Mall owners bend over backwards to attract global brands

It’s a survival strategy. Malls across India are now rolling out the red carpet for prominent retail chains in order to drive footfalls and attract brand value. Swedish retail giant, H&M signed a lease agreement with a Hyderabad mall developer where it was given six months rent-free, an investment of Rs 2.5 crore on fit-outs and a 30-year lease.

Even Inorbit Malls has committed to spend Rs 12 crores on fit-outs and interiors on H&M’s upcoming stores in Mumbai, Hyderabad and Bangalore. Delhi’s Select Citywalk Mall gave a six month rent free space to H&M when it was new to the country and that would have helped the brand to settle down. Similarly, it gave a rent free period of four and a half months to Zara. With most global brands, malls sign a 30-35 year lease. Most mall developers give these sops to global brands because they see them as crucial anchors that can drive high footfalls to the malls.

In the last few years, footfalls at malls are down to 20-25 per cent due to economic slowdown and onslaught of e-commerce. As a result, occupancy costs have also come down by about 15 per cent. The income that is lost during rent-free periods or co-investment in initial store fit-out, is recovered by working that into the commercial mix by the developers. At times they do look to recover that from other tenants or to amortise it over a period of time.