India's Retail Revolution: Leasing Activity Set to Soar by 2025

India's retail real estate market anticipates record leasing activity by 2025, with projections nearing 9 MSF—the highest since the pandemic. This surge is driven by new Grade A retail spaces and a resurgence in mall absorption, as outlined by Cushman & Wakefield.

The Indian retail real estate sector is on the brink of a significant upswing, with leasing activities projected to achieve an unprecedented 9 million square feet by 2025, according to Cushman & Wakefield's latest report. This would mark the highest annual absorption rate since the pandemic outbreak.

The report identifies the revival in mall-centric leasing as a pivotal factor propelling this growth. The completion of new Grade A retail assets in key markets, especially in the year's final quarter, has played a substantial role in this resurgence. This development comes amid a consistent demand for high-street locations, where mall space availability is facilitating expansion plans long hindered by previous supply shortages. Key sectors driving this demand include fashion, food and beverage, and entertainment.

The supply landscape has seen considerable enhancement, with expected new mall supply for 2025 calculated at approximately 4.3 million square feet, a stark rise from the subdued 0.9 million square feet in 2024. Though this increase does not completely alleviate the accumulated shortfall, it has significantly eased pressure, enabling higher leasing volumes. Looking forward, Cushman & Wakefield forecasts continued strengthening of retail leasing demand into 2026, projecting a 10-11 million square feet absorption.

Upcoming supplies are pegged at around 5.9 million square feet, predominantly featuring Grade A+ malls in major cities like Bengaluru, Chennai, Mumbai, and Hyderabad. This expansion will offer retailers diverse choices and support sustained growth. While market saturation could stabilize mall rentals, premium Grade A+ malls and prime high-street locations are expected to maintain robust rental trends. High demand for top-performing assets could continue to push rental benchmarks higher in the face of ongoing demand-supply disparities.

The report also notes an emerging trend of premiumisation within India's retail environment, underscoring the influence of global brand entries, strategic alliances, and the organized retail sector's measured expansion into select Tier II cities.

(With inputs from agencies.)