India’s Retail Sector Records 2.24 MSF of Leasing Volume in Q2 2025: Cushman & Wakefield

New Delhi, July 24, 2025: The second quarter of 2025 recorded 2.24 mn sq ft (MSF) of leasing across malls and high streets in the top eight cities, according to the Retail Market Beat Report of Cushman & Wakefield, highlighting continued strength in leasing activity.

The figure is in line with the average quarterly volume observed over the past four quarters though it represents a slight 5.4 per cent dip QoQ and a 6.3 per cent dip YoY. With this, H1 2025 leasing volumes stood at 4.61 MSF, marking a 17 per cent YoY growth, reaffirming strong retailer sentiment amid stable consumer demand.

Malls accounted for 45 per cent of leasing volume in Q2 (1.01 MSF), a 42 per cent QoQ, and the highest mall share in the past five quarters, signalling growing interest in experience-driven, structured retail formats. However, high streets witnessed a 26 per cent QoQ decline although they continued to dominate with 55 per cent(1.23 MSF) of leasing activity, underscoring the persistent undersupply of quality mall stock across cities.

No new mall supply was added in Q2, and Grade A mall completions for H1 2025 stood at 1.3 MSF. As a result, mall vacancy levels dropped by around 77 basis points to 8.16 per cent in Q2 2025 with premium Grade-A+ or superior malls witnessing even tighter vacancies at just 4.28 per cent.

This highlights the growing demand for premium retail assets and further strengthening landlord leverage in prime locations. Meanwhile, average main street rents remained stable on QoQ basis while recording a healthy six per cent YoY.

“India’s retail sector continues to demonstrate strong momentum with consistent growth in leasing volumes pointing to a healthy underlying demand. High streets remained the dominant driver of activity while vacancy levels in Grade-A malls have tightened further, reflecting a clear and growing preference for high-quality and experience-led retail spaces,” said Suvishesh Valsan, Head, research India, Cushman & Wakefield said.

“Looking ahead, we remain optimistic. Nearly, 4 MSF of new Grade A supply is expected in the second half of the year, particularly across key metros such as Mumbai, Delhi-NCR and Hyderabad. This should help bring more balance to the market and open up fresh opportunities for retailers to expand in line with evolving consumer expectations.”

What’s also noteworthy is the growing interest from international brands and the sharp uptick in leasing across categories like wellness and grocery—both of which signal a broader shift in India’s consumption landscape, he added. “As new supply comes online, we expect leasing momentum to further accelerate, particularly in top-tier urban markets.”

In terms of cities, Hyderabad, Mumbai and Delhi-NCR emerged as the top-performing markets, recording leasing volumes of 0.76 MSF, 0.52 MSF and 0.3 MSF, respectively- collectively accounting for over 70 per cent of the total leasing activity in the quarter.

They were followed by Pune (0.23 MSF), Bengaluru (0.18 MSF), Chennai (0.16 MSF), Kolkata (0.05 MSF) and Ahmedabad (0.04 MSF). With respect to growth in leasing volume, the western cities of Mumbai and Pune saw a 1.6X and 1.5X rise in volume on a YoY basis during the quarter.

Additionally, domestic retailers continued to maintain a dominant position in leasing volume with 86 per cent share (1.93 MSF).

The quarter also witnessed a notable uptake in international retailer participation, whose share rose to 14 per cent with 0.31 MSF of leasing activity, up from 8.5 per cent in the previous quarter. This growth was largely driven by malls, which remain the preferred format for global brands seeking structured environments, brand visibility and curated customer experiences.   

In terms of category demand, food and beverage and fashion remained the primary space takers across both mall and high street formats in Q2 2025, accounting for more than 50 per cent share of leasing activity (1.17 MSF), reflecting consumers’ growing preference for lifestyle-driven retail and experiential offerings.

The wellness category also posted strong growth, capturing 8 per cent share of the leasing volume at 0.18 MSF, a 2x YoY increase and a marginal 13 per cent QoQ dip.

Meanwhile, supermarkets and hypermarkets clocked 3x q-o-q growth and 10 per cent YoY increase in leasing volume reaching 0.18 MSF, reflecting robust demand for daily essentials and convenience-driven retail formats. 

Looking forward, the second half of the year is likely to see a significant influx of new supplies, especially within Delhi-NCR, Mumbai and Hyderabad. The new inventory is expected to alleviate pressure on vacancy and provide new opportunities for retailers actively looking for expansion.