India's Q2 2026 retail leasing grows 17.6% YoY amid sustained demand: Rpt

Gross leasing touches 2.4 million sq ft as sustained occupier demand, low vacancies and limited Grade A mall supply support rental growth

India's retail real estate sector recorded gross leasing volume (GLV) of 2.4 million square feet (msf) in the second quarter of calendar year 2026 across the top eight cities, driven by sustained occupier demand despite tight supply, according to a report by Cushman & Wakefield.

 

Gross leasing rose 23.2 per cent quarter-on-quarter and 17.6 per cent year-on-year during the quarter.

 

Total leasing in the first half of 2026 stood at 4.35 msf, up 3.1 per cent from a year earlier, highlighting steady growth across key retail markets.

 

No new Grade A mall supply was added for the second consecutive quarter. However, leasing activity in malls remained strong, supported by continued absorption in projects completed during the second half of 2025.

   

The report said limited availability of premium mall space and rising rentals prompted retailers to evaluate opportunities beyond Grade A assets, including select Grade B developments.

 

Malls accounted for 51.3 per cent of total leasing, or 1.23 msf, registering growth of 33.4 per cent quarter-on-quarter and 21.9 per cent year-on-year.

 

Main streets accounted for the remaining 48.7 per cent, or 1.17 msf, of leasing activity. While their overall share moderated marginally, leasing volumes increased 14 per cent sequentially and 13.3 per cent from a year earlier, supported by continued demand for high-visibility retail locations.

 

Domestic retailers remained the largest occupier group, contributing 82.4 per cent of total leasing, or 1.98 msf. About 54 per cent of their leasing activity was concentrated in main streets.

 

International retailers accounted for 17.6 per cent, or 0.42 msf, of leasing activity, with nearly 76 per cent of their transactions taking place in malls, reflecting a preference for institutionally managed retail destinations.

 

Delhi NCR, Mumbai and Hyderabad together accounted for 64 per cent of total leasing activity during the quarter.

 

By category, fashion retailers led leasing activity with a 28.2 per cent share, followed by food and beverage at 17.2 per cent.

 

Strong demand and the absence of new supply further tightened vacancies. Grade A mall vacancy declined to 5 per cent in the second quarter, down 163 basis points year-on-year.

 

Prime high-street rentals increased by an average of 2.1 per cent quarter-on-quarter and 5.1 per cent year-on-year. Among major retail corridors, Mumbai's Linking Road recorded a 22 per cent annual increase in rents, followed by Bengaluru's Indiranagar 100 Feet Road at 12 per cent, Chennai's Anna Nagar 2nd Avenue at 11 per cent and Delhi NCR's Khan Market at 9 per cent.

 

"Even in an environment where quality retail supply remains constrained, occupiers have shown a clear willingness to compete for well-located assets, whether in premium malls or established high streets. This has resulted in tighter vacancies, firmer rentals and broader leasing momentum across major cities," said Gautam Saraf, executive managing director, Mumbai and New Business, Cushman & Wakefield.

 

Looking ahead, the report said supply constraints are likely to persist in the near term as retailer demand continues to outpace the availability of quality retail space.

 

A supply pipeline of 12.7 msf is scheduled for delivery between 2026 and 2028, including about 1.6 msf expected in the second half of 2026. Delhi NCR is projected to account for more than half of the upcoming supply, followed by Bengaluru, Chennai, Kolkata and Hyderabad.