Saturday, December 14, 2019
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Small retailers cramped for locations in Dubai

Dubai: It is getting to be just about impossible for a small retailer to find an immediate location — and at a rent to his liking — in any of Dubai’s happening malls. High-street choices too are proving out of reach unless the retailers can call upon sizable funds to pay for the upfront “key money”, with market sources suggesting these now run into millions of dirhams at prominent locations.

So, where is the small retailer to go? “Commercial spaces along Shaikh Zayed Road and street level retail around the Downtown area are currently proving to be popular locations for small and independent retailers, as they are typically more price sensitive in their search criteria,” Mohammad Faheem, senior research analyst at CBRE Middle East, said. “Newly completed developments around Business Bay are also seeing an increase in demand, driven by the completion of infrastructure and rising residential and office populations.

“Demand for non-mall formats is being driven principally by an influx of smaller sized retailers, particularly from new F&B concepts and independent brands looking to enter the market.”

But retail space on the ground floor of new high-rises, even in prominent clusters, usually sticks to the standard format of a supermarket or grocery store plus a couple of basic service providers such as a laundry or an eatery. The leeway for other types of retail formats to get a sight-in can prove difficult, if not impossible. Retail stock has also been boosted by completion of a number of community-focused retail schemes, including The Avenues in Jumeirah as well as ‘City Walk’.

But there are still glaring gaps in off-mall stock. To overcome this, retailers are moving further away from established retail spots. Mankhool Road had been getting a fair bit of play with its available choices, while the villa renovations on Jumeirah and Al Wasl Roads have opened up new possibilities. Warda Haute Couture, for instance, decided on this tack with a location on Al Wasl Road to showcase its newly launched men’s wear line.

“I believe consumers are looking for new shopping experiences other than malls; they like concept stores that will offer them more than clothes, an integrated buying experience,” Annalisa of O Concept store said. “This is why emerging brands will profit and differentiate themselves by stocking with stores that aren’t in the mall. Definitely, independent stores or boutiques is the best start for them.”

Demand for small retail spaces has seen a demand spurt in the last 24 months, by CBRE’s reckoning, “driven by the continued expansion of the local population,” Faheem said. Apart from F&B, apparel retailers too have been active in picking up spare off-mall stock, and more recently, the Indian jeweller Kalyan set about making a launch splash with multiple store openings on the same day.

Demand is such that “this in turn has led to rising rentals, with landlords becoming more bullish on the outlook and with occupiers also keen to secure the most attractive spaces,” Faheem said.

And how have the higher rates been absorbed by small retailers? “Unfortunately, I’ve seen more outlets closed because of high rents in the last six months.”