India Retail Leasing Hits 2.4 MSF in Q2 2026: Report

India's organised retail real estate market has delivered another quarter of solid growth, and what makes the number more impressive is the context in which it came: no new Grade A mall supply was added for the second consecutive quarter. A Cushman & Wakefield report released on 1 July 2026 shows that gross retail leasing across the top eight cities reached 2.4 million square feet in Q2 2026, up 23.2 per cent quarter-on-quarter and 17.6 per cent year-on-year, driven entirely by occupier demand rather than fresh space entering the market.

India retail leasing holds up despite tight supply

The cumulative picture for the first half of 2026 reinforces the trend. Total leasing in H1 2026 reached 4.35 million square feet, up 3.1 per cent from H1 2025. With no new Grade A mall completions in either Q1 or Q2, occupiers have been absorbing space in projects that were already built and partially leased, pushing vacancies tighter and firming up rentals across premium assets. The absence of new supply has not cooled demand; if anything, it has intensified competition for the best-located assets, which is showing up in rental levels and in the willingness of retailers to commit to spaces in established malls and high streets rather than waiting for new developments.

Which cities and categories are leading

Delhi NCR, Mumbai and Hyderabad together accounted for 64 per cent of Q2 leasing, with Delhi NCR contributing 0.67 million square feet, Mumbai 0.50 million square feet and Hyderabad 0.37 million square feet. On the category side, fashion led with a 28.2 per cent share of leasing activity, followed by food and beverage at 17.2 per cent. The fashion and F&B dominance reflects a broader shift in how malls are positioning themselves: experience-led retail anchored by dining and fashion draws footfall that purely transactional categories struggle to replicate, and landlords have been actively curating tenant mixes to lean into that dynamic.

What the supply picture means for the market

The consecutive quarters of zero Grade A supply additions point to a structural imbalance that is unlikely to resolve quickly. Large-format mall development in India has long faced challenges around land costs, approvals and project financing, and the pipeline of genuinely investment-grade retail space remains thin relative to the scale of demand. Cushman & Wakefield noted that space uptake remained strong in recently completed projects, which captures the pattern accurately: when quality supply does arrive, it leases up fast. The gradual addition of new supply combined with sustained consumption growth is expected to improve market availability over time and create fresh expansion opportunities for retailers, but the near-term picture remains one of constrained availability and pricing power firmly in landlords' hands.

The investment implication

For the commercial real estate investment market, the combination of rising leasing volumes, tighter vacancies and firmer rentals in a supply-constrained environment is precisely the dynamic that supports asset revaluations and justifies further capital allocation to retail. The Phoenix Mills FY26 numbers discussed earlier this week illustrated how a mature mall operator translates that operating environment into growing rental income. The Q2 leasing data from Cushman & Wakefield shows the demand conditions underpinning that story remain intact, and with the supply pipeline still thin, the structural tailwinds for India's premium retail real estate look set to hold through the second half of 2026.

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