Market Outlook

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HIGHLIGHTS

Vacancy compression continued in H2 2018. Click on the Download to find out more on:

• Economic indicators
• Prime Gross Effective Rent, Overall Vacancy (6 monthly)
• Supply Pipeline: New Developoments & Major Refurbs
• Key leasing transactions Q1 2019

The Sydney CBD’s latest vacancy rate was recorded at just 4.6%, highlighting that landlord favourable conditions are still in full effect. Cushman & Wakefield’s office market forecast and responses from a survey of market professionals‡ both suggest that the vacancy rate will continue to tighten to around 4% over the year ahead. In the year to July limited space availability stymied net absorption to just 9,489sqm.

Hyderabad office market, in the short to medium term, is likely to see a continuation of the current low vacancy scenario which is being further exacerbated by most of the upcoming supply of 2019 already pre-committed.

Mall vacancies which spiked during the second half of 2018 have declined to 5% levels again. Tenants were quick to grab quality space options available in operational malls. Fashion & Apparel, F&B were dominant with more than half of the leasing share during the quarter. Brands such as Fila, Kompanero, Da Milano, Rare Rabbit, Tarun Tahiliani etc. have opened stores recently. Sephora, the international multi-brand personal care & beauty retailer has recently launched two stores in prime retail malls.

With leasing activity totaling close to 360,000 sf, Q1 2019 recorded the highest first quarter leasing for the city in the last 7 years. Salt Lake submarket constituted an overwhelming majority (97%) of the leasing recording two large transactions above 100,000 sf during the quarter.

With strong leasing activity headlined by select sub-markets, net absorption for Q1 stood at 1.4 msf; nearly three times higher compared to Q1 2018. Nearly 50% of the net absorption was seen on account of new project completions during the quarter.

The overall vacancy reduced considerably to 11.7% from 13.4% on the back of stock withdrawal of four non performing / poor grade malls totaling to 975,000 sq ft. during the quarter. This highlights the high occupancy and good performance of quality mall developments across the city.

Brands like Lifestyle, Shoppers Stop, Louis Vuitton, Arrow, Meena Bazaar, Sabhyata, and Manyavar leased spaces in malls during Q1 2019. F&B, fitness and apparel brands like Haldiram’s, CultFit, and FBB expanded their retail footprint in main street spaces in Delhi and Gurugram. 

Limited vacancy in existing malls led to a greater quantum of leasing activity on main streets during the quarter. Prominent activity by lifestyle & F&B segments was seen on the high streets of Aundh & Pimpri-Chinchwad.

Retail sales of Winter 2019 shows a 0.9% year-on-year growth, underpinned by the drugs and toiletries category, which grew a robust 2.3% y-o-y. On the other hand, the new Chinese E-commerce Law, that took effect on January 2019, imposes a stronger regulation on the domestic resale of commodities purchased overseas, which would likely impact Chinese tourists’ inbound spending in Japan.