Non-metro markets drive Tier-II expansion as apparel absorbs 40% of retail real estate

Organized retail leasing in India grew 20 per cent Y-o-Y to reach 3.9 million sq ft in H1, FY26, driven by aggressive brick-and-mortar rollouts across regional markets. Data from real estate consultancy CBRE indicates, fashion and apparel brands captured 40 per cent of overall space absorption, outperforming food and beverage (14 per cent) and entertainment (9 per cent). Growth was particularly concentrated in non-metropolitan hubs, where apparel retailers represented 69 per cent of total retail leasing in Chandigarh and Jaipur, and 65 per cent in Kochi. Domestic retail chains and expanding direct-to-consumer (D2C) brands accounted for over 70 per cent of gross space absorption, shifting real estate strategy away from top-tier metros.

Portfolio diversification mitigates supply constraints

Retailers are reallocating store footprints toward hybrid athleisure and mid-range value formats to capitalize on suburban demand. Despite gross leasing growth, new operational retail supply remained constrained at 0.9 million sq ft, with Delhi-NCR hosting all major mall completions. Retail occupiers are deploying disciplined store expansion strategies, targeting Grade A developments in high-growth secondary catchments to optimize real estate yields, noted Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE. As developers integrate experience-led mixed-use projects, apparel brands are securing anchor tenancies to lock in primary locations before upcoming supply pipelines mature.

Delivering advisory and property management services

Established in 1994, CBRE South Asia is a commercial real estate services provider operating across primary Indian metro markets. The firm delivers advisory, transaction, and property management services across commercial, industrial, and retail asset classes. Supported by institutional market research, CBRE projects steady double-digit demand growth across emerging regional retail hubs.