JLL has published a recent report underlining the growth potential of Tier 2 and 3 Indian cities as retail development regions, with more than 25 million square feet of new retail space expected to come up within the next five years. This is driven by increased consumer demand, land availability, and a previous lack of quality retail options in these markets.
North India will lead this new tide of retailing, accounting for 44% of the new supply. Key cities in this region are Ludhiana, Jaipur, and Lucknow. The retail landscape comprises a diverse balance of both large regional players and smaller emerging developers. Southern India is a close second, contributing 30% of the new retail space, with cities like Coimbatore, Malappuram, Thrissur, and Trivandrum at the forefront of this growth.
There is immense retail supply anticipated in the east, with about 4.5 million square feet primarily led by developments in Guwahati. Key developers are announcing large-format, high-quality retail initiatives in Western India, with major projects underway in Goa, Surat, and Ahmedabad.
Alongside this expansion, premium and bridge-to-luxury brands have concentrated their efforts on these cities as consumer aspirations have grown and new opportunities have emerged for fresh store locations. Daiso Japan and Charles Tyrwhitt are just two of the notable retailers that have chosen these emerging markets as the locations for their first stores in the country, illustrating a decisive shift in retail strategy.
With an average gross leasable area of about 375,000 square feet, the largest developments will exceed one million square feet. Most retail centres are located in capitals or other major cities with tremendous potential, serving a broad consumer base that includes smaller satellite towns. This breadth allows developers to create medium- and large-sized malls, which will enhance the tenant mix and overall shopper experience,” observes Samantak Das, Chief Economist and Head of Research and REIS, India, at JLL. The anticipated retail expansion in Tier 2 and 3 cities, as highlighted by JLL, underscores the vibrant opportunities for growth and investment in these emerging markets.
