Retail leasing soared to 5-year high in the first half of 2024

Retail leasing between January and June 2024 witnessed 3.1 million sq. ft. across eight cities compared to the last 5-year H1 period. The influx of investment-grade mall supply will influence primary leasing trends in the coming quarters, while leading malls across key cities will continue to witness strong demand for secondary spaces. The fashion and apparel products categories continue to exert strong demand. In the first half of 2024, the share of this segment in overall retail leasing remained at 39%.

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In the first half of 2024, India’s retail sector has seen substantial growth, driven by increasing interest from foreign and luxury brands. Retail leasing reached a five-year high with 3.1 million sq. ft. leased across eight cities. On an annual basis, retail leasing witnessed a growth of 7% Y-o-Y in H1 2024, according to a report ‘India Retail Figures H1 2024’, by CBRE South Asia Pvt. Ltd. (India’s leading real estate consulting firm)

Notable new entrants include Maison Margiela and Time Vallée, alongside expansions by Swiss watchmaker Breitling and American fashion brand Michael Kors, in Chennai and Pune, respectively. Japanese brands Daiso Japan and ILEM Japan also opened stores in Chennai, while Charles Tyrwhitt and Franck Provost debuted in Mumbai and Bengaluru.

The demand for fashion and apparel remains robust, particularly for mid-range, value fashion, and athleisure, which together hold about 39% of the market share. The entertainment sector, with a 13% share, and homeware and department stores at 11% also contribute significantly to leasing activity.

Tier-II cities, including Chandigarh, Jaipur, Lucknow, Indore, and Kochi, collectively absorbed 0.4 million sq. ft. of retail space, with Indore and Kochi leading, capturing 56% of this total. Lucknow and Chandigarh followed with 17% each.

In tier-I cities, around 0.5 million sq. ft. of new retail space was added. 

Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India stated, “Steady retail leasing activity was witnessed in Q2 2024 on a quarterly basis. However, the ongoing introduction of quality supply is expected to continue stimulating an uptick in overall space absorption in the coming quarters. A growing number of direct-to-consumer (D2C) brands are recognising the importance of establishing a physical presence to complement their online operations. Developers are closely monitoring these brands with robust online customer bases and exploring opportunities to integrate them into physical retail formats.”    )

CBRE anticipates further growth with several investment-grade malls expected to open in Bengaluru, Hyderabad, Mumbai, and other cities, potentially adding 3-4 million sq. ft. of new space. The ongoing leasing activity is expected to continue, driven by demand for high-quality malls and strategically located properties. As vacancy rates in key malls in tier-I cities are low, the influx of new investment-grade supply will likely shape future leasing trends.