India Office Market Dynamics Q1 2026

India’s office market activity continues to break new ground, despite the geopolitical and anticipated AI-driven disruption headwinds for the sector, with gross leasing hitting 21.5 mn sq ft, the highest ever for any first quarter period across years. GCCs and flex have emerged as the biggest drivers of office demand, with respective shares of 45.5% and 25.9% in the first quarter of 2026.

At a city level, Bengaluru led with 24.8% share of the Q1 leasing volumes, followed by Mumbai with 19.5% and Hyderabad with 16.8%. Pune had a healthy 14.5% share with Delhi NCR following at a 14.2% share.

GCCs were the major driver of leasing activity in the cities of Bengaluru, Chennai, Hyderabad and Mumbai in Q1 2026. Bengaluru in fact saw GCCs account for a 70% share of the quarterly gross leasing activity in the city (the strongest in two years) showcasing the inherent strength of Bengaluru in retaining its status as the frontrunner for setting up of strategic hubs by global firms. Mumbai saw GCCs command a 46.3% share in the gross leasing volumes while Hyderabad saw a 42.9% contribution to tis quarterly leasing volumes from GCCs.

Cities like Pune saw Flex steal a march with a 54.8% share of the city’s leasing volumes in Q1 and in Delhi NCR as well, flex was the leading occupier segment with a 32.9% share.

Flex as a key strategic lever for portfolio management and optimization for both global and domestic firms, continues to build on its record-breaking performance in 2025 with another strong quarter of expansion in Q1. It leased 5.56 mn sq ft across the top seven cities in Q1 2026, which is higher than the quarterly space take-up average by flex in the previous year.

India’s net absorption in Q1 2026 was also the highest in the first quarter across any year at 13.7 mn sq ft and was led by Bengaluru with a 36.0% share. Net absorption in Bengaluru was propelled by robust pre-commitments in newly operational projects, with approximately 54% of total net absorption stemming from the conversion of these pre-leased commitments during the quarter. Bengaluru was followed by Hyderabad with a 22.6% share with Mumbai and Delhi NCR next with 12.0% and 10.7% shares, respectively. All cities’, barring Delhi NCR has recorded improved net absorption compared to Q1 2025.

New office completions were recorded at 9.71 mn s.f. during the quarter, representing a 29.8% q-o-q drop and also down by 7.8% y-o-y. Net supply, post inclusion of a few refurbished projects stood at 10.60 mn s.f.

Bengaluru dominated new completions during the quarter with a share of 61.0%, followed by Delhi NCR, Mumbai and Chennai with shares of 14.3%, 13.2% and 11.6%, respectively. Hyderabad, Pune and Kolkata recorded no completions during the quarter.

Rental values on a y-o-y basis (Q1 2026 vs Q1 2025) increased across all cities, with Hyderabad witnessing the maximum growth of 10.2%, followed by Delhi NCR and Bengaluru with respective growths of 7.9% and 6.4%. Rents in Chennai and Kolkata have grown y-o-y by 5.2% and 4.9%, whereas Mumbai and Pune have seen 3.3% and 1.8% y-o-y rental growths, respectively.

India continues to stand tall amid the multiple disruptions with structural tailwinds of its talent, innovation ecosystem and cost advantages creating product ownership roles as global offshoring arms based in India become the digital and engineering "brain" of the organization. Headcount growth continues to remain accretive and along with real estate footprint expansion and combined with the crunch in existing portfolios as office occupancies ramp up, is creating the perfect recipe for continued RE growth with India at the epicentre of these plans. The strong pipeline of deal activity and current performance points towards India’s leasing volumes to potentially hit the 100 mn sq ft mark over the next two years. 

With GCCs making up ~50% of all active space requirements driven by international banking and financial services players' appetite for offshore operational centres, complemented by the manufacturing sector dynamism fostered through strategic policy initiatives and strong tech R&D background, the growth runway remains intact. GCCs are leveraging India's deep talent pool in AI, data science, and digital engineering to develop new products, build analytics platforms, and automate global operations, all of which keeps the office story positive despite AI-driven automation conversations.

Tightening vacancy rates within core assets and submarkets indicate a strong appetite for business expansion and headcount growth. With institutional-backed quality supply supporting the growth, the levers for India as the core strategic hub for business innovation and transformation remain strong and will drive the market momentum at a pace that is set up by the previous years’ consistency and growth.