India's retail leasing rises 17.6% YoY to 2.4 MSF in Q2 2026 as mall vacancies hit 5-year low: Cushman & Wakefield

India's retail real estate market continued to gather pace in the April-June quarter of 2026, with gross leasing volume (GLV) rising 17.6% year-on-year (YoY) to 2.4 million sq. ft. (MSF), despite the absence of any new Grade A mall supply for the second consecutive quarter, according to Cushman & Wakefield's Q2 2026 Retail Market Beat report.

The leasing activity also increased 23.2% sequentially, taking total retail leasing in the first half of 2026 to 4.35 MSF, a 3.1% increase over the corresponding period last year. The sustained demand amid tight supply has further compressed vacancies and strengthened landlords' pricing power across India's key retail markets.

Malls drive leasing despite supply crunch

Organised retail formats continued to dominate leasing activity, with shopping malls accounting for 1.23 MSF, or 51.3% of the total leasing during the quarter. Mall leasing grew 33.4% quarter-on-quarter (QoQ) and 21.9% YoY, driven by continued absorption in projects completed during the second half of 2025.

Main streets contributed the remaining 48.7%, or 1.17 MSF, with leasing volumes rising 14% QoQ and 13.3% YoY as retailers continued to favour high-footfall commercial corridors.

The shortage of premium retail space also prompted several brands to explore opportunities beyond Grade A developments, including select Grade B retail assets, as rentals continued to harden across major markets.

Delhi NCR leads, domestic retailers dominate

Delhi NCR emerged as the country's largest retail leasing market during the quarter, accounting for 0.67 MSF or 28% of total leasing. Mumbai followed with 0.50 MSF (21%), while Hyderabad recorded 0.37 MSF (15%). Together, the three cities contributed nearly 64% of India's total retail leasing activity in Q2.

Among occupiers, domestic retailers remained the primary growth driver, contributing 82.4% of total leasing, or 1.98 MSF, with more than half of their transactions taking place on main streets. International brands accounted for the remaining 17.6%, with nearly three-fourths of their leasing concentrated in shopping malls, reflecting their preference for institutionally managed retail destinations.

Fashion remained the largest demand generator with a 28.2% share of leasing, followed by food & beverage (17.2%), entertainment (10.8%) and accessories & lifestyle (10%).

Vacancies tighten as rentals rise

With fresh supply remaining absent, vacancy levels in Grade A malls declined to 5%, down 163 basis points from a year ago, underscoring the growing scarcity of quality retail space.

Prime high-street rentals increased 2.1% QoQ and 5.1% YoY, with some of the sharpest gains recorded in Mumbai's Linking Road (22%), Bengaluru's Indiranagar 100 Feet Road (12%), Chennai's Anna Nagar 2nd Avenue (11%), Ahmedabad's CG Road (11%) and Delhi NCR's Khan Market (9%).

Commenting on the market, Gautam Saraf, executive managing director, Mumbai & New Business, Cushman & Wakefield, said strong consumer demand continues to support leasing activity despite constrained supply. He noted that retailers remain willing to compete for well-located assets across premium malls and established high streets, resulting in tighter vacancies, firmer rentals and sustained leasing momentum across major cities.

Looking ahead, the consultancy expects supply constraints to persist in the near term. However, around 12.7 MSF of new retail space is scheduled for completion between 2026 and 2028, including nearly 1.6 MSF in the second half of this year. Delhi NCR is expected to account for more than half of the upcoming supply, followed by Bengaluru, Chennai, Kolkata and Hyderabad, which is likely to improve availability and support retailers' expansion plans over the medium term.