India Office Market Dynamics Q2 2026

India’s office market activity is not perfectly decoupled from the global rumblings around AI-driven disruption and the geopolitical headwinds. The sluggishness in decision-making saw gross leasing volumes decline to a nine-quarter low of 16.45 mn s.f. in Q2 2026. At a city-level, the quarterly gross leasing volumes were driven by Bengaluru with a share of 24.6%, followed by Delhi NCR with 21.6%, Pune with 17.7% and Chennai with 13.9%, respectively. Despite lower quarterly leasing, H1 2026 remains the second-highest H1 period on record next only to H1 2025 with leasing volumes coming in at 37.9 mn s.f. Bengaluru was the biggest contributor to the H1 2026 figures with a 24.7% share, with Delhi NCR, Pune, Mumbai and Hyderabad following in order. The global-headquartered firms continued to command a lion’s share at 55.2% of the India office leasing numbers as they focused on right-sizing their portfolios and headcount projections while remaining fully invested in the India growth story. However, the share of global firms was slightly lower than their previous year average, with the global uncertainties more on display in the second quarter of the year.

The tech sector was the biggest contributor in Q2 2026 leasing volumes with a 28.8% share, driven largely by global firms. The flex sector followed closely behind with 28.4%, while Manufacturing/industrial and BFSI sectors were next with 10.8% and 10.2% shares, respectively. On a half yearly basis as well, tech led with a 29.0% share, followed by flex with 27.0% with BFSI and manufacturing next with 15.8% and 11.2% shares, in that order.

GCCs displayed an accelerating momentum y-o-y in H1 2026, with activity up by 14.2% and their share in the H1 leasing volumes at 41.7%, underscoring their dominant role in driving office space demand in India.

Domestic occupier activity was driven by indigenous flex operators who held a dominant 57.8% share of the total space leased by domestic firms in H1 2026. On an absolute basis, flex has now leased 10.23 mn sq ft in H1 2026 across the top seven cities, which is a record high for any H1 periods previously for this segment.

On a quarterly basis, though net absorption was marginally down by 3.3% q-o-q at 13.2 mn s.f. it showed a strong trend with a 16.8% upside on a y-o-y comparison. For Q2 2026 net absorption, Bengaluru led with a 25.5% share followed closely by Pune with 24.3% and Delhi NCR with a 15.4% share.

India’s net absorption in H1 2026 rose to 26.9 mn s.f., up by 11.6% y-o-y and the highest ever compared to all previous first half periods. This performance was again propelled by Bengaluru with a 30.9% share driven by strong space take-up in quality projects across core markets in the city. Bengaluru was followed by Hyderabad with a 18.8% share while Pune and Delhi NCR were next with 16.4% and 13.0% shares, respectively.

With new completions down by 9.3% y-o-y at 22.9 mn s.f. in H1 2026, and net absorption hitting a record high during the same period, the Pan India vacancy across the top seven cities fell to its lowest in five years at 14.5%, a big drop of 160 bps y-o-y.

New office completions were recorded at 13.25 mn s.f. during the quarter, representing a 36.5% q-o-q growth, but down by 10.4% y-o-y. Net supply for the quarter, after accounting for several refurbished projects and the withdrawal of a few, totaled 13.17 mn s.f.

Bengaluru dominated new completions during the quarter with a share of 43.7%, followed by Pune, Delhi NCR and Hyderabad with shares of 24.5%, 10.2% and 10.0%, respectively.

Average rents in Q2 2026 across all cities rose between 0.4-3.6% on a q-o-q basis. Hyderabad led with 3.6% rental growth, while Mumbai and Kolkata each posted 1.0% q-o-q increase in rents. Chennai and Delhi NCR both saw rental growth of 0.9% q-o-q, with Bengaluru and Pune following at more modest growth numbers of 0.7% and 04%, respectively

The rental values on a y-o-y basis (Q2 2026 vs Q2 2025) have increased across all cities, with Hyderabad witnessing the maximum growth of 11.9%, followed by Delhi NCR and Bengaluru with growths of 7.7% and 5.4%, respectively. Rents in Chennai and Kolkata have grown y-o-y by 4.6% and 4.3%, whereas Mumbai and Pune have seen 3.4% and 1.0% y-o-y rental growth, respectively.

While a temporary blip in leasing volumes was mainly driven by the current geopolitical uncertainty and rising discussions around AI-led disruption, the structural tailwinds of talent, innovation ecosystem and cost advantages that are creating product ownership roles in GCCs based in the country, are likely to keep India on a strong footing.

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 epicenter of these plans.

Going forward, firms look at portfolio optimization and firm up headcount projections, leasing volumes for 2026 are expected to remain within range of the historic levels seen in 2025. The year 2026 is likely to be the year when firms pivot before they embark on their growth plans as global offshoring arms based in India become the digital and engineering "brain" of the organization. This should keep India’s gross leasing volumes on track to potentially hit the 100 mn s.f. mark over the next two years.