Tier II cities would continue to play a vital role in the country’s growth story as these cities are poised to be India’s new growth drivers in the coming years – driven by their progress in the real estate landscape, work environment, quality of life, and sustainability.
According to CBRE’s latest research report, “Tier II cities: Coming of Age,” these cities are great talent bases, and bringing offices closer to talent has the potential to be alternative growth centers, fueling innovation. and growth for office occupants. Therefore, it is increasingly essential for these cities to maintain the current pace of infrastructure development and strengthen skills development.
Broadening the economic base and accessing a pool of skilled talent are the main drivers for occupiers to consider expanding into Tier II cities.
The various business groups in Tier II cities offer a mix of non-SEZ and SEZ establishments with average rents ranging from 30-40 rupees per square foot per month to around 60-80 rupees per square foot per month. Most cities have also seen a growing presence of operators of flexible spaces, industrial hubs and shopping malls.
According to the report, the quality of life in these cities is well supported by the relatively affordable cost of living compared to Tier I cities, as well as a growing presence of healthcare and educational institutions. There has also been growing investor interest in recent years, with various plans announced by domestic and global companies to establish their footprints in these markets.
“The implementation of targeted policy reforms and strategic infrastructure initiatives by the state or central government has resulted in a consumer preference for suburbs or small towns. This is evidenced by the entry and expansion of flexible operators and the growing footprint of industrial establishments,” said Anshuman Magazine, Chief Executive Officer – India, Southeast Asia, Middle East and Africa, CBRE.
He further added, “Increasing urban sprawl is likely to extend beyond Tier I cities so that Tier II cities take on the mantle of the future. Recognizing this need, the government has started to take steps to address the existing infrastructure gaps by business, which would boost the development of these cities. »
“Major Tier II cities are key to the impending property boom, now boasting thriving central and secondary business districts, some having even established outlying business hubs. Leading developers are now heading to these cities, propelled by demand from national and global enterprises, flexible space providers, start-ups, ed tech firms, and more. commented Ram Chandnani, Managing Director Consulting and Transaction Services, CBRE India.
Retail market in major Tier II cities:
Most Tier II cities saw growing presence of domestic and global brands across various categories
- With an increasing focus on expanding metro, rail and road networks, airports and developing commercial hubs, the residential sector is also booming in these cities as the dream of owning a home is now becoming a reality in these locations. As a result, retailers and mall developers are looking to leverage the purchasing power of the growing population of these cities. The increasing use of the Internet has whetted the appetite for quality products in these areas, thereby boosting e-commerce as well.
- Most Tier II cities have established high street locations and a few have new ones as well. Well surrounded by residential basins, these shopping destinations cater to a wide audience offering a diverse mix of brands in the fields of athletics, fashion and clothing, restaurants, department stores, hypermarkets , gourmet restaurants, car and electronics showrooms.
- Each of these cities is also home to shopping malls from some key developers with a varied presence of brands in different categories. The central business district in these cities and their outlying locations is the most preferred choice for these developments.
Chandīgarh:
- Nexus Elante Mall is home to several leading global and domestic brands
- Chandigarh’s main micro-markets are found in many places and are also home to Dhillon Plaza – an organized shopping street that includes athletics, hypermarkets, multiplexes, fashion and clothing brands, as well as QSR formats at flying
- Average rents start from Rs 100-200 per square foot per month for Malls (MC) and Rs 100-150 per square foot per month for Main Street.
Jaipur:
- Major retail micro markets in Jaipur include Malviya Nagar, C-Scheme, MI Road and Vaishali Nagar.
- Average rents in some of these micro markets start from Rs 175-250 per square foot per month for MC and Rs 150-250 per square foot per month for HS
- The main brands present in the city are Zara, FabIndia, Shopper Stop, Mother Care, Marks & Spencer, Starbucks, Mango, Forest Essentials, etc.
- The main shopping malls in the city are the World Trade Park Mall and the Triton Mall
- In February 2022, BlueStone.com launched a jewelry manufacturing unit in Jaipur with a capacity to process over 250 kilograms of gold per month
- In December 2021, Biba opened its 300th store in the country in Jaipur
Lucknow:
- The main micro retail markets in Lucknow are Gomti Nagar, Hazratganj and Ashiyana & Alambagh
- Average rents in these micro markets start from Rs 90-150 per square foot per month for MC and Rs 90-110 per square foot per month for HS
- The main brands present in the city are Uniqlo, Decathlon, Lulu Hyper, Shopper Stop, Spencer, PVR, The White Crow, Skechers, Nike, Croma, etc.
- In July 2022, Lulu Group opened its first mall in North India in Lucknow
Coimbatore:
- The main micro retail markets in the city are Central Coimbatore: Peelamedu, RS Puram, Cross Cut Road: Peelamedu, Saravanapatti, West Coimbatore and Thudiyalur – Mettupalayam Road
- Average rents in these micro markets start from Rs 140-160 per square foot per month for MC and Rs 90-110 per square foot per month for HS
- Due to the presence of several technology companies in West Coimbatore, the Avinashi Road and Peelamedu area is home to many F&B outlets as well as fashion and clothing brands.
Cochin:
- The main micro retail markets in the city are MG Road, Marine Drive, Vytilla Bypass and Kakkanad
- Broadway – a major main street is located at Marine Drive
- Average rents in these micro markets start from Rs 200-300 per square foot per month for MC and Rs 80-100 per square foot per month for HS
- The main brands present in the city are Cinepolis, Tanishq, Kalyan Jewelers, Malabar Gold, Raymond, McDonalds Allen Solly, Pothys, Seemati, etc. and the main malls are Lulu Mall and Oberon Mall.
Thiruvananthapuram:
- The main micro retail markets in the city are MG Road, Pattom Kesavadasapuram and Trivandrum Bypass
- Mall of Travancore and Lulu Mall are the main malls in the city
- Average rents in these micro markets start from Rs 250-350 per square foot per month for MC and Rs 80-100 per square foot per month for HS
- The main brands present in the city are ShoppersStop, Carnival Cinema, Pizza Hut, KFC, Domino’s, Reliance Trends, Max, etc.
Visakhapatnam:
- The main micro retail markets in the city are Central, South and North Vizag
- Central Vizag is home to a few major shopping streets and is dominated by fashion and clothing brands
- Average rents for HS start from Rs 100-120 per square foot per month
- The main brands in the city are Westside, ShoppersStop, Pantaloons, BlueStone, Superdry, Tommy Hilfiger, Puma, Nike, Levi’s, Croma, Lifestyle, Zudio, Raymond, etc.
- In July 2022, K Raheja Corp leased 17 acres of land in Saligramapuram to set up a new mall in Visakhapatnam; the rental agreement has been signed with the port authorities for Rs 125 crore
Ahmedabad:
- The main micro retail markets in the city are central, eastern, western and northern Ahmedabad
- Center of Ahmedabad – Navrangpura, Vastrapur has important shopping streets in Gujarat well known for ethnic fashion and clothing players
- The main brands in the city are Tanishq, Manyavar, Jade Blue, Fabindia, Bestsellers, Nike, Puma, Adidas, Decathlon, Aditya Birla Brands, Marks & Spencer, H&M, Lifestyle, ShoppersStop, Westside, Cinepolis, Fun City, Aldo, Charles & Keith, Rolex, Sephora, Armani exchange, etc.
- Average rents start from Rs 200-300 per square foot per month for MC and Rs 150-200 per square foot per month for HS
- In June 2022, Phoenix Mills announced plans to open their new Phoenix Palladium mall in Ahmedabad before the end of the year. Similarly, Lulu Group has announced its intention to expand its portfolio of shopping centers in India by creating a new shopping center in Ahmedabad.
Indore:
- Major micro retail markets include AB Road, Central Indore and Sapna Sangeeta
- The main brands present in the city are Westside, Pantaloons, The White Crow, Bluestone, Tanishq, Tasva, Farzi Café, H&M, Fab India, Starbucks, Croma, Zudio, Inox, Hamleys, MORE, etc.
- Average rents start from Rs 100 – 200 per square foot per month for MC and Rs 100 – 200 per square foot per month for HS
- In April 2022, TASVA of Aditya Birla Fashion launched its first brand store in Indore
Bhubaneshwar:
- The main micro retail markets in the city are Central: Janpath Road, East: Cuttack Puri Road – Rasulgarh, NH 5, West: Patrapada, North: Patia Road and South: Kalpana Square
- The main brands present in the city are Pantaloons, Westside, H&M, Tanishq, Carat Lane, Kalyan Jewelers, Malabar Gold, Joyalukkas, Inox, KFC, MP Jewelers, Khimji Jewelers, etc.
- Average rents start from Rs 100-250 per square foot per month for MC and Rs 150-200 per square foot per month for HS
- In April 2022, Big Basket announced its expansion plans to Bhubaneswar. The company has announced plans to increase its revenue from Rs 1.6 crore per month until the first quarter of 2022 to Rs 5 crore per month by the end of 2021.
