India’s Retail Sector Experiences Record Leasing Growth

India’s retail sector is witnessing an impressive expansion, fuelled by strong macroeconomic factors such as rapid urbanization, rising incomes, and changing consumer behaviours. The latest RELEAP report by ANAROCK Retail highlights a significant surge in leasing activity, with demand consistently outstripping supply for the third consecutive year, signalling a thriving market.

In 2024, over 6.5 million square feet of organized retail space was leased across major cities, significantly exceeding the supply of new retail stock. This strong demand has contributed to a sharp drop in vacancy rates across malls, now standing at just 7.8%, a notable decrease from 15.5% in 2021. The lower vacancy rates have also led to an increase in rental values, especially in prime retail locations.

Retail stores with area of 2000 to 5000 sqft are in demand

Retailers are increasingly opting for larger spaces to meet the growing demand for diverse shopping experiences. The report reveals that stores ranging from 2,000 to 5,000 square feet are now the most popular, accounting for the majority of leasing activity. Smaller spaces, between 1,000 and 2,500 square feet, are also seeing higher demand due to limited availability in sought-after malls. This shift toward larger retail footprints is driven by the growing need to offer more immersive shopping environments that integrate entertainment, dining, and leisure options alongside traditional retail.

In terms of sector performance, the Beauty & Personal Care and Departmental Store categories have seen an 11% growth in leasing activity in the latter half of 2024. Apparel & Accessories continue to dominate the market, making up 40% of all leasing transactions. The report also shows that vacancy rates in high-demand malls have continued to decline, with top-tier properties now operating at nearly full capacity.

Looking to the future, significant retail space is set to enter the market between 2024 and 2028, especially in NCR, MMR, and Hyderabad, which together will account for nearly 78% of the total upcoming supply. Major mall developments, including World Mark in Aero city (30 lakh sq ft) and Ramsons Trends Square Mall in Bangalore (10 lakh sq ft), are expected to meet the increasing demand for organized retail spaces.

As malls evolve into multi-functional destinations, the demand for larger, high-quality spaces is expected to keep rising. The sector’s transformation is creating a dynamic retail landscape that offers consumers a complete, experiential shopping journey, blending retail with entertainment and dining.

Anuj Kejriwal, CEO & MD of ANAROCK Retail, highlighted, “The retail space leasing momentum is expected to maintain its pace, particularly in NCR, MMR, and Hyderabad, where significant new supply is in the pipeline. Rental values across malls and high streets will continue to rise as demand outpaces available stock.”

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