The recession, coupled with obscenely high rents, are forcing superstores out of business.

BANGALORE, India --- It's midday at the Royal Meenakshi Mall, and I walk past a sight that’s not too unusual: behind the door of a third floor jeweler stands a guard, but not a single cashier. The guard looks relaxed; the threat of theft is slim. The prospect of a shopper coming in is even slimmer.

In the spring of 2011, the shopping center at the southern edge of Bangalore opened in an attempt to rival the city's largest, Mantri Square. At 1.7 million square feet, the year-old Mantri mall was, at the time, the nation's largest. Last year, it lost its brief title to a behemoth destination in Mumbai.

A decade ago, when the country's economic growth was escalating, shopping centers like these three started to sprout furiously in large Indian cities. They quickly became staples of the urban landscape. Air-conditioned and remarkably pristine, they are filled with gaudy interiors, luxury brand names and Western fast-food outlets. Some have soaring condos in their backyards. The malls tower over street corners, often thickening the already heavy traffic with their visitors, primarily the still small chunk of cities considered middle class.

Now, though, it looks like many of them may have outgrown the shopper. Even when crowded, the malls' stores often struggle to bring in enough sales.

An employee cleans the floor inside a shopping mall in Mumbai. (Danish Siddiqui/Reuters)

"There was an initial euphoria and a herd mentality in developing malls," explains Shubhranshu Pani, managing director of retail services for Jones Lang LaSalle India, a real estate consultancy in Mumbai. When the global recession hit, spending tapered off.  "The retailers started realizing that consumption is not able to sustain rents," he says.

This past summer, analysts began pointing to shuttering malls as a harbinger of India's still dragging economy. Figures from this fall show that retail net absorption fell by nearly 60 percent from last year. That is, the nation added far less new mall space. And the trend isn't set to turn.

In 2006, around the peak of the mall boom, 80 shopping projects were slated for Bangalore alone. Roughly half of them, by Pani's count, have been shelved. According to JLL, seven malls are set to open this year in Mumbai. None are planned thereafter.

For investors, the shift is a troubling sign for corporate India. BM Shivakumar, a citizen activist in Bangalore, recently released documents that show the city's Development Authority has failed to collect roughly $2.8 million in unpaid mall rents. The BDA has leased land to 15 shopping complexes, with 774 shops and offices, according to the papers Shivakumar uncovered using RTI, the Indian equivalent of FOIA.

Some mall tenants, he claims, have not paid the city rent for seven years in a row.

A metro train moves past Sahara Mall, a shopping centre built by Sahara group, in Gurgaon on the outskirts of New Delhi. (Mansi Thapliya/Reuters)

For some, this is a sign that city taxpayers are getting swindled. Shivakumar believes the deals are cut as a collusion between city officials and developers to nab valuable public land. Using the space for malls, with store prices that approach those in the U.S., signals a decision to cater to a sliver of the city. "This is only in favor of the rich," he tells me through a translator.

But the rich stopped coming, at least in large enough numbers. "The city-centric malls are not at all profitable," says Pani. The main culprit is disproportionately high rents. In some sections of New Delhi, Mumbai and Kolkata, a square foot of commercial space is on par with costs in London and New York.

New mall developers in India are gravitating to suburbs and smaller cities, places, Pani says, where the retail space has not hit "stratospheric prices." Most of India's upcoming malls will probably pop up in its tier II cities, where real estate is cheaper and the numbers of new shoppers in the wings are tremendous.

Indian retail, less than a tenth of which is considered part of the formal economy, is also bracing for possible monumental change. In September, the government opened the door for single-brand foreign investors, including gargantuan retailers like Walmart. In the wake of the decision, mall developers scrambled to make space for the possible arrival of the colossal brands. A few malls reportedly booted established tenants to make room for Starbucks, the nation's newest addition. 

But the final ruling on foreign investment, set for this week, is still uncertain. Even if the big multinationals do make it in, they will be limited to a handful of metropolises. There's also little evidence they will have many new shoppers to attract in the large Indian cities. "We're talking about the size of the market being very little," Pani adds.

And yet big city fever has not entirely abated. In the documents he obtained, Shivakumar discovered the Bangalore development authority is shedding its revenues, drained by absentee mall renters. But he also discovered the agency still has plans for its land. Four new malls are in the works.

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