Introduction
In recent years, the retail landscape in urban areas has undergone a significant transformation due to the rise of quick commerce firms. These innovative companies are not just changing the way we shop but are also reshaping the real estate market, particularly for retail leasing. Dark stores, a concept designed for efficient delivery and pick-up services, are becoming increasingly popular, delivering rental returns that outshine traditional retail spaces.
The Rise of Dark Stores
Dark stores, strategically located to serve densely populated residential neighborhoods, are experiencing a remarkable surge in demand. Industry analysts report a staggering 40% rise in inquiries for retail spaces ranging from 1,000 to 4,000 square feet over the past two to three years. This demand can be attributed to the expansion of quick commerce companies, which typically establish dark stores within a 10-kilometer radius of their target markets. As a result, rental yields for these properties have significantly increased, providing beneficial opportunities for property owners.
Projected Growth
As consumer demand continues to escalate, the network of dark stores is poised for rapid growth. Currently estimated at 22.8 million square feet in 2024, the demand for dark store spaces is projected to rise to 27.1 million square feet by 2027. This growth reflects a broader trend of urbanization and the increasing preference for convenience in shopping.
Attractive Rental Returns
One of the key advantages of dark stores is their location in less conventional areas, such as bylanes or backyards, where real estate prices tend to be lower. Sunil Singh, director of RealtyCorp, emphasizes that property owners can significantly boost their rental income by leasing these spaces to quick commerce firms. For instance, Singh rented out an 1,800 square feet space to Blinkit in Fraser Town, Bengaluru, at a rate of Rs 60 per square foot, resulting in a monthly income of INR 1.08 lakh. This impressive return showcases the lucrative potential for landlords tapping into this emerging market.
Benefits to Property Owners
As quick commerce continues to flourish, property owners are uniquely positioned to benefit from this trend. Landowners with properties located away from the main road or in areas with limited accessibility are capitalizing on the demand for dark stores. Pawan Sharma, Director of Sales and Leasing at Agarwal Estates, notes that these property owners are seeing substantial returns on investment by converting their properties into dark stores, taking advantage of the changing retail dynamics.
Conclusion
The emergence of dark stores as a viable business model has revolutionized retail leasing in urban areas. With significant rental income potential and projected growth on the horizon, property owners are increasingly drawn to the quick commerce sector. As consumer preferences continue to evolve, dark stores are likely to remain a focal point of real estate investment strategies, offering a unique opportunity for landlords and businesses alike.
