India's retail sector posted its strongest half-yearly leasing performance in four years, with gross leasing across the country's top seven markets climbing 10.5 per cent to 6.27 million square feet in H1 2026, according to a report released on Tuesday, 4 August 2026 by commercial real estate services firm JLL. The figure marks a decisive recovery in organised retail demand despite a sharp contraction in new mall supply.

Leasing Momentum Across Two Quarters

Demand held firm through the first half of the year. Q1 2026 gross leasing stood at 3.09 million square feet, sustained by continuous retailer expansion even as supply remained constrained. The pace accelerated in Q2 2026, with leasing rising 2.7 per cent sequentially to 3.18 million sq ft, driven largely by domestic brands, which accounted for 79.1 per cent of total leasing activity during the period.

Key Markets Leading Demand

Among India's top seven cities, Mumbai led with a 29 per cent share of H1 2026 leasing volume, followed by Delhi NCR at 24 per cent. Together, these two markets accounted for 53 per cent of total demand. Bengaluru contributed a further 23 per cent, meaning the three cities collectively anchored more than 75 per cent of all retail space leased in the first half. Peripheral precincts in Delhi NCR and Hyderabad provided additional expansion opportunities where new supply did materialise.

Supply Squeeze Reshaping Retail Formats

New shopping mall supply in H1 2026 totalled just 0.82 million square feet — a 64 per cent year-on-year decline from the robust supply recorded in H1 2025. According to the JLL report, top retail brands have been struggling for the past six to nine months to secure quality spaces within shopping malls, pushing them to evaluate alternate store formats. Notably, despite the supply crunch, malls increased their share of overall gross leasing from 38.9 per cent in H1 2025 to 43.1 per cent in H1 2026, reflecting intensified competition for available mall space.

Experience-Driven Retail Fuelling Demand

The JLL report attributes the resilience in demand to a structural shift in consumer behaviour toward experience-driven retail. Shoppers are increasingly favouring curated in-store environments, which is sustaining footfall and, in turn, retailer appetite for physical expansion. This comes amid multiple external headwinds that could have dampened demand, though the report does not specify them individually.

What Comes Next

With quality mall supply expected to remain tight in the near term, industry observers will watch whether alternate retail formats — high streets, standalone stores, and mixed-use developments — can absorb the overflow demand. A sustained recovery in new mall completions will be critical to unlocking the next phase of organised retail growth across India's metropolitan markets.