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Raghavendra Kamath, Business\nStandard \n<\/i><\/p>\n
Raghavendra Kamath, Business\nStandard
\n<\/i><\/p>\n
Mumbai, 17 June 2016<\/i><\/p>\n
![\"\"](\"..\/images\/h-and-m-mall-india.jpg\")
To drive footfalls and attract\nbrand value, mall developers across the country are rolling out the red\ncarpet for prominent chains.
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\nRecently, H&M signed a lease agreement with a Hyderabad mall\ndeveloper, wherein the latter gave the Swedish retailer six months\nrent-free, promised an investment of Rs 2.5 crore on fit-outs (a term\nused to describe the process of making interior spaces suitable for\noccupation) and a 30-year lease, according to a source. This was over\nand above the fit period of three to four months.
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\nAccording to sector experts, department stores ask and get a rent-free\nperiod of three to four months during which they do fit-outs, and get a\nlease period of nine-odd years.
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\nAccording to the same source, Mumbai-based Inorbit Malls has committed\nto spend Rs 12 crore on fit-outs and interiors on H&M’s\nupcoming stores in Mumbai, Hyderabad and Bengaluru. Inorbit’s public\nrelations agency did not want to comment.
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\n“They (H&M) say they follow a standard format in signing deals\nacross 4,100 stores worldwide. If a mall developer is not comfortable\non the terms, they are ready to search for others,” said the source. An\nH&M spokesperson said: “We never comment on rumours or future\nexpansion plans.”
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\nYogeshwar Sharma, executive director at Select Citywalk, which houses\nboth H&M and Zara, says they gave a rent-free period of six\nmonths as H&M was new to the country and it would help the\nbrand to settle down. However, he denied the mall spent money on\nfit-outs and interiors.
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\nSharma said the mall had given a rent-free period of four and a half\nmonths to Zara when it opened in the mall. “Indian brands do not\nenforce longer rent-free periods,” he said. Adding that in the longer\nview of the mall, they sign 30-35 year leases with global brands.
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\nA Zara spokesperson said: “We cannot comment on our commercial\nrelations.” Sources said H&M had worked out a special revenue\nsharing deal with Phoenix Mills for two of its upcoming stores in\nMumbai. Though there is a buzz that Phoenix Marketcity in the Kurla\narea had paid for fit-outs of Zara, Rajendra Kalkar, president-west at\nPhoenix denied this.
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\nRecently, Future Group’s Big Bazaar vacated its premises in High Street\nPhoenix and H&M is set to open its 30,000 sq ft space on the\nsame place.
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\n“We give the same treatment for all good brands and there is no\npreferential treatment for any,” Kalkar said, adding every deal was\nbased on commercial negotiations and different from each other.
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\nAdded Mukesh Kumar, senior vice-president at Infinity Malls:\n“International brands ask for capex on fit-outs and interiors. Some\nagree to it and some do not.”
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\nDevangshu\nDutta, chief executive at consultancy firm Third Eyesight, said\ninternational marquee brands are seen as crucial anchors that can drive\nhigh footfall to malls.<\/span>
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\nAccording to estimates, footfall at malls are down 20-25 per cent in\nthe past couple of years, due to economic downturn and onslaught of\ne-commerce. Correspondingly, occupancy costs have also come down by\nabout 15 per cent. ![\"\"](\"..\/images\/malls-mumbai-fashion-brands.jpg\")
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\n“Zara and\nH&M have already demonstrated the excitement they are able to\ngenerate, not only at launch but the traffic they are able to sustain\nover time,” Dutta said.<\/span>
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\nAs far as\nrecovering the income lost during rent-free periods or co-investment in\ninitial store fit-out, developers would be working that into their\ncommercial mix, and looking to recover that from other tenants or to\namortise it over a period of time, he added.<\/span>
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\nSusil Dungarwal, chief mall mechanic at Beyond Squarefeet\nAdvisory, a Mumbai-based mall management company, said despite the\nterms and conditions, global brands were choosy about where to go.\n“They go to a mall only where the latter adds value to the brand,” he\nsaid
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\nMall owners, he went on, believe they’d be able to recover the\ninvestment on fit-outs and interiors in a few years, as the new brand\nwill add value to its tenant mix and offer customers a new brand,\nimpacting in better rental realisation from other tenants, too.
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\nMany malls had shut down in Mumbai, Bengaluru and other cities in the\npast couple of years, due to low footfall and business. Beside Nirmal\nLifestyle in Mulund, Neptune Magnet Mall in Bhandup and Centre One in\nVashi, malls that have closed in Mumbai include City Mall and Mega Mall\nin Andheri, and Dreams Mall in Bhandup. Kohinoor Mall in Kurla is yet\nto become functional.
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\nEva Mall on Brigade Road and Sigma Mall on Cunningham Road in Bengaluru\nhave shut shop. Navi Mumbai has seen Gold Souk Mall, Wedding Mall and\nPalm Beach Galleria converted into office complexes or showrooms for\nautomobile companies.<\/p>\n