Supply constraints drag volumes even as mall share rises and top cities drive 65 per cent of demand
India’s retail real estate sector recorded leasing of 1.95 million square feet (MSF) across the top eight cities in Q1 2026, reflecting stable occupier demand despite constrained supply, according to Cushman and Wakefield.
Leasing declined 28 per cent quarter-on-quarter and 10 per cent year-on-year, largely due to the lack of new mall supply. The slowdown follows a strong 2025, when leasing hit 9.21 MSF, the highest annual tally in the post-pandemic period, indicating sustained demand momentum.
Despite supply limitations, malls accounted for 47 per cent of leasing in Q1 2026, up from 33 per cent a year earlier, signalling a shift towards organised and experience-led retail. Main streets continued to dominate with a 53 per cent share, though lower than 67 per cent in Q1 2025, supported by demand for high-visibility locations.
Delhi NCR led leasing activity with a 30 per cent share (0.59 MSF), followed by Hyderabad at 22 per cent (0.43 MSF) and Mumbai at 13 per cent (0.25 MSF). These three markets together contributed 65 per cent of total leasing during the quarter.
City Trends Mixed
Delhi NCR recorded a strong 45 per cent year-on-year growth, while Hyderabad and Mumbai saw declines of 26 per cent and 57 per cent, respectively. Bengaluru and Pune posted moderate gains, while Chennai saw a dip. Ahmedabad and Kolkata registered sharp growth on a low base.
Fashion and food and beverage segments together accounted for 46 per cent of leasing, while entertainment gained traction with an 11 per cent share, largely within malls. Department stores and furniture segments contributed 10 per cent and 5 per cent, respectively.
Domestic retailers dominated leasing with an 87 per cent share and increased their mall presence. International retailers recorded a 21 per cent year-on-year rise in leasing, with most activity concentrated in malls.
Vacancy levels tightened further, with Grade A malls at 5.7 per cent and Grade A+ assets at 2.6 per cent. Prime high-street rentals rose 1.4 per cent quarter-on-quarter and 4.5 per cent year-on-year.
Looking ahead, around 5.88 MSF of new supply is expected in 2026, with a total pipeline of 14.94 MSF between 2026 and 2028, likely to support leasing activity and drive premiumisation in the sector.
