The Indian retail sector continues to witness robust growth, driven by macroeconomic factors of rapid urbanization, rising affluence, and evolving consumer preferences.

According to the latest RELEAP report by ANAROCK Retail, the sector has seen significant leasing momentum, with demand consistently outpacing supply for the third consecutive year.

Key Highlights:

Leasing Momentum: In 2024, over 6.5 million sq ft of organized retail space were leased across major cities, surpassing the supply of new stock significantly. This has led to a reduction in vacancy levels in malls to 7.8%, causing rental values to increase.

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Store Size Preferences: Retailers have shifted their preferences to larger stores, with spaces admeasuring between 2000-5000 sq ft recording the highest share of transactions. Stores ranging from 1,000 to 2,500 sq ft are seeing increased demand due to limited availability in malls.

Category Trends: The Beauty & Personal Care and Departmental Store segments witnessed an 11% surge in the second half of 2024. Apparel & Accessories continue to dominate, accounting for 40% of leasing transactions in H2 2024.

Vacancy Rates: Vacancy in prominent malls continues to decline, with superior malls operating to nearly 100% capacity. Vacancy rates have dropped from 15.5% in 2021 to 7.8% in 2024.

Upcoming Supply (2024-2028) & Rental Trends 

Note: Data for top 7 cities only; includes only Grade A malls sized >2 lakh sq.ft., excludes standalone anchors

Commenting on the same, Anuj Kejriwal, CEO & MD, ANAROCK Retail, said, “Significant upcoming supply is planned in NCR, MMR, and Hyderabad, accounting for nearly 78% of the total supply. Notable mall developments include World Mark, Aerocity with 30 lakh sq ft, Ramsons Trends Square Mall, Bangalore with 10 lakh sq ft, and Orion Mall, in Kokapet, Hyderabad – also with 10 lakh sq ft. Rental values across malls and highstreets are on the rise and are expected to continue their upward climb until new good quality supply is added.”

Key high street locations include MG Road, Bangalore (lease rates at Rs 250-350/sq ft), South Extension, Delhi (lease rates at Rs 800-1000/sq ft), and Linking Road, Mumbai (lease rates at Rs 800-1000/sq ft).

Major tenants based on total area leased include Lifestyle International (15,69,760 sq ft), Reliance Projects & Property Management Services (15,02,823 sq ft), and PVR Limited (11,14,427 sq ft).

Commenting on the Anarock report, Harinder Singh Hora, Founder Chairman, Reach Group, said, “The way retailers approach physical spaces is changing fast, and NCR is at the forefront of this shift. It’s no longer just about having a presence; it’s about creating an experience. With leasing activity outpacing supply, brands are moving towards larger formats that allow for better customer engagement and experiential retail. Besides, the rising demand has pushed vacancy rates lower and rentals higher, signalling strong confidence in well-located retail hubs. As urbanization accelerates and consumer aspirations evolve, we believe that the key to success lies in curating retail destinations that offer not just shopping, but a complete lifestyle experience.”

The influx of new F&B brands, fashion labels, and lifestyle retailers, both global and homegrown, has fueled the demand for Grade A retail spaces. The Anarock report trends highlight that 2024 witnessed the leasing transaction of over 6.5 million sq ft of organized retail space across the top 7 cities and significantly surpassed the new supply inventory.

“This shows the strengthening interest of brands and investors in India’s evolving retail space landscape. The trend also highlights how retailers and brands are not only looking for brick-and-mortar stores but are inclined towards larger and more engaging spaces offering immersive brand experiences. This trend highlights the need for interactive zones, flagship stores, and experiential retail centers. As a result, we are witnessing high-street malls and premium retail hubs incorporating shopping, dining, gaming areas, sky clubs, and lounges offering more comprehensive destinations. With increased demand for quality retail spaces and the ongoing momentum of leasing tractions, we anticipate that the retail space sector will record new growth numbers in 2025,” said Sandeep Chhillar, Founder and Chairman, Landmark Group.

Arjun Gehlot, Director, Ambience Group, said, “In NCR, particularly Gurugram’s retail market is evolving fast, and the numbers tell the story. This isn’t just about space; it’s about experience. Retailers today want prime locations where they can create immersive brand experiences, which is why we’re seeing a shift to larger store formats. Besides, the demand for premium retail destinations is driven by the rise of global and homegrown brands in fashion, beauty, and lifestyle.”

Pankaj Jain, Chairman and CMD, SPJ Group, said, “The demand for premium retail spaces in NCR is rising, and Anarock’s report justifies this market trend. Today’s consumers are looking for experiences that stay for a lifetime, driving demand for well-integrated experiential retail hubs. With new and global brands making their way into the market, we are seeing a massive shift towards high-street malls that provide experiential shopping and hangout formats. With the rise in population density in urban areas the gap of supply is real. This presents an opportunity for developers to innovate retail spaces and fill the gap. Gurugram’s retail landscape has evolved over the years and is now aligning with the changing lifestyle needs of consumers, making retail a comprehensive experience.”