India’s Retail Sector Records 2.4 MSF of Leasing in Q2 2026, Up 17.6% YoY as Tight Supply Drives Market Momentum
Gurugram, July 1, 2026: India’s retail real estate sector maintained its strong growth momentum in the second quarter of 2026, with gross leasing volume (GLV) reaching 2.4 million square feet (MSF) across the top eight cities. According to Cushman & Wakefield’s Q2 Retail Market Beat Report, this performance marks a 23.2% quarter-on-quarter (QoQ) increase and a 17.6% year-on-year (YoY) rise, reflecting sustained occupier demand despite continued supply constraints. Total leasing during the first half of 2026 reached 4.35 MSF, up 3.1% compared to the first half of 2025, highlighting a steady growth trajectory across key retail markets.
Malls led the activity during the quarter with a 51.3% share, totaling 1.23 MSF and registering a 33.4% QoQ and 21.9% YoY growth. Even as no new Grade A mall supply was added during the second consecutive quarter, space uptake in malls remained strong as the leasing momentum was supported by continued absorption in projects completed during the second half of 2025, reflecting sustained retailer preference for organized retail formats. At the same time, the limited availability of premium mall space and rising rentals led retailers to evaluate opportunities beyond Grade A assets, including select Grade B developments. Main Streets remained highly resilient and continued to attract healthy occupier interest, accounting for a 48.7% share (1.17 MSF) during the quarter. While their overall share moderated marginally, high-street leasing volumes grew by 14.0% QoQ and 13.3% YoY, supported by continued demand for high-visibility, consumption-driven locations.
Domestic retailers maintained their dominant position by contributing 82.4% of total leasing (1.98 MSF), with most of their activity concentrated in Main Streets at approximately 54%. International retailers accounted for the remaining 17.6% (0.42 MSF), with nearly 76% of their leasing occurring within malls, reflecting a clear preference for institutionally managed, high-quality retail environments offering curated consumer experiences. At the city level, Delhi NCR, Mumbai, and Hyderabad continued as the top contributors, together accounting for 64% of total leasing activity in the second quarter. Delhi NCR led the pack with 0.67 MSF (28% share), followed by Mumbai at 0.50 MSF (21%) and Hyderabad at 0.37 MSF (15%). The remaining volume was distributed across Bengaluru (0.25 MSF), Pune (0.25 MSF), Chennai (0.20 MSF), Ahmedabad (0.11 MSF), and Kolkata (0.05 MSF). Category-wise, Fashion continued to dominate leasing activity with a 28.2% share, followed by F&B at 17.2%, Entertainment at 10.8%, and Accessories & Lifestyle at 10.0%. Together, these categories contributed nearly two-thirds of the total leasing volume.
The sustained demand, coupled with a lack of new supply, resulted in a further tightening of vacancies. Grade A mall vacancy declined to 5.0% in Q2 2026, marking a 163 basis point (bps) YoY reduction and reinforcing landlord-favourable conditions. On the rental front, prime high-street rents recorded an average growth of 2.1% QoQ and 5.1% YoY, with appreciation remaining selective and location-specific. Key retail corridors witnessed notable rental growth on a YoY basis, including 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%).
Looking ahead, supply constraints are likely to persist in the near term as retailer demand continues to outpace the availability of quality retail space across major markets. However, a robust supply pipeline of approximately 12.7 MSF slated for delivery between 2026 and 2028 is expected to gradually improve availability and support occupier expansion plans over the medium term. Of this upcoming pipeline, approximately 1.6 MSF is expected to be completed in the second half of 2026, with Delhi NCR projected to account for more than half of the upcoming supply, followed by Bengaluru, Chennai, Kolkata, and Hyderabad.
Commenting on the market dynamics, Gautam Saraf, Executive Managing Director, Mumbai & New Business, Cushman & Wakefield, said, “India’s retail real estate market continues to demonstrate the strength of underlying consumer demand. 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. Looking ahead, the gradual addition of new supply combined with sustained consumption growth is expected to improve market availability of quality retail space and create fresh expansion opportunities for retailers.”
