‘Retail Sector Records 2.4 MSF of Leasing Volume in Q1 2025, 55% Increase YOY’

Gurugram, April 8, 2025: Real estate services firm Cushman & Wakefield has released its Q1-2025 Retail Market Beat Report, highlighting the continued strength of India’s retail sector. According to the report, leasing activity crossed 2.4 million square feet (MSF) in the first quarter of the year across the top 8 cities. This is a robust 55 per cent year-on-year (YoY) growth and a 6 per cent quarter-on-quarter (QoQ) increase. Both malls and mainstreets contributed to this growth owing to the commencement of new supply in emerging locations.

The report highlighted that Hyderabad was the frontrunner in terms of leasing volume, contributing 34 per cent (0.8 MSF) of the total leasing activity, with a staggering 106 per cent YoY growth. Besides the prominent high streets such as HITEC City and Jubilee Hills, certain emerging high streets such as Kothapet, Secunderabad, Boduppal and Kompally also contributed immensely to leasing.

Mumbai followed closely, accounting for 24 per cent (0.58 MSF) of the total leasing volume and recorded a 259 per cent YoY growth, largely owing to the emergence of new high street locations and the addition of new mall supply. Delhi NCR also saw significant traction, capturing 17 per cent (0.41 MSF) of the total leasing share, supported by strong demand in key submarkets and a 57 per cent YoY increase. Retail activity here was largely led by premium brands, dining and entertainment concepts, reinforcing its status as a high consumption market.

Bengaluru and Chennai, meanwhile, exhibited stable YoY growth numbers with 0.19 MSF and 0.17 MSF of leasing respectively.

The report also observed that Mainstreets continued their domination of the leasing landscape, accounting for 2/3 rd of the total leasing volume at 1.69 MSF, with premium high street locations in Delhi NCR, Mumbai, Bengaluru and Hyderabad witnessing heightened interest from retailers. Mall leasing, meanwhile, stood at 0.72 MSF for the quarter. Notably, Mumbai witnessed the highest lease share of 44 per cent in Malls at 0.31 MSF. This was triggered by two Grade A malls becoming operational in the city, adding 1.3 MSF to India’s Grade A mall inventory, now standing at ~63 MSF.

In terms of category demand, the report observed that Entertainment and Fashion were the biggest space consumers in malls, capturing a 34 per cent leasing share at 0.35 MSF, whereas Fashion and F&B were most prevalent in main streets across the top-8 cities with 0.80 MSF of leasing volume.

Additionally, foreign brands accounted for around 8 per cent of the transaction volumes to partake in India’s growing consumption story, while domestic brands drove over 92 per cent of leasing activity, highlighting the strength of the homegrown retail expansion.

Looking ahead, mall leasing activity is expected to further pick up with close to 6.4 MSF of new mall supply expected across the top 8 cities by the end of 2025, 58 per cent of which will be Grade A+.

Saurabh Shatdal, Managing Director, Capital Markets and Head-Retail, India said, “India’s retail sector is evolving at a dynamic pace, and the strong leasing activity in Q1 2025 reflects growing market confidence. We’re seeing a clear trend where retail demand is following new, quality supply—cities with fresh developments are witnessing heightened transaction volumes. Beyond traditional malls, new retail hubs are emerging within mixed-use developments, including office and residential complexes. With close to 7 million square feet of new supply expected over the next three quarters—largely comprising premium Grade A malls—we expect this positive momentum to continue well into the year.”

Hyderabad’s retail leasing momentum remained strong in Q1 2025, witnessing a 2 per cent QoQ increase and nearly doubling YoY. High streets continued to dominate, accounting for over 90 per cent of leasing activity. Suburban locations led the market with a 61 per cent share in leasing, led by key areas such as Kothapet, Nallagandla, and Kompally, while core locations like Jubilee Hills contributed 24 per cent to the leasing volume. Homegrown retail brands accounted for 98 per cent of leasing volume, underscoring their aggressive expansion in the city. Among retail categories, fashion accounted for a 27 per cent share, followed by wellness (19 per cent) and F& B (16 per cent), underscoring the rising demand for lifestyle, health-conscious brands, and experiential dining options.

No new Grade A retail mall supply was recorded in Hyderabad in the first quarter; however, the city is set to record retail supply of 2.8 MSF by 2027, with 1.7 MSF slated this year. Areas such as Kompally and Shamshabad will see fresh retail developments, catering to rising demand in these underserved locations. High Street rentals increased by up to 2 per cent YoY on average, driven primarily by Jubilee Hills. Meanwhile, mall rentals remained steady.

Mumbai’s retail real estate market saw witnessed leasing volumes rising 41 per cent QoQ to 0.58 MSF. The surge was led by malls, which contributed 55 per cent of total leasing (0.32 MSF), aided by fresh occupancies in newly operational properties like Oberoi Sky City in Borivali and Aurum Square in Ghansoli. Superior grade malls remained the preferred choice, accounting for 90 per cent of mall leasing, at 0.29 MSF. Main street leasing also rose 30 per cent QoQ to 0.26 msf, with Andheri and Mulund witnessing heightened traction. In terms of segments, fashion brands led the charge in total leasing volumes, capturing a 39 per cent share, followed by CDIT and F& B at 15 per cent each.

The influx of 1.3 MSF in new supply pushed overall mall vacancy up to 8.03 per cent, though this is expected to stabilize as new tenants become operational. Rentals reflected market confidence, with top main streets like Colaba Causeway and Kemps Corner seeing more than 10 per cent YoY growth, while mall rentals rose 2–3 per cent QoQ.

Bengaluru’s retail leasing remained stable at 0.19 MSF in Q1 2025, marking a marginal 2 per cent YoY increase. Main streets accounted for 75 per cent of leasing at 0.14 MSF, while mall leasing stood at around 0.05 MSF. Fashion segment dominated retail leasing during the quarter, contributing over 40 per cent of the total lease volumes, followed by F& B segment with a 21 per cent share. With no new mall supply in the first quarter and the Grade A mall inventory unchanged at 11 MSF during the quarter, headline vacancy in Grade A malls fell by 60 bps at 6.8 per cent during the quarter. Average vacancy rate in superior malls (Grade A+) remained tight at around 3 per cent, highlighting the robust demand but inadequate supply of premium mall space. Quoted mall rentals remained unchanged on a QoQ basis. Rental appreciation of 1-2 per cent was recorded on a QoQ basis across main streets such as Indiranagar 100 Feet Road, Koaramangala 80 Feet Road, HSR Layout 27 th Main and Jayanagar 4 th Block, 11th Main on the back of sustained space demand.

Chennai’s retail sector recorded 0.17 million sq. ft. of leasing volume in Q1 2025, with main streets dominating at 0.16 MSF, driving over 90 per cent of the total activity. Northwest (38 per cent) and Off-CBD (37 per cent) submarkets led demand, with hotspots like Anna Nagar, T. Nagar, Perambur, Arcot Road, and Aminjikarai attracting retailers. The fashion segment accounted for 37 per cent of Main Street leasing, nearly a 4x increase YoY, while accessories & lifestyle followed at 32 per cent, showing a notable rise from last quarter. Mall leasing remained limited at just 0.01 MSF, constrained by tight availability of Grade A space. Mall vacancy declined 14 bps QoQ to 14.13 per cent in Q1. Rentals in key main streets like Usman Road North, Usman Road South, Adyar Main Road, Purasawalkam High Road, and Pondy Bazaar rose 3-4 per cent QoQ, fueled by sustained demand from national brands, a trend expected to continue.

Retail leasing in Delhi NCR reached 0.41 MSF in Q1 2025, growing 1.5x QoQ and 2.2x YoY, driven by main streets, which accounted for 61 per cent of leasing. Gurugram had a 52 per cent share in quarterly leasing, followed by Noida (40 per cent) and Delhi NCT (8 per cent).

While main street leasing tripled YoY, mall leasing declined by 12 per cent YoY. The Fashion and F&B segments led space take-up with 24 per cent share each, followed by Entertainment (18 per cent) and Department Stores (11 per cent), with F&B leasing nearly doubling YoY. With no new mall completions in Q1, mall vacancy dropped by 38 bps in the quarter and 3.5 percentage points YoY to 12.1 per cent, with superior malls maintaining tight vacancy (~3 per cent) while non-superior malls saw ~20 per cent vacancy. Main street rentals surged across key locations, with Galleria Market (Gurugram) witnessing a 20 per cent growth YoY, Connaught Place (14 per cent), Khan Market (7 per cent), and Sector 29, Gurugram (12-15 per cent), while South Extension and Rajouri Garden remained stable.

Retail leasing activity in Pune rose sharply in Q1 2025 to 0.17 MSF, recording a nearly 60 per cent increase over the previous quarter. Malls led the momentum, contributing 66 per cent of the overall leasing (~0.11 msf)—a near 2X growth QoQ. Nearly 50 per cent of the mall leasing activity was concentrated in suburban precincts such as Solapur Road, Hadapsar, and Nagar Road. Fashion segment dominated leasing in the first quarter with a 25 per cent share, followed by entertainment at 17 per cent and departmental stores at 15 per cent.

Meanwhile, Main Street leasing hit 57,630 sq ft —up 17 per cent QoQ and 22 per cent YoY with peripheral locations capturing a 63 per cent share with all the leasing activity occurring in precincts such as Akurdi and Pimpri-Chinchwad. The entertainment category dominated with a 56 per cent share, followed by the wellness category with 9 per cent and the footwear category with 4 per cent. Mall vacancy held steady at 7.1 per cent, with no new supply added during the quarter. Superior Grade malls maintained tight vacancies in the 5–6 per cent range, reflecting sustained demand for quality space. Main street rentals jumped 6–7 per cent QoQ, with prominent appreciation in FC Road, Aundh, Bund Garden, and Baner-Balewadi. Meanwhile, mall rentals remained largely stable, with a few Superior Grade malls witnessing 8–9 per cent growth due to consistent traction.

Ahmedabad recorded retail leasing volume of ~50,000 sq ft, a 36 per cent drop as compared to the same period last year. Main streets led with a dominant 87 per cent share in leasing while the remaining was contributed by malls. Fashion (53 per cent) and lifestyle and accessories brands (39 per cent) led demand in the first quarter in terms of segments.

Prominent main streets such as Sindhu Bhavan Road, Nikol, and Iskcon-Ambli Road contributed to ~6 per cent of the overall mainstreet leasing. Mainstreet retail between Sarkhej to Thaltej locations (SG Highway) have shown appreciation of 5-6 per cent on QoQ basis and 9-10 per cent on YoY basis.

Retail leasing in Kolkata remained steady in Q1 2025 at approximately 37,500 sq. ft., witnessing a marginal 4 per cent YoY dip. High streets remained the epicentre of activity, accounting for over 90 per cent of leasing amid limited availability in Grade A malls. Prime CBD stretches like Theatre Road, Elgin Road, and Chowringhee Road attracted strong demand from fashion and F&B players, while locations such as Alipore and Chinar Park also saw healthy traction. In terms of overall leasing transactions, fashion dominated with over 50 per cent share, followed by F&B (30 per cent) and accessories & lifestyle brands (11 per cent). No new mall supply was added during the quarter, though upcoming completions in Joka and Alipore are expected to add 1.35 MSF of space later in the year. Grade A mall vacancy remained extremely tight at 2.6 per cent, reflecting sustained demand for quality retail space. Rentals across malls and main streets remained stable, with minor upticks of 1–2 per cent in select suburban high streets like Gariahat and Kankurgachi.