Gross leasing down 26% q-o-q

• In Q3 2025, Chennai’s retail market saw reduced net absorption at 0.01 million sq ft. Gross leasing dropped 26% q-o-q to 0.13 million sq ft. Suburbs led gross leasing with 55% share, followed by Prime City at 28%.
• Jewellery outlets and CDIT led market demand with 27% and 22% shares, respectively. Strong leasing occurred in prime high streets, accounting for 95% of total leasing due to limited space availability in prime malls.

No new supply in the quarter

• The city’s retail stock was adjusted to 6.9 mn sq ft, due to a mall downgrade in the secondary submarket. No additional supply is expected through end-2025.
• Prime malls in the city maintain tight vacancy levels. Overall city vacancy decreased by 40 bps q-o-q and now stands at 10.0%.

Rents and capital values increased marginally

• City rental rates increased 2% q-o-q, driven by marginal rent escalations at premium malls and rent increases due to heightened retail activity in key retail clusters.
• Capital values increased in the city by 4.7% y-o-y. Market yields reduced by 30 bps y-o-y.

Outlook: Strong retail mall supply in the city

• Chennai’s retail sector is set for notable expansion, with 0.25 million sq ft of new retail space expected by early 2026. This will bring healthy net absorption levels, driven primarily by demand from fashion, apparel and Food & Beverage outlets.
• Looking further ahead, the 2026-2029 period will see a significant 3.0 mn sq ft of new mall supply, including major projects like Mall of Madras in North Chennai and Forum Mall along the OMR corridor.