Malls demand their share

13 December 2022, Mumbai

With business in malls now overtaking pre-pandemic levels, operators are renegotiating rents and asking for a higher share of revenues from retailers and brands.

They are also open to smaller lease tenures which give them the flexibility to change the tenant mix. The increase in revenue share has been depending upon the category and brands. Rents are moving northwards but the exact levels vary from brand to brand. When leases come up for renewal for existing retailers or even for new ones, malls have an option to make changes.

The changes have been made for varying periods of six months or a year. For instance, supermarkets are now paying a bigger share of 0.25 per cent because their margins are thinner. On the other hand, cinema theatres or department stores are paying one or two per cent more.Retailers are also paying bigger revenue shares in some cities like Delhi and Mumbai, where there is a shortage of quality space. Since business has been looking up post Covid, retailers are not averse to paying more.

While in some categories like fashion, beauty, and food and beverages, the revenue share for malls is going up, in others like electronics the revenue share is falling as margins in these businesses are shrinking.

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