Indian Retail Sector Sees Strong Leasing Momentum; Vacancy Rates Drop To 7.8%

The Indian retail sector continues to grow rapidly, driven by urbanization, rising affluence, and changing consumer preferences.

According to the latest RELEAP report by ANAROCK Retail, leasing demand has outpaced supply for the third consecutive year.

Leasing Momentum

In 2024, over 6.5 million sq ft of organized retail space were leased across major cities, exceeding the supply of new stock.

As a result, mall vacancy levels have dropped to 7.8%, pushing rental values higher.

Store Size Preferences

Retailers now prefer larger stores. Spaces between 2,000–5,000 sq ft recorded the highest share of transactions.

Meanwhile, stores ranging from 1,000 to 2,500 sq ft are in high demand due to limited availability in malls.

Category Trends

The Beauty & Personal Care and Departmental Store segments saw an 11% rise in the second half of 2024. Apparel & Accessories led the market, accounting for 40% of leasing transactions in H2 2024.

Declining Vacancy Rates

Vacancy rates in key malls have fallen from 15.5% in 2021 to 7.8% in 2024. Top-tier malls are now operating at nearly full capacity.

Upcoming Supply

Anuj Kejriwal, CEO & MD, ANAROCK Retail, said, “Significant upcoming supply is planned in NCR, MMR, and Hyderabad, accounting for 78% of the total supply.”

Major projects include World Mark, Aerocity (30 lakh sq ft), Ramsons Trends Square Mall, Bangalore (10 lakh sq ft), and Orion Mall, Hyderabad (10 lakh sq ft).

Rising Rental Values

Lease rates at high-street locations have increased. MG Road, Bangalore, ranges from ₹250–350/sq ft. South Extension, Delhi, and Linking Road, Mumbai, range from ₹800–1,000/sq ft.

Major Tenants

Leading tenants by 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).

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