India's Office Leasing Rises 6% To 35.7 Million Sq Ft In H1 2026 Despite Cautious Q2: Report

India’s office market maintained its growth momentum in the first half of 2026, with Grade A gross leasing rising 6% year-on-year to 35.7 million sq ft despite a cautious second quarter marked by global trade disruptions and economic uncertainty, according to Colliers India.

Leasing activity in Q2 2026 stood at 17.4 million sq ft, down 2% from a year ago, but the market remained resilient as demand continued to be driven by Global Capability Centres (GCCs), diversified occupier activity and the growing adoption of flexible workspaces.

Bengaluru remained the country’s largest office market during H1 2026, accounting for 10.5 million sq ft, or 29% of total leasing. Hyderabad followed with 7.2 million sq ft, registering a sharp 47% year-on-year increase.

Delhi-NCR, Mumbai and Chennai each recorded between 4 million and 5 million sq ft of leasing during the six-month period.

However, quarterly demand softened in some markets. Mumbai and Pune witnessed a 25-29% decline in leasing during Q2 2026 as occupiers turned more cautious. The share of large office transactions of 100,000 sq ft or more fell sharply in Mumbai from 41% in Q1 to 13% in Q2, while Pune’s share declined from 63% to 38%.

“India’s office market remained firm in the second quarter of the year. A strong first quarter acted as a cushion, largely limiting the fallout of the ongoing global crisis. Q2 2026 also marked the ninth consecutive quarter with at least 15 million sq ft of Grade A office leasing across the top seven cities, underscoring the strong fundamentals of India’s commercial real estate market,” said Arpit Mehrotra, Managing Director, Office Services, India, Colliers.

He added that India’s position as the preferred destination for GCCs, coupled with expectations of greater stability in West Asia, could help annual office leasing exceed 70 million sq ft once again in 2026.

Technology firms dominate demand; flex spaces hit record

Technology companies continued to lead conventional office leasing, accounting for 43% of demand in Q2 2026, followed by BFSI firms with a 13% share. During the first half of the year, technology companies leased 10.6 million sq ft, while BFSI firms occupied 6 million sq ft, together contributing more than 60% of conventional leasing.

Flexible workspace operators also strengthened their presence, leasing 8.6 million sq ft during H1 2026, up 32% year-on-year and the highest ever for a six-month period. Flex operators accounted for 24% of total leasing in H1 2026, compared with 19% a year earlier.

In Q2 alone, flex space leasing reached 4.6 million sq ft, representing 26% of total demand and more than 90% above the average quarterly leasing seen over the past five years.

New supply declines as developers remain cautious

New Grade A office completions declined 9% year-on-year to 22.5 million sq ft during H1 2026, reflecting a cautious approach by developers. Supply additions in Q2 dropped 28% to 10.7 million sq ft.

Bengaluru led new completions with 8.7 million sq ft during the first half of the year, accounting for 39% of total supply. Delhi-NCR and Mumbai followed with 4.3 million sq ft and 3.6 million sq ft, respectively. Mumbai recorded the strongest growth in supply, with completions rising 80% year-on-year, driven by projects in Navi Mumbai, Powai and Thane.

Bengaluru and Hyderabad continue to anchor demand

According to Vimal Nadar, National Director and Head of Research at Colliers India, Bengaluru and Hyderabad together accounted for nearly half of India’s office leasing during H1 2026, supported by strong GCC demand across multiple sectors.

“Given their established strengths in talent availability and cost competitiveness, Bengaluru and Hyderabad are well positioned to support India’s office demand even during challenging periods. GCCs are likely to account for 40-50% of Grade A office leasing in 2026,” Nadar said.

Despite demand exceeding new supply in most cities during Q2, vacancy levels remained broadly stable at around 15% across India due to relocations and portfolio churn. Average rentals increased by up to 5% quarter-on-quarter in select high-activity micro-markets.