIP, Raymond, Louis Philippe, Van Huesen, Marks Spencer etc.

Zara, Totto, Wills lifestyle, Evoluzine, Souls, Clothes Encounter, Color weaves, Barista, Cotton World, Auroville, Gurlz.

GopalapuramCathedral Road100-75Elite, Vimal, Bapalal Jewellery, Khazana Jewellery, Woodlands, Copper Chimney, Titan, Raymond.

MylaporeDr. Radhakrishnan Salai110-90Nilgiris Super-markets, Turakia Opticals, Sri Krishna Sweets, Levis, Nike, Satyam Infoway, Pizza Hut, GKB Opticals. Hot Breads.

Anna NagarSecond Avenue

Third Avenue90-75

75-50Damro Furniture, Hutch Shop, Food world, Gautier, Crocodile, Pizza Hut, Barista.

Vivek & Co., Archies Gallery, Sundaram Motors, Caf Coffee Day, Trinetra Super Market.

AdyarSardar Patel Road

Gandhi Nagar

1st Main Road

L.B Road75-60

75-50

60-50Sixth Sense, Adyar Bakery, The Hutch Shop, Food World, Nuts n Spices, Qwickys, Proline, Pantaloons, Hotel Sangeeta.

Mitsubishi Lancer Showroom, Chick King, Pizza Corner.

Besant Nagar

Second Avenue

Vailankanni Church Road

Beach Road50-40

50-45

60-50Food World, Cakewalk, L'oreal Beauty Saloon.

Hotel Saravana Bhavan, Nilgiris Supermarkets. My Dollar Store, Fab India, Planet Yum, Cozee, Barista.

AlwarpetT.T.K Road

C.P Ramaswamy Road60-40

65-45Lifestyle, Touchtel, Bata.

Crocodile, Kirtilal Jewellery, Pizza Corner, Coffee World.

T.NagarPondy Bazaar

North Usman Road

G.N Chetty Road120-100

100-85

60-50Globus, Nike, Ratna Stores.

Nalli Silks, Pothys, GRT Jewellery, Barista, Meenakshi Bhavan.

Caf Coffee Day, Food World, Qwickys, Agrani Switch.

Note: All these rates are for Ground Floor showrooms with good frontage.

Source: Trammell Crow Meghraj Market Surveys

Details of Existing and Upcoming malls

Name of MallDeveloperLocationArea in sft

Existing Malls

Spencer PlazaMangal Tirth Estate Anna Salai4.8 Lakh

Abirami Mega MallAbirami Theatres Purasaivakkam1.5 lakh

Chennai Citi CenterETA GroupR K Salai2 Lakh

Upcoming/Proposed Malls

Ampa Centre OneAmpa Housing Development Nelson Manickam Road3.4 lakh space out of 6.5 lakh

Prashanths Real Gold TowerReal Value PromoterNorth Usman Road, T Nagar1.4 lakh

Coromandel PlazaSuryavardhan Estates Navalur, OMR2.5 lakh

Express MallIndian ExpressOff Anna Salai8 lakh

DLF Mico MallDLF LimitedEgmore4 lakh

Chennai Central MallSrinivasa Shipping &

Property development & PantaloonNungambakkam High Road1.2 lakh

River Side MallMarg ConstructionsKarapakkam, OMR4 lakh

Gee Gee mallGee Gee KushaldasPoonnamallee High Road1.8 lakh

Kshitij Town CentreKshitijVelachery Main Road9 lakh

The SoukAerensVandalur4 lakh

Allied MallAllied Majestic Promoters Navalur, OMR6.1 lakh

The ForumPrestige GroupMount Road 12.75 lakh (5.25 lakh Retail & 7.5 lakh Office)

The ForumPrestige GroupVadapalani11 lakh (7 lakh Retail & 4 lakh Office)

Orchid MallAlliance ProjectsKorattur2.3 lakh

Ozone MallOzone GroupAnna Nagar10 lakh

The GatewayShriram PropertiesPerungulathur8 lakh

P S MallP S GroupVelacherry3 lakh

Source: Trammell Crow Meghraj Market Surveys