India’s retail sector recorded steady demand in Q1 2026, with gross leasing reaching 3.1 million sq ft across the top seven cities, according to JLL. While leasing activity moderated 15% quarter-on-quarter due to limited new institutional-grade mall supply, it still posted a marginal 1% year-on-year rise, indicating continued resilience in retailer expansion.

Healthy demand also led to a 40-basis point drop in mall vacancy levels, with overall vacancy reducing from 12.3% in the previous quarter to 11.9%. JLL attributed the quarterly moderation largely to the absence of sizeable new mall supply following a strong 2.5 million sq ft infusion in Q4 2025. Only 0.25 million sq ft of new mall supply was added in Q1 2026, taking total retail stock to 92.4 million sq ft.

“India’s retail sector is navigating a pivotal transition with remarkable agility. First quarter’s 3.1 million sq. ft leasing, anchored by a 48% high street surge and domestic retailers commanding 79% market share, reflects strategic format diversification as supply constraints drive innovation,” said Rahul Arora, Head - Office Leasing & Retail Services, Senior Managing Director (Karnataka, Kerala), India, JLL.

With limited mall supply, high streets emerged as the leading leasing format, accounting for 48% of transactions, while malls contributed 40%. Mumbai led leasing activity with a 26% share, followed by Bengaluru and Delhi NCR at 21% each. Together, the three cities accounted for 68% of total leasing. Kolkata captured 10%, while Hyderabad, Chennai and Pune contributed 9%, 7% and 6% respectively.

Fashion and apparel continued to dominate category demand, while entertainment emerged as the second-largest segment with a 16% share. Food and beverage followed at 15%, reflecting sustained expansion by restaurant and café operators.

Domestic retailers contributed 79% of total leasing, driven by strong activity from D2C brands. International retailers also recorded a 48% year-on-year rise in leasing, supported by India’s growing consumption demand.

JLL noted that a 46.1 million sq ft institutional-grade pipeline is expected between 2026 and 2030, positioning India’s retail market for a major growth cycle over the coming years.