According to a recent report by JLL India, Tier II and III cities are poised for an extraordinary transformation, with over 25 million square feet of new retail space expected to emerge by 2029. This expansion is not just a statistic; it represents a significant shift in consumer behavior, urbanization, and market dynamics across the country.

North India Leads the Charge

North India is at the forefront, contributing 44% of the upcoming retail supply. Cities like Ludhiana, Jaipur, and Lucknow are driving this growth, thanks to a combination of established and emerging regional developers seizing the opportunity to cater to a burgeoning consumer base. The Southern region follows closely, accounting for 30% of the supply, with cities such as Coimbatore and Thrissur leading the way.

Impressive Scale of Development

The average mall size in these expanding urban centers is projected to be around 375,000 square feet, with a remarkable four projects expected to exceed 1 million square feet. This scale is indicative of a new era in retail, where consumer experiences are prioritized, and the mix of tenants is diversified to meet evolving demands.

Strategic Land Acquisitions Fueling Growth

Developers are actively acquiring land in these emerging cities to develop retail projects. Key cities like Jaipur, Lucknow, Ahmedabad, and Coimbatore are becoming hotspots for real estate investments. Rahul Arora, Head of Retail Services at JLL, notes that these acquisitions are driven by rising consumer demand and a strategic focus on locations that promise high returns.

Retailer Confidence and Brand Expansion

The influx of high-quality retail supply has bolstered retailer confidence in Tier II and III cities. Premium and bridge-to-luxury brands are now venturing into these markets, drawn by increasing consumer aspirations. Notable examples include Daiso Japan and Charles Tyrwhitt, who have chosen these cities for their inaugural stores in India.

Mixed-Use Developments on the Rise

Many developers are not just focusing on standalone retail projects; there is a growing trend towards mixed-use developments that integrate retail, food and beverage, office spaces, and hospitality. This holistic approach enhances the shopping experience and contributes to the urban ecosystem.

Institutional Investment in Emerging Markets

Institutional investors are increasingly targeting Tier II and III cities for retail development, complementing the efforts of leading real estate developers. While prime metro areas continue to attract significant investment, a notable portion of institutional assets—approximately 9.12 million square feet—is now concentrated in 12 emerging urban centers, including Amritsar, Chandigarh, and Indore.

A Bright Future for Retail

The retail real estate landscape in India is evolving rapidly. As developers and institutional investors recognize the potential of Tier II and III cities, the stage is set for a retail revolution that will redefine shopping experiences across the nation. With the combination of lower land costs, rising consumer aspirations, and a commitment to quality developments, these cities are poised to become the next retail hotspots in India.