Retailers expand steadily across the city, with suburban high streets as the primary focus

• Chennai’s retail market experienced subdued leasing activity in Q2 2026, with negligible net absorption on account of retailer exits from malls. Overall leasing in the city was led by high streets with a share of 83%, among which the suburban locations were preferred.
• Leasing activity in the quarter was led by jewellery with a share of 34% and food and beverages with a share of 19%, with the Suburbs submarket leading overall leasing, contributing 59% of total activity, while the Secondary submarket accounted for 29%.

No new supply in the quarter

• No new mall supply was added to the city. The city’s retail stock remained at 6.9 million sq ft.
• Prime malls in the city maintained tight vacancy levels. Overall city vacancy remained stable at 9.5% in Q2 2026.

Rents and capital values see marginal increases

• City rental rates increased 2.1% q-o-q, driven by marginal escalations in premium malls in key clusters, with the Secondary submarket seeing a 2.6% q-o-q growth.
• Rents in prominent high streets continued their strong growth, reflecting heightened retailer interest in these locations. Capital values increased marginally by 2.6% q-o-q as well, maintaining consistent upward momentum.

Outlook: Strong demand and supply anticipated in the coming years

• For 2026, 0.4 million sq ft of new supply was anticipated in Secondary and Suburbs submarkets. This modest pipeline indicated continued stability, with demand expected from F&B, fashion and apparel, and multiplex operators.
• The city’s mall segment is set for notable expansion between 2027-2030, with approximately 2-2.5 million sq ft of new developments expected to enter the market. Mall of Madras in the Suburbs submarket is among the prominent malls due for completion in the near-term.