Vacancy levels have spurted at Indiranagar 100 ft Road, one of the most happening high streets in Bangalore. It's a result of new supply and high rentals.Property owners who purchased land in the mid-2000 boom time are reluctant to reduce rentals; and brands are waiting for property owners to blink first.

"Rentals on 100 ft Road rose sharply prior to 2008. Property owners expected rentals of Rs 150 per sq ft, when it wouldn't fetch them more than Rs 100 ,"Ram Chandnani, deputy MD in property consultancy CB Richard Ellis, told Times of India.

Mall developments in the neighbourhood have also impacted the street. "Many people come from Whitefield to shop at Indiranagar. But with a new mall coming up in Whitefield, and the Gopalan Mall on Old Madras Road, the catchment area for 100 ft Road will reduce," said Alok Dubey, VP in Arvind Lifestyle Brands. Arvind set up an Arrow store on 100 ft Road seven years ago, and later brought US Polo and IZOD into the same building.

Tenants pay between Rs 100 and Rs 225 per sq ft as rental for the ground floor and Rs 40-80 for the upper floors. Though rentals saw a correction during the slowdown, it has now gone back to pre-recession levels. Van Heusen, a premium lifestyle brand, set up a 5,000 sft store on the road three years ago. "We then paid a rent of Rs 200 per sq ft. During the slowdown, the rent came down by 20 per cent. But we are back to pre-recession levels," said Ajay Ramachandran, COO of Van Heusen.

Several brands, including Pepe, Leros, John Player and Dockers, have exited the high street in the last one year.

Upper floors have also become unpopular. "Walk-ins to upper floors is about half of what you get on the ground floor," said Arvind's Dubey. Padmanabhan, the Levi's franchisee on the road, has brought his entire merchandise to the ground floor. "There was resistance on the part of customers to go to the first floor. We are using that space for our backend operations."

Some 25 rental agreements were signed in the January-April period, said real estate sources. Hush Puppies has taken a 2,000 sq ft property at Rs 110 per sq ft. Tommy Hilfiger has rented 1,800 sq ft at Rs 135 per sq ft and Copper Chimney has taken 5,000 sq ft at Rs 110 per sft.

"Large format stores are filling up faster with 25-35 per cent discount over the market value. Mid-sized stores have higher vacancy levels," said Prashanth Sambargi, a partner at Mars Realty.

Source: 14. May. 2011, TOI