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Retail leasing across India's top eight cities saw a minor 1% decline, totaling 1.63 million square feet in the July-September period, compared to the previous year. Main streets dominated leasing activity, accounting for 68% of the total leased space. The demand for retail space in cities like Delhi-NCR, Bengaluru, Chennai, and Kolkata led to a significant increase in rental rates, while malls faced quieter leasing due to limited supply. Despite e-commerce growth, physical stores continue to thrive, with a shift towards spaces offering a blend of shopping, lifestyle, and entertainment experiences.
Leasing activity for retail spaces in shopping malls and prime high streets across the top eight Indian cities slightly declined by 1%, totaling 1.63 million square feet during the July-September period, according to Cushman & Wakefield's Q3-2024 Retail MarketBeat report. This figure was consistent with the same period last year. Advertisement
Main Streets continued to dominate the retail leasing market, representing 68% of the total leased space. The strong demand in these areas led to significant rental growth, particularly in Delhi-NCR, Bengaluru, Chennai, and Kolkata, where rents increased by up to 15% year-over-year.
The shift in consumer preferences toward more discretionary spending is evident in retail leasing trends, which have been led by fashion, food and beverage, and accessories. The rapid evolution of India's retail sector, coupled with a shortage of mall supply, has driven higher leasing activity on main streets compared to malls, which saw a quieter quarter.
Leasing volumes varied across cities. Ahmedabad saw a sharp 32% drop to 0.06 million square feet, while Bengaluru experienced a 9% increase, leasing 0.20 million square feet. Chennai and Delhi-NCR also witnessed a decline of 33% and 39%, respectively. Conversely, Hyderabad, Mumbai, and Pune recorded notable growth, with Mumbai leading the rise with a 74% increase.
The evolving retail landscape reflects growing urbanization, with demand for modern, strategically located retail spaces expected to rise. As consumer habits shift and more brands enter the market, the focus is moving toward spaces that combine shopping with lifestyle, entertainment, and community experiences. Despite the growth of e-commerce, the enduring demand for physical stores shows their unique ability to offer experiential shopping, something that online platforms cannot replicate. High-quality mall developments will be crucial in meeting the needs of this rapidly changing retail market.
In conclusion, the retail leasing market in India reflects a shift toward main streets, driven by high demand and limited mall supply. With increasing urbanization and evolving consumer preferences, the demand for strategically located retail spaces is expected to rise. While e-commerce continues to grow, physical retail stores remain crucial for delivering unique, experiential shopping. High-quality mall developments will play a pivotal role in supporting this transformation, catering to the needs of both consumers and retailers in an increasingly dynamic market.
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