India Retail Leasing Hits 3.1 Mn Sq Ft in Q1

Synopsis: India’s retail real estate leasing reached 3.1 million sq. ft. in Q1 2026, with high streets outperforming malls as brands preferred accessible, flexible retail spaces amid limited premium mall supply.

The retail real estate market in India has begun the year on a positive note with limited supply of institutional grade malls incentivising retailers to move to high streets and away from retail malls, despite steady occupier demand. Gross leasing activity in the seven largest cities reached 3.1 million sq ft in the January-March period. While retail leasing activity moderated 15% sequentially, volumes were still marginally higher by 1% year-on-year, showed data from JLL India.

During the quarter, just 0.25 million sq ft of fresh mall supply hit the market, bringing the top seven Cities' to 92.4 million sq ft. 

“India’s retail sector is navigating a pivotal transition with remarkable agility. First quarter’s 3.1 million sq. ft leasing, anchored by a 48% high street surge and domestic retailers commanding 79% market share, reflects strategic format diversification as supply constraints drive innovation,” said Rahul Arora, Head - Office Leasing & Retail Services, Senior MD (Karnataka, Kerala), India, JLL.

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He further noted vacancy compression, robust international retailers growth, and a significant pipeline of supply to come, which are all signs of structural strength. The limited supply situation also had a huge impact on the leasing mix during the quarter, with high streets being the most popular retail format, representing 48% of total retail leasing activity. Following that, shopping malls accounted for 40% of the market.

The top retail market for absorption was Mumbai, accounting for 26% of the market, followed by both Bengaluru and Delhi NCR, which were tied with 21% each. The three cities jointly had 68% of the overall leasing volume in the quarter. Reports of international retailers' strong growth and vacancy compression, along with a significant supply pipeline, suggest that the sector is structurally strong, he added.

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In addition to the dominance of the Fashion & Apparel category in retailer activity, the Entertainment category was the second largest, accounting for 16% of leasing activity. Next-generation theatre types dominated cinema-led space absorption, which was shared by 71% of cinema operators.Expansion of next-generation theatre types was responsible for 71% of entertainment-led space absorption at cinema. Food & Beverage was the next largest segment at 15% of the total leasing.

The domestic brands continued to drive demand, accounting for 79% of leasing activity, with the direct-to-consumer (DTC) brands holding a steady 7% share as digital-first brands grew their offline reach. International retailers also picked up the pace of growth, seeing their leasing grow by 48% YOY as they have become more confident of India's consumption-led growth story.

The data indicates that India's retail sector will enter an extended growth phase with 46.1mn sq ft of projects in the development pipeline expected to come to fruition between 2026 and 2030 in the top seven cities. The new supply is likely to meet the rising demands from consumers, facilitate rent growth and possibly attract more institutional investors to ORE.