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What is the story about?
India’s office market has kicked off 2026 on a record-setting note, with leasing activity surging to an all-time high of 29.9 million square feet (mn sq ft) in the January–March quarter, even as global geopolitical tensions cloud business sentiment.
According to Knight Frank India, the Q1 performance marks a 6% jump over the previous peak recorded a year ago, signalling strong underlying demand for commercial real estate in the country.
The data underscores India’s growing strategic relevance in the global corporate landscape, with occupiers continuing to expand operations and commit to large-format office spaces. Notably, Grade A office assets accounted for 93% of total leasing activity during the quarter, reflecting a clear preference for high-quality, compliant, and ESG-aligned workspaces.
A key shift in Q1 2026 has been the more balanced distribution of demand across major markets. While Bengaluru retained its position as the largest office leasing hub with 9.2 mn sq ft of absorption, its share declined compared to last year, indicating a broader-based recovery.
Read more: Mumbai realty may slow in next 1-2 quarters as cycle turns, says Knight Frank's Gulam Zia
Hyderabad emerged as a strong contender with 5.9 mn sq ft, followed closely by Mumbai at 5.6 mn sq ft, while the National Capital Region recorded 4.0 mn sq ft, nearly doubling its leasing volumes year-on-year.
Both Mumbai and Hyderabad posted their highest-ever quarterly leasing volumes, with transaction activity in these cities already exceeding 50% of their total leasing for 2025, highlighting the sharp acceleration in occupier demand. The quarter also saw four mega deals exceeding 1 million sq ft each across key markets, reinforcing long-term confidence among large occupiers.
Driving nearly half of the leasing activity were Global Capability Centres (GCCs), which transacted 14.4 mn sq ft and accounted for 48% of total absorption—the highest share and absolute volume on record. Bengaluru remained the epicentre of GCC expansion, capturing 41% of total GCC leasing.
The trend reflects a structural shift, with global firms increasingly positioning India as a core operational and innovation hub rather than a peripheral outsourcing destination.
Also read: Birla Estates clocks ₹1,600 crore bookings in a month for Gurugram luxury project
India-facing businesses also showed strong momentum, leasing 5.8 mn sq ft during the quarter, marking a 22% year-on-year growth—the highest among all occupier segments. Flexible workspace operators and third-party IT services firms accounted for 17% and 15% of leasing activity, respectively, indicating a continued diversification of demand drivers.
However, the strong demand environment is being met with constrained supply. Total office completions stood at 14.0 mn sq ft in Q1 2026, up 154% year-on-year, but still less than half of the space absorbed during the same period. This mismatch has been a persistent trend since 2021, driven in part by developers prioritising residential projects over commercial developments.
As a result, vacancy levels have steadily declined from 17.2% in 2021 to 13.9% in Q1 2026, tightening market conditions and strengthening landlord pricing power. The supply crunch has also fuelled a sustained rental upcycle across major office markets since early 2022.
Rental growth in Q1 2026 ranged between 2% and 15% year-on-year across cities. NCR and Kolkata led the surge with 15% growth each, while Hyderabad and Chennai recorded 8% increases. Mumbai and Bengaluru saw comparatively moderate rental growth of 6% and 7%, respectively, but continue to remain among the most expensive office markets in the country.
In a notable milestone, both NCR and Bengaluru crossed the ₹100 per sq ft per month mark for the first time, with average rents at ₹105 and ₹100.6, respectively.
Mumbai remained the costliest office market at ₹125 per sq ft per month, followed by NCR and Bengaluru, while Pune, Chennai, and Hyderabad offered relatively more affordable options, albeit with rising trajectories.
From a city-level perspective, Bengaluru’s leasing activity declined 28% year-on-year, but it retained leadership due to its deep occupier base, particularly in technology and GCC segments.
Hyderabad recorded a sharp 48% increase in leasing, underpinned by strong demand from both GCCs and flex operators. Mumbai saw a 60% jump, driven by large deals and expansion by India-facing firms, while NCR’s 95% surge reflects a significant revival in occupier sentiment, aided by improving infrastructure and Grade A supply.
Among other markets, Pune saw a 17% decline in leasing, while Chennai recorded a 19% drop, indicating some moderation in demand. Kolkata and Ahmedabad, though smaller in scale, posted notable growth in percentage terms, suggesting emerging traction in these markets.
On the supply side, Bengaluru led completions with 4.4 mn sq ft, followed by NCR at 3.1 mn sq ft and Hyderabad at 2.3 mn sq ft. However, despite this ramp-up, new supply continues to lag demand, pointing to sustained tightness in the market over the near to medium term.
Industry experts believe that while geopolitical uncertainties may lead to some caution in decision-making, India’s strong economic fundamentals, large talent pool, and cost competitiveness will continue to support office demand. The ongoing expansion of GCCs, coupled with the gradual stabilisation of hybrid work models, is expected to keep leasing momentum resilient.
The Q1 2026 performance reinforces a broader structural narrative—India is increasingly becoming central to global corporate strategies, and that shift is now clearly reflected in the country’s record-breaking office market activity.
According to Knight Frank India, the Q1 performance marks a 6% jump over the previous peak recorded a year ago, signalling strong underlying demand for commercial real estate in the country.
The data underscores India’s growing strategic relevance in the global corporate landscape, with occupiers continuing to expand operations and commit to large-format office spaces. Notably, Grade A office assets accounted for 93% of total leasing activity during the quarter, reflecting a clear preference for high-quality, compliant, and ESG-aligned workspaces.
A key shift in Q1 2026 has been the more balanced distribution of demand across major markets. While Bengaluru retained its position as the largest office leasing hub with 9.2 mn sq ft of absorption, its share declined compared to last year, indicating a broader-based recovery.
Read more: Mumbai realty may slow in next 1-2 quarters as cycle turns, says Knight Frank's Gulam Zia
Hyderabad emerged as a strong contender with 5.9 mn sq ft, followed closely by Mumbai at 5.6 mn sq ft, while the National Capital Region recorded 4.0 mn sq ft, nearly doubling its leasing volumes year-on-year.
Both Mumbai and Hyderabad posted their highest-ever quarterly leasing volumes, with transaction activity in these cities already exceeding 50% of their total leasing for 2025, highlighting the sharp acceleration in occupier demand. The quarter also saw four mega deals exceeding 1 million sq ft each across key markets, reinforcing long-term confidence among large occupiers.
Driving nearly half of the leasing activity were Global Capability Centres (GCCs), which transacted 14.4 mn sq ft and accounted for 48% of total absorption—the highest share and absolute volume on record. Bengaluru remained the epicentre of GCC expansion, capturing 41% of total GCC leasing.
The trend reflects a structural shift, with global firms increasingly positioning India as a core operational and innovation hub rather than a peripheral outsourcing destination.
Also read: Birla Estates clocks ₹1,600 crore bookings in a month for Gurugram luxury project
India-facing businesses also showed strong momentum, leasing 5.8 mn sq ft during the quarter, marking a 22% year-on-year growth—the highest among all occupier segments. Flexible workspace operators and third-party IT services firms accounted for 17% and 15% of leasing activity, respectively, indicating a continued diversification of demand drivers.
However, the strong demand environment is being met with constrained supply. Total office completions stood at 14.0 mn sq ft in Q1 2026, up 154% year-on-year, but still less than half of the space absorbed during the same period. This mismatch has been a persistent trend since 2021, driven in part by developers prioritising residential projects over commercial developments.
As a result, vacancy levels have steadily declined from 17.2% in 2021 to 13.9% in Q1 2026, tightening market conditions and strengthening landlord pricing power. The supply crunch has also fuelled a sustained rental upcycle across major office markets since early 2022.
Rental growth in Q1 2026 ranged between 2% and 15% year-on-year across cities. NCR and Kolkata led the surge with 15% growth each, while Hyderabad and Chennai recorded 8% increases. Mumbai and Bengaluru saw comparatively moderate rental growth of 6% and 7%, respectively, but continue to remain among the most expensive office markets in the country.
In a notable milestone, both NCR and Bengaluru crossed the ₹100 per sq ft per month mark for the first time, with average rents at ₹105 and ₹100.6, respectively.
Mumbai remained the costliest office market at ₹125 per sq ft per month, followed by NCR and Bengaluru, while Pune, Chennai, and Hyderabad offered relatively more affordable options, albeit with rising trajectories.
From a city-level perspective, Bengaluru’s leasing activity declined 28% year-on-year, but it retained leadership due to its deep occupier base, particularly in technology and GCC segments.
Hyderabad recorded a sharp 48% increase in leasing, underpinned by strong demand from both GCCs and flex operators. Mumbai saw a 60% jump, driven by large deals and expansion by India-facing firms, while NCR’s 95% surge reflects a significant revival in occupier sentiment, aided by improving infrastructure and Grade A supply.
Among other markets, Pune saw a 17% decline in leasing, while Chennai recorded a 19% drop, indicating some moderation in demand. Kolkata and Ahmedabad, though smaller in scale, posted notable growth in percentage terms, suggesting emerging traction in these markets.
On the supply side, Bengaluru led completions with 4.4 mn sq ft, followed by NCR at 3.1 mn sq ft and Hyderabad at 2.3 mn sq ft. However, despite this ramp-up, new supply continues to lag demand, pointing to sustained tightness in the market over the near to medium term.
Industry experts believe that while geopolitical uncertainties may lead to some caution in decision-making, India’s strong economic fundamentals, large talent pool, and cost competitiveness will continue to support office demand. The ongoing expansion of GCCs, coupled with the gradual stabilisation of hybrid work models, is expected to keep leasing momentum resilient.
The Q1 2026 performance reinforces a broader structural narrative—India is increasingly becoming central to global corporate strategies, and that shift is now clearly reflected in the country’s record-breaking office market activity.
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