Fresh retail space supply in top Indian cities falls 57% in Q1

"We now have a chronically supply-constrained market where retailers' biggest challenge is not drawing shoppers but finding the right spaces to serve them in," Kejriwal said.

The historical numbers underline the trend. In 2023, the top seven cities added 5.3 million sq ft of new Grade A retail supply against gross leasing of 6.5 million sq ft. During 2024, new supply fell sharply to just 1.1 million sq ft, while leasing stayed at 6.5 million sq ft. New mall supply recovered partially in 2025 with 5.2 million sq ft of new completions, while leasing surged to a record 13 million sq ft, the consultant said.

Vacancy levels have dropped to 6.7% in the first half of 2026, according to Anarock.

The shortage is not simply a function of developers failing to respond to demand, Anarock observed. Building a successful large-format retail asset is considerably more complex than delivering other forms of real estate. Development requires a large and contiguous land parcel in a strategically located catchment.

"The availability of suitable land is itself a constraint in established urban markets, while rising land costs can make new projects difficult to structure," Kejriwal said. "Approval timelines, financing conditions and construction schedules can further delay project delivery."