In 2024, over 6.5 million square feet of organized retail space was leased across major cities, as against only 1.1 million sq. ft of new completions, the report said.
To be sure, the covid-19 pandemic significantly disrupted new retail development supply, with suspended or partially operational activities. For example, in 2019, the market saw net completion and absorption of 8.5 million square feet of mall space.
While prominent malls are experiencing a dip in vacancy, top-tier malls are operating at near-full capacity, the report added.
The demand-supply imbalance has brought mall vacancy rates—the space ready to be occupied in a mall—down to 7.8%, subsequently increasing rental values, which, the report said, are expected to continue rising until sufficient high-quality supply is added. In 2019, the vacancy rate was 14%, which fell to 9% in 2023.
However, a significant amount of supply is expected across the top seven cities in the next four years, said Anuj Kejriwal, chief executive and managing director, Anarock Retail.
“A significant upcoming supply is planned in the National Capital Region, Mumbai Metropolitan Region, and Hyderabad, accounting for nearly 78% of the total supply. Rental values across malls and high streets are on the rise and are expected to continue their upward climb until new good quality supply is added,” he said.
The demand was led by the apparel and accessories segment, accounting for 40% of leasing transactions in the second half of 2024. Beauty and personal care and departmental stores also witnessed an 11% surge in leasing transactions in the period.
Besides, retailers are increasingly preferring large store sizes, between 1,000 and 2,500 sq. ft, due to rising demand, limited space availability, and the need for productivity optimization, making these spaces highly sought after for expansion, the report added.
Existing brands aside, more foreign brands have also entered the country.
In February, clothing company Inditex opened its maiden Bershka store in Mumbai. Brands such as Nars (cosmetics), Gucci Beauty, Prada Beauty, and YSL Beauty opened stores in the country in 2024.
Even direct-to-consumer brands are expanding their offline presence.
As a result, the tenant mix within Grade A malls has evolved.
“The influx of new-age brands, particularly in categories like direct-to-consumer (D2C), experiential retail, and food and beverage, indicates a shift towards catering to changing consumer preferences. This shift also reflects a strategic move by mall operators to attract younger demographics and differentiate themselves from e-commerce platforms,” Kejriwal said.
Meanwhile, mall developers said strong consumer demand, rising discretionary spending, and the growing preference for organized retail destinations were driving leasing activity.
“In 2023 alone, we leased over 2 million sq. ft of retail space, and at the end of Q3FY25, our trading occupancy across the portfolio stands at almost 97%., said Dalip Sehgal, executive director and CEO, Nexus Select Trust, which operates 18 premium mall in 14 cities in India.
“More brands are keen to open stores in malls because they offer higher footfalls, stronger brand visibility, and an experiential shopping environment—factors that are critical in today’s omnichannel retail strategy. At Nexus Malls, we witnessed a 15-20% increase in leasing demand from brands across categories such as fashion, athleisure, food and beverage, and entertainment,” he added.
While overall consumption has shown mixed patterns, consumers at the premium end continue to spend. “Notably, premium international brands and homegrown D2C players are aggressively expanding within malls,” said Sehgal.
Anarock mapped data in the top seven cities and included only Grade A malls sized more than 200,000 sq. ft, excluding standalone anchors.
