A Resurgent Retail Landscape
In the first half of 2026, India's retail sector saw a significant jump in leasing activity, defying global economic pressures. According to reports from real estate consultancies, gross leasing across top cities rose substantially, marking the strongest
half-yearly performance in four years. One report from CBRE noted a 20% year-on-year increase, translating to approximately 3.9 million square feet of retail space being leased. Another from JLL highlighted a 10.5% rise to 6.27 million square feet in the same period. While the exact figures vary between reports, the trend is clear: retailers are confidently signing leases and opening new doors, indicating a strong belief in the Indian consumer story.
Fashion and Food Lead the Charge
The driving force behind this expansion spree is primarily the fashion and apparel sector, which accounted for around 40% of the total leasing activity. This includes everything from department stores to mid-range fashion labels and athleisure brands. Following closely is the food and beverage (F&B) sector, contributing about 14% of the leasing volume. The entertainment category, including multiplexes and family fun zones, also played a significant role with a 9% share. This mix shows a clear strategy from mall developers and brands to create comprehensive 'experiential' destinations where consumers come not just to shop, but to dine and be entertained.
The Strategic Push into Tier-II Cities
While major metropolitan areas like Mumbai, Delhi-NCR, and Bengaluru remain the anchors of retail demand, accounting for over 75% of leasing volume, the real story is the strategic push into new territories. Brands are aggressively expanding into Tier-II cities like Jaipur, Kochi, and Chandigarh. In these emerging markets, fashion and apparel retailers are even more dominant, sometimes accounting for nearly 70% of leasing activity. This shift is fueled by rising disposable incomes, increased digital exposure creating brand awareness, and significant infrastructure development in these cities. For retailers, these markets represent untapped potential with lower operational costs compared to the saturated metros.
Domestic Brands and D2C Go Physical
Another crucial layer to this story is who is doing the expanding. Domestic retailers are the primary engine, driving more than 70% of the leasing activity. This highlights the strength and ambition of homegrown brands. Simultaneously, a fascinating trend is the offline expansion of direct-to-consumer (D2C) brands. Having built their presence online, these companies are now opening physical stores to enhance customer experience, build trust, and create an omnichannel presence. D2C brands accounted for a significant 28% of the overall leasing, showing that the future of retail is a blend of digital and physical storefronts.
A Landlord's Market Amidst Supply Crunch
This high demand is meeting a constrained supply. The first half of 2026 saw very little new Grade-A mall supply become operational; some reports even noted two consecutive quarters of zero new supply. This mismatch has created a 'landlord's market' in prime locations, with vacancy rates dropping and rents firming up. Retailers are struggling to find quality spaces, pushing them to consider alternative formats and locations. However, a robust pipeline of nearly 46 million square feet of new mall space is expected to be delivered by 2030, which should help accommodate the long-term expansion plans of brands.
