The top seven cities recorded gross leasing of approximately 4.1 million sq. ft. of Grade A mall space in H1 2026, compared with only around 0.9 million sq. ft. of new completions. This means retailers leased almost 4.5 times the amount of Grade A space delivered during the period.

The demand-supply imbalance comes even as both leasing and new mall completions moderated from the exceptionally strong levels recorded in 2025. Leasing declined approximately 24% year-on-year in H1 2026, while new completions fell by around 57%.

Mall supply fails to keep pace with retailer demand

ANAROCK’s data shows that the mismatch between Grade A mall supply and leasing demand has been building over several years.

In 2023, the top seven cities added approximately 5.3 million sq. ft. of new Grade A retail supply against gross leasing of 6.5 million sq. ft. In 2024, new supply dropped sharply to just 1.1 million sq. ft., while leasing remained at around 6.5 million sq. ft.

The gap widened considerably in 2025. Although new mall supply recovered to approximately 5.2 million sq. ft., leasing surged to a record 13 million sq. ft.

The trend continued in H1 2026, when only 0.9 million sq. ft. of new Grade A mall space was completed against leasing of 4.1 million sq. ft.

Anuj Kejriwal, CEO – Retail and CEO – Europe, Middle East & Africa, ANAROCK Group, said the supply problem is cumulative and has been worsening over the years. According to him, consistent leasing demand has steadily absorbed available Grade A space even as new mall completions have fluctuated.

The result is a supply-constrained market where retailers are increasingly facing difficulty in securing suitable locations.

Delhi-NCR the only market with new Grade A mall supply

Delhi-NCR was the only market among the top seven cities to record new Grade A mall completions during H1 2026.

The region added approximately 0.9 million sq. ft. of new supply, while leasing stood at approximately 1.26 million sq. ft.

Mumbai, Hyderabad, Bengaluru, Pune, Chennai and Kolkata recorded leasing activity but virtually no new Grade A mall completions during the first half of the year.

This means retailers in these markets were largely competing for space within existing Grade A malls, further tightening the availability of quality retail locations.

Why is new mall development difficult?

ANAROCK said the shortage cannot simply be attributed to developers failing to respond to rising demand. Developing a successful Grade A mall is more complex than delivering several other forms of real estate.

Large-format malls require sizeable and contiguous land parcels in strategically located catchments. Developers also need to commit substantial upfront capital and undertake detailed consumer and catchment analysis.

Securing anchor tenants, obtaining approvals and completing construction can further lengthen the development cycle.

The availability of suitable land has become a particular constraint in established urban markets, while rising land prices can make projects more difficult to structure.

According to Kejriwal, approval timelines, financing conditions and construction schedules can also delay delivery. The sharp decline in new supply in 2024, when only 1.1 million sq. ft. of Grade A mall space was completed despite strong leasing demand, demonstrated how quickly the development pipeline can be disrupted.

The 57% year-on-year fall in new completions during H1 2026 further highlights that mall supply cannot be increased quickly in response to rising retailer demand.

Grade A mall vacancy falls to 6.7%

The tightening supply-demand equation is also reflected in vacancy levels.

Grade A mall vacancy across the top seven cities fell to 6.7% in H1 2026, the lowest level recorded since 2010, according to ANAROCK.

The post-pandemic vacancy rate had peaked at 15.5% in 2021. Before the pandemic, the highest Grade A mall vacancy was recorded in 2011 at 21.5%.

The contrast with lower-quality retail stock is significant. Grade B and C malls across major cities continue to report substantially higher vacancy levels, ranging from approximately 8% to as high as 35%.

The data suggests that India’s challenge is not a shortage of retail real estate in terms of total space. Instead, the market is short of well-located, professionally managed and institutionally owned Grade A and A+ malls capable of meeting the requirements of major national and international retailers.

Opportunity for developers and institutional investors

ANAROCK said the combination of low vacancy, strong retailer demand and the continued growth of experience-led consumption creates an opportunity for developers and institutional investors to increase investment in high-quality retail assets.

The opportunity is particularly significant in markets where Grade A mall vacancy has already fallen to near-record lows.

However, unless new supply increases meaningfully, retailers could face longer waiting periods for prime locations, rising occupancy costs and greater competition for established mall space.

The H1 2026 data therefore points to a structural shift in India’s organised retail real estate market: demand for quality mall space is increasingly outpacing the ability of developers to deliver new Grade A supply.

Also Read: India’s Retail Boom to Attract USD 3.5 Billion in Next 3 Years as Western Malls Crumble

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India’s Retail Boom: Key Statistics

India’s retail sector is one of the fastest-growing industries, contributing over 10% to the country’s gross domestic product (GDP) and employing around 8% of the workforce. The entry of multinational corporations, coupled with a rising middle class, has fueled a surge in retail developments. Nearly 60 new shopping malls, spanning 23.25 million sq. ft, are expected to become operational between 2023 and 2025. According to Kearney Research, India’s retail industry is projected to grow at 9% annually from 2019 to 2030, reaching $1.8 trillion by 2030.

Experience-Driven Stores: The New Retail Trend

Brands are increasingly prioritizing experience-driven stores, incorporating engaging sensory elements such as interactive displays, live demonstrations, and themed store designs to enhance customer engagement. Advanced technologies, including AI-powered recommendations, AR/VR try-ons, and smart displays, are further revolutionizing the shopping experience by seamlessly integrating digital and physical retail.

Industry Leaders Weigh In

Pankaj Jain, Chairman and CMD, SPJ Group, highlights the growing trend of premium retail spaces in key urban centers: “India’s retail sector is witnessing unprecedented growth, with regions like Delhi-NCR emerging as prime hubs for premium and experiential shopping. The demand for mixed-use retail spaces that blend shopping, dining, and entertainment is on the rise. At SPJ Group, we see this as an opportunity to create dynamic retail ecosystems that attract top-tier brands and offer consumers a holistic experience.”

Similarly, Harsh Gupta, CEO, Sundream Group, emphasizes the future of retail: “Retail spaces are evolving into seamless blends of shopping and leisure. Experience-driven stores are the future, and premium brands seek prime locations with high footfall and tech-enabled environments. At Anthurium Noida, we are redefining retail leasing by offering AI-ready infrastructure and a thriving commercial ecosystem.”

Ajendra Singh, Vice-President (Sales and Marketing), Spectrum@Metro, sheds light on how retail is now about storytelling and brand immersion: “Today’s retail is no longer just about products; it’s about storytelling and experiential engagement. Premium brands are elevating the shopping experience with interactive store formats. At Spectrum@Metro, we are curating next-generation retail destinations to create stronger brand connections and sustained consumer interest.”

The Future of Retail Spaces

The rise of premium retail spaces underscores a broader shift toward high-street retail and luxury malls, where technology and immersive experiences redefine consumer interactions. AI, AR/VR, and omnichannel strategies are becoming integral to modern retail, enabling brands to engage with customers beyond traditional sales models. Moving forward, the industry is set to adapt by embracing sustainability, digital innovation, and exclusivity, ensuring that premium retail spaces remain at the forefront of India’s shopping experience.

With the continued expansion of experience-driven retail, India’s shopping landscape is poised for a new era, where physical stores serve as more than just transaction points—they become hubs of engagement, brand storytelling, and customer loyalty.

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North India is expected to lead this expansion, accounting for 44% of the upcoming supply, with key cities such as Ludhiana, Jaipur, and Lucknow at the forefront. The South follows with a 30% share, led by cities like Coimbatore, Mallapuram, Thrissur, and Trivandrum. The eastern region, notably Guwahati, will contribute approximately 4.5 million square feet, while Western India is witnessing major developments in cities like Goa, Surat, and Ahmedabad.

Dr. Samantak Das, Chief Economist and Head of Research and REIS at JLL, noted that the average mall size in these cities is projected at 375,000 square feet, with four projects anticipated to exceed 1 million square feet. Most of these urban centers are located in state capitals or large cities, serving a broad consumer base that includes surrounding smaller towns, thereby creating opportunities for mid-scale and large-scale malls that enhance tenant mix and shopping experiences.

As confidence among retailers grows, many premium and bridge-to-luxury brands are entering these markets, reflecting rising consumer aspirations. Notable examples include Daiso Japan at Elante Mall in Chandigarh and Charles Tyrwhitt at Palladium Ahmedabad, marking their first stores in India.

Developers are actively acquiring land in strategic locations for these retail projects, particularly in cities such as Jaipur, Lucknow, Mohali, Ahmedabad, Surat, and Coimbatore. Some plans also include mixed-use developments that will integrate retail, food and beverage, office spaces, and hospitality.

Institutional investors are increasingly focused on these emerging urban centers as well, recognizing the potential in Tier II and III cities. Approximately 30% of institutionally held retail assets, totaling around 9.12 million square feet, are now located in these smaller cities, including Amritsar, Chandigarh, Ludhiana, Udaipur, Mysuru, Mangaluru, Indore, and Bhubaneswar.

As developers capitalize on lower land costs and growing consumer demand, the retail landscape in India continues to evolve, offering a mix of national and international brands and boosting confidence among retailers in these burgeoning markets.

Also Read: Indoor Amusement Centers Transforming India’s Retail Landscape: JLL Report

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By Varun Singh

The Shopping Centres Association of India (SCAI) has written to Maharashtra Tourism Minister Aaditya Thackeray urging him and the State Government to take concrete steps in the urgent opening of malls in the state.

SCAI says 5-million retail jobs are at stake, and the first impact could be seen as early as August.

Maharashtra has more than 75 malls across the state, with almost 50% spread across Mumbai MMR, Thane, Kalyan, Navi Mumbai Dombivali, etc.

Similarly, Pune has more than 20% malls while the rest are spread across Amravati, Aurangabad, Kolhapur, Nasik, Nagpur, Aurangabad, etc.

The lockdown has also put plans of more than 30 malls on hold which are presently under construction.

In its letter to Thackeray, SCAI has hinted at jobs of 5 million people in modern retail going under the hammer if urgent action is not taken by the State Government.

This is being seen as a result of freeze in revenues following the Lockdown which impacted the entire retail industry.

Retailers and Shopping Centres have now started expressing that it is becoming difficult every passing day to meet day to day expenses including salaries due to zero revenue and cash reserves drying up, over the last few months.

The first big impact could be seen as early as August 2020.

SCAI in its letter said that stocks worth hundreds of lakhs of all retailers are getting damaged and the fear is that the value will be lost if not immediately sold which will further hurt businesses. “The industry has already seen losses exceeding Rs 1,00,000 crore. Maharashtra is a critical market for shopping centres and a delay in opening malls will prove to be a death knell for us”, said Amitabh Taneja, Chairman Shopping Centres Association of India.

Citing examples of states where malls have been allowed to open up, SCAI said that it has developed and rolled out stringent SOPs in over 500 shopping malls across the country that opened up and have successfully been able to implement social distancing guidelines along with other necessary measures in the best possible manner.

While malls have opened in most states June 8 onwards, Maharashtra is yet to take a decision on easing the lockdown.

Presently malls are operational in major Metros and Tier-1 cities including those which have witnessed Mumbai MMR like spread of the pandemic.

The Central and State governments were seen to be taking this decision after understanding the stress the retail industry has gone through since the lockdown.

Cities which have opened malls include Delhi, Gurugram, Hyderabad, Chandigarh, Lucknow, Jaipur, Ahmedabad as well as small but populous cities such as Agartala, Bhopal, Siliguri, Raiganj, Indore and more recently Cuttack to name a few.

Manoj K. Agarwal, CEO, Viviana Malls said, “It is reassuring to see the confidence posed by State Government’s across the country in our SOPs and our ability to strictly adhere to social distancing guidelines and provide a safe shopping experience. We have urged the Maharashtra Government to give us the opportunity to atleast start operating in a controlled manner and help in the industry’s survival.”

Malls that have opened have been capping the number of visitors along the lines of SCAI and health Ministry guidelines and the Health Ministry. According to SCAI, consumer sentiment towards shopping in malls has been very positive owing to the controlled atmosphere in which they are being operated.

“A recent dipstick carried out by SCAI members across the country asserted shopping malls as the safest place to visit given all the preparations, strict implementation of safety protocols and the ability to ensure crowd control,” Taneja added.

Rajendra Kalkar, President West and Wholetime Director of The Phoenix Mills Ltd. which operates Palladium and High Street Phoenix in Lower Parel said, “We are actually seeing the more serious shopper walking into our malls in Lucknow, Bareilly and Bangalore. This is unlike the times when malls were seen as a hangout destination. Conversion rate has more than doubled, which is a good sign. The lockdown had led to pent up demand, which we now see being eased out with categories like electronics, cosmetics, personal apparel seeing sizeable sales.”

SCAI in its letter to the Tourism & Environment Minister has made some pointed recommendations on guidelines that should be implemented once malls are opened up. Among these include strict crowd control by adopting a 75 sq ft per person formula within malls and retail stores, mandatory use of the government’s Aarogya Setu app to enter malls, reduced staffing at 60-70 percent with single shift operations on all days, Food Court and Restaurant seating to be reduced to 50%, reduced parking to maintain social distancing, encouraging contactless payments, isolation room facility, availability of oxygen cylinder, Ambulance-on-Call, to highlight a few. SCAI has submitted a detailed set of guidelines to Thackeray.

All these measures have ensured that shopping malls don’t get overcrowded and are secured spaces at any given time.

Mukesh Kumar, Chairman of the SCAI-SOP-Committee, SCAI and CEO, Infiniti Malls said, “We have undertaken several measures to maintain safety and hygiene like implementation of technology to supplement and in some cases to replace manual interventions for example installation and use of Thermal Devices to check temperature of visitors, automated dispensers for hand sanitisers, use of density counting equipment to keep a real time check on the number of people in the mall, frequent sanitisation of hand rails of escalators. These have been some of the foremost priorities in addition to the guidelines issued by the Government.”

“Shopping centres’ have also undergone a learning experience to operate in the new normal and based on these learnings have even implemented additional measures to ensure the safety of the consumer”, Taneja said.

Also Read: Godrej leases office to Maersk for Rs 13.09 crore rent

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