Malls seek full rent from retailers | Economic Times

Retailers won’t get rent concessions next month onward as most malls plan to revert to the original terms of agreements with tenants as sales have recovered nearly 80% despite lower footfall.Several top retailers, including Aditya Birla Fashion, Shoppers Stop, Reliance Retail and Tata Trent, negotiated lower rentals since the June quarter, when malls largely remained closed across cities due to lockdowns and other restrictions to contain Covid-19.“We supported the industry when it was required,” said Pushpa Bector, executive director at DLF Retail. “Spend per footfall has doubled and in some segments, it has even reached 120% of pre-Covid level. But the agreement to provide relief was until this fiscal end.”Several malls had reworked pacts that allowed for a resumption of previously agreed rentals if the tenant crossed 80% of the previous year’s sales. “We have recouped sales even as footfall remain lower than pre-Covid levels,” said Anuj Arora, general manager at Oberoi Mall in Mumbai. “The terms of trade will now be back to the original agreement, signed before Covid-19.”‘New Normal’“In cases where leases have expired, we have signed new agreements without concessions,” said Arora of Oberoi Mall. High real estate costs in India make it important for retailers to generate higher average price realisations per square foot of space to maintain profitability. While most retailers have reopened all their stores, footfall and sales have not reached pre-pandemic levels yet.“Retailers and malls have both realised that Covid-led disruptions or weekend lockdowns amid rising cases is now the new normal, and they will need to support each other when necessary and not perpetually,” said Sanjeev Mohanty, managing director, South Asia, Middle East and North Africa, Levi Strauss & Co. “While most of the malls have almost recovered to 70-80% footfall, there are exceptions, such as Mumbai and Pune, where the recovery curve has been lagging behind other metros and cities.”While normalcy has almost returned to electronics, lifestyle and apparel retailers, a few categories are still under pressure, said mall developers.Gurvineet Singh, chief executive of Viviana Mall in Thane, said a complete recovery is only expected by June-July. “We had given rebates to retailers till October, restaurants until December and for multiplexes, we had extended discounts until March,” he said. “But from next month, we will be back to earlier terms and conditions.” Mall operators had given full or partial waivers to retailers despite being among the worst hit, with lockdowns keeping them shut in most big cities for more than two months. They had to bear fixed costs with hardly any income from rentals.“Some segments such as cinemas, entertainment still need support and we will do that on a case-to-case basis,” said Yogeshwar Sharma, chief executive, Select Citywalk in New Delhi.