Retail real estate sector to surpass 7.5 million sq ft in annual leasing activity
24 December 2025, Mumbai
India’s retail real estate sector has reached a defining milestone, with annual leasing activity projected to surpass 7.5 million sq ft. This post-pandemic high represents a structural shift in the apparel industry, where international ‘fast-glam’ brands and domestic ethnic-wear giants are aggressively securing prime floor space. While e-commerce remains a powerhouse, the physical storefront has been reinvented as a high-conversion brand temple. This ‘physical-first’ strategy is particularly evident in Tier-I cities, where Grade-A mall vacancies have plummeted to sub-8 per cent levels, driving a rental appreciation of nearly 12 per cent Y-o-Y.
Fashion hubs drive the Grade-A gold rush
The current leasing boom is fundamentally a fashion-led phenomenon. Apparel and lifestyle brands accounted for over 45 per cent of total absorption this year. Major international players like Uniqlo and H&M are moving beyond flagship metros into high-growth corridors like Pune and Hyderabad, while domestic behemoths such as Reliance Retail and Trent are fueling a ‘mega-format’ trend. These 20,000+ sq ft stores are designed to offer ‘retail-tainment,’ blending digital kiosks with sensory fabric lounges. Real estate analysts note, for every dollar spent on digital ads, brands are now reallocating a significant portion toward high-visibility physical footprints to combat online customer acquisition costs.
Tier-II expansion and the challenge of premium supply
The roadmap for 2026 suggests a supply-side crunch as the primary hurdle. With demand outstripping the delivery of new premium malls, retailers are pivoting to high-street ‘boutique’ clusters and revitalized heritage zones. This has catalyzed a retail revolution in Tier-II cities like Chandigarh and Kochi, which saw a 25 per cent growth in leasing volume this quarter alone. ‘The challenge isn't the appetite for fashion; it’s the availability of quality shelves,’ says a leading mall developer. As brands prepare for the 2026 fiscal cycle, the focus is shifting toward ‘pre-commitment\’ leasing in upcoming sustainable, LEED-certified retail parks to align with global ESG mandates.
Get in Touch! 
