Retail leasing slips 6% to 2.24 mn sq ft across top 8 cities in Q2 2025: C&W

Hyderabad led retail leasing in Q2 2025 with 0.76 mn sq ft, followed by Mumbai at 0.52 mn sq ft and Delhi-NCR at 0.3 mn sq ft, the C&W report said

Around 2.24 million sq ft of retail space was leased across malls and high streets in India’s top eight cities during April–June 2025, reflecting a 6% year-on-year dip from 2.39 million sq ft in the same period last year, according to Cushman & Wakefield’s Q2 2025 Retail Market Beat report.

Around 2.24 million sq ft of retail space was leased across malls and high streets in India’s top eight cities during April–June 2025, a report by C&W has said (Photo for representational purposes only) (Pixabay)

The report noted that no new mall supply was added in Q2, while Grade A mall completions for H1 2025 stood at 1.3 million sq ft. Consequently, mall vacancy levels declined by around 77 basis points to 8.16% in Q2 2025, contributing to the overall drop in available space.

The figure also reflects a 5.4% drop compared to the previous quarter but remains consistent with the average leasing volume seen over the past four quarters, it said. Despite the quarterly dip, H1 2025 leasing volumes stood at 4.61 million sq ft, up 17% year-on-year, signaling strong retailer confidence amid steady consumer demand, it said.

Among cities, Hyderabad (0.76 mn sq ft), Mumbai (0.52 mn sq ft), and Delhi-NCR (0.3 mn sq ft) led the market, together accounting for over 70% of total leasing activity in Q2. They were followed by Pune (0.23 mn sq ft), Bengaluru (0.18 mn sq ft), Chennai (0.16 mn sq ft), Kolkata (0.05 mn sq ft), and Ahmedabad (0.04 mn sq ft).

In terms of growth, Mumbai and Pune saw leasing volumes rise by 1.6x and 1.5x, respectively, compared to Q2 2024, highlighting strong traction in western markets.

Malls accounted for 45% of leasing volume in Q2 (1.01 mn sq ft), a 42% q-o-q rise, and the highest mall share in the past five quarters, signaling growing interest in experience-driven, structured retail formats.

High streets witnessed a 26% q-o-q dip in retail leasing

High streets witnessed a 26% q-o-q decline, although they continued to dominate with 55% (1.23 mn sq ft) of leasing activity, underscoring the persistent undersupply of quality mall stock across cities.

Having said that, rentals in key high streets such as Khan Market and Connaught Place have not been impacted. The market continues to remain tight, primarily because mall vacancies are extremely low across cities. With limited Grade-A mall supply, retailers have little choice but to explore and commit to high street locations, which keeps the rental levels up in these consistently high-performing high streets, the CW analysis said.

Mall completions

No new mall supply was added in Q2, and Grade A mall completions for H1 2025 stood at 1.3 million square feet. As a result, mall vacancy levels dropped by around 77 basis points to 8.16% in Q2 2025, with premium Grade-A+ or superior malls witnessing even tighter vacancies at just 4.28%, the report noted.

Average main street rents remained stable on a q-o-q basis, while recording a healthy 6% y-o-y rise, it said.

“India’s retail sector continues to demonstrate strong momentum, with consistent growth in leasing volumes pointing to a healthy underlying demand. High streets remain the dominant driver of activity, while vacancy levels in Grade-A malls have tightened further, reflecting a clear and growing preference for high-quality and experience-led retail spaces. Looking ahead, we remain optimistic,” said Suvishesh Valsan, Head, Research India at Cushman & Wakefield.

Nearly 4 mn sq ft of new Grade A supply is expected in the second half of the year, particularly across key metros such as Mumbai, Delhi-NCR, and Hyderabad. The upcoming supply is expected across Delhi-NCR: West Delhi and Gurgaon; Hyderabad: North-West Hyderabad; Mumbai: Eastern suburbs and South Mumbai, it said.

There was a growing interest from international brands and the sharp uptick in leasing across categories like wellness and grocery, both of which signal a broader shift in India’s consumption landscape. As new supply comes online, we expect leasing momentum to further accelerate, particularly in top-tier urban markets, he said.

Food and beverage and fashion brands take up 50% share of retail space

In terms of category demand, food and beverage and fashion remained the primary space takers across both mall and high street formats in Q2 2025, accounting for more than 50% share of leasing activity (1.17 mn sq ft), reflecting consumers’ growing preference for lifestyle-driven retail and experiential offerings.

The wellness category also posted strong growth, capturing 8% share of the leasing volume at 0.18 mn sq ft - a 2x y-o-y increase and a marginal 13% q-o-q dip.

Meanwhile, supermarkets and hypermarkets clocked 3x q-o-q growth and 10% y-o-y increase in leasing volume reaching 0.18 mn sq ft, reflecting robust demand for daily essentials and convenience-driven retail formats, the report noted.