The growth has been driven by robust occupier demand, expansion of Global Capability Centers (GCCs), and increasing adoption of flexible workspaces, despite ongoing global economic uncertainties.

Bengaluru & Hyderabad Lead the Surge

Bengaluru and Hyderabad emerged as the top-performing office markets, collectively accounting for nearly 50% of total leasing activity, with a combined demand of 8.7 million sq ft.

Other major cities including Mumbai, Pune, Delhi-NCR, and Chennai recorded steady Grade A leasing activity in the range of 2–3 million sq ft each.

Notably:
Hyderabad and Pune saw leasing demand more than double YoY, indicating strong expansion momentum in these markets.

Technology & BFSI Drive Office Demand

Conventional office leasing remained dominant at 14.4 million sq ft, accounting for 79% of total demand.

Technology firms led the market, contributing 36% of conventional leasing
BFSI sector also played a major role, with both sectors together accounting for nearly two-thirds of demand

This highlights continued confidence among corporates in expanding their physical office footprint.

Flex Spaces See Rapid Growth

Flexible workspaces are gaining significant traction:

Flex space leasing rose 77% YoY
Total flex leasing reached 3.9 million sq ft
Share increased to 21% of total leasing activity

Delhi-NCR and Hyderabad led flex space demand, while cities like Kolkata and Pune also saw strong adoption.

This trend reflects growing demand for:
Hybrid work models
Scalability
Cost optimization

Supply Pipeline Remains Strong

New office supply remained healthy at 11.8 million sq ft in Q1 2026, reflecting a 19% YoY increase.

• Bengaluru dominated supply additions with a 47% share
• Mumbai and Chennai added around 1.5 million sq ft each
• Supply remained limited in Hyderabad and Kolkata during the quarter

Vacancy Levels Decline, Rentals Rise

With demand outpacing supply:

Vacancy levels dropped to 15.3%, down ~90 basis points YoY
Office rentals increased by ~6% YoY across top cities

This indicates a tightening market with improving landlord confidence.

The Big Picture

India’s office market continues to demonstrate resilience and long-term growth potential, backed by:

Expansion of GCCs
Diversification across sectors
Rising demand for Grade A office spaces
Growing role of flexible workspaces

Despite global headwinds, India remains one of the strongest office markets in the Asia-Pacific region.

Also Read: Panvel Real Estate Market Sees Robust Growth

The post India Office Market Starts 2026 Strong with 18.3 Mn Sq Ft Leasing, Up 15% YoY appeared first on Square Feat India.

This marks a notable evolution in the country’s commercial real estate landscape, where businesses are increasingly moving beyond metros in search of scalable and cost-efficient alternatives.

Tier-2 Cities Gain Ground in Flex Office Market

The report highlights that Tier-2 cities collectively account for:

• 575+ flex workspace centres
• ~29% share of total flex centres in India
• 8.8 Mn sq ft of flex stock (~9% pan-India share)

This growth reflects a broader decentralisation trend, as companies look to reduce dependence on saturated metro markets.

City-wise Flex Space Distribution

Among Tier-2 cities, flex space supply is led by:

• Ahmedabad – 22.7% share
• Kochi – 10.2%
• Indore – 10.1%
• Jaipur – 8.5%
• Coimbatore – 8.3%
• Lucknow – 7.6%
• Mangaluru – 6.3%
• Chandigarh – 4.9%
• Bhubaneswar – 4.3%
• Dehradun – 4.0%
• Other cities (Vadodara, Surat, Vizag, etc.) – 13.1%

This spread indicates that flex workspace demand is no longer limited to a handful of cities but is broad-based across emerging urban corridors.

Cost Advantage Driving GCC Expansion

One of the biggest drivers of this shift is cost arbitrage, with Tier-2 cities offering:

• Up to 50% lower occupancy costs compared to metro cities
• Access to skilled talent pools
• Reduced operational expenses

As a result:

• 200+ companies have established
• 300+ Global Capability Centres (GCCs) across Tier-2 cities

Key sectors driving this demand include:

• IT-ITeS
• Consulting services
• BFSI
• Engineering & manufacturing

Flex Spaces Becoming Preferred Choice for GCCs

While GCCs are not the dominant occupiers of flex spaces, their presence is steadily increasing:

• ~9% of flex centres in Tier-2 cities cater to GCC-led operations
• 16% of GCC bases operate out of flex workspaces

This signals a growing preference for flexible, scalable office models among global firms entering smaller cities.

Quality & ESG Shift in Tier-2 Office Market

Interestingly, the report highlights a quality gap and opportunity in Tier-2 markets:

• Only 60% of flex centres are in dedicated office buildings
• Just 26% are in Grade-A assets

However, GCC occupiers are setting higher benchmarks:

• 53% of GCC-occupied flex centres are in Grade-A buildings
• 19% operate from green-certified spaces

This indicates that demand for premium, ESG-compliant office spaces will be a key growth driver going forward.

The Bigger Trend: Decentralisation of India’s Office Market

According to Shrinivas Rao, CEO of Vestian:

“The rise of Tier-2 cities is a defining shift in India’s expansion strategy. As infrastructure improves and flex ecosystems mature, the decentralization of GCCs will become a cornerstone of the Viksit Bharat 2047 vision.”

What This Means for Real Estate

For developers, investors, and occupiers, this trend has clear implications:

• New investment hotspots emerging beyond metros
• Rising demand for Grade-A office assets in Tier-2 cities
• Flex operators scaling aggressively in non-metro markets
• Strong linkage between infrastructure growth and commercial real estate demand

As metros face saturation, Tier-2 cities are not just alternatives anymore—they are becoming core to India’s office market expansion story.

Also Read: Flex Spaces to Play Major Role in Office Expansion, Survey Reveals

The post Flex Stock in Tier-2 Cities Hits ~9 Mn Sq Ft, Accounts for 9% of India’s Total appeared first on Square Feat India.

The report, titled “2026 India Office: Unlocking Agility, Vitality and Flight-to-Quality,” highlights that the sector’s growth will be driven by a diversified occupier base, rising institutional investment, and evolving workplace strategies.

Strong Growth Trajectory Ahead

India’s Grade A office stock is expected to expand significantly over the next few years. From 847.1 million sq ft in 2025, total stock is projected to reach 900–920 million sq ft in 2026, and further cross 1.1–1.2 billion sq ft by 2030.

At the same time:

• Demand is expected to grow to 90–100 million sq ft annually by 2030
• Supply could reach 75–85 million sq ft annually by 2030
• Vacancy levels are likely to decline to ~15% in 2026 and further to 13–14% by 2030
• Office rentals are projected to rise from ₹108.8 per sq ft/month in 2025 to ₹110–115 in 2026, and ₹120–130 by 2030

This reflects sustained occupier confidence and continued developer activity despite global economic uncertainties.

Bengaluru to Lead, Hyderabad and Delhi-NCR Strong

Among India’s top office markets, Bengaluru is expected to dominate in 2026, accounting for nearly one-third of total leasing activity and supply.

Other key cities will also see strong performance:

• Delhi NCR and Hyderabad are each expected to record over 10 million sq ft of demand and supply
• Mumbai is projected to see 9–10 million sq ft demand and 5–7 million sq ft supply
• Pune and Chennai will continue steady growth
• Kolkata is expected to witness a gradual uptick in activity

GCCs to Drive Nearly Half of Leasing

Global Capability Centers (GCCs) are emerging as the biggest growth drivers for India’s office market.

• GCC leasing is expected to reach 30–35 million sq ft in 2026
• This will account for 40–50% of total office demand

GCCs are increasingly evolving into innovation-driven hubs across sectors such as technology, BFSI, and engineering. Their preference for scalable and flexible office setups is pushing developers to create modular and plug-and-play workspaces.

Flex Spaces Gain Momentum

Flexible workspace operators are expected to play a significant role in shaping office demand:

• Annual leasing by flex operators is projected at 15–18 million sq ft in 2026
• This will account for 20–25% of total leasing activity

India’s total flex office stock is expected to reach 85–90 million sq ft by 2026, and surpass 100 million sq ft by 2027, reflecting the growing adoption of hybrid work models and demand for flexible leasing options.

REITs to Expand Commercial Real Estate Participation

The report also highlights the increasing role of Real Estate Investment Trusts (REITs) in India’s office market.

• Around 525 million sq ft of Grade A office stock is currently REIT-worthy
• Of this, 141 million sq ft is already listed under four REITs
• The remaining 384 million sq ft holds potential for future REIT listings

As a result, REIT penetration is expected to cross 20% in the coming years, improving liquidity and enabling wider retail investor participation in commercial real estate.

Sustainability and Tech to Define Future Workspaces

Sustainability and technology integration are set to become key differentiators in the office market:

• Over 80% of new office supply in 2026 is expected to be green-certified
• Green buildings could account for 70–75% of total stock
• Around 80% of leasing activity will be concentrated in green-certified buildings

Developers are increasingly focusing on:

• ESG-compliant designs
• Renewable energy integration
• Climate-resilient infrastructure
• Smart, tech-enabled buildings

Additionally, more than 420 million sq ft of older office stock (over 10 years old) presents a retrofit opportunity worth over ₹500 billion, indicating strong investment potential in upgrading existing assets.

Positive Outlook Despite Global Uncertainty

According to Arpit Mehrotra, India’s office market is entering a “future-ready cycle of structural growth,” driven by GCC expansion, flex space adoption, and a broadening occupier base.

Vimal Nadar added that ESG compliance and digital infrastructure will increasingly influence asset valuations and investor preferences.

Overall, India’s office market is expected to remain one of the most resilient globally, supported by strong fundamentals, cost advantages, and a growing talent pool.

Also Read: Mumbai’s Real Estate Market Healing: Property Registrations Catch Steam in February 2026

The post India Office Market to See 70–75 mn sq ft Demand in 2026, Supply at 60–65 mn sq ft appeared first on Square Feat India.

The momentum was particularly strong in the final quarter of the year, with Q4 2025 alone clocking a record-breaking 26.8 million sq ft, the highest quarterly leasing ever recorded in the country.

Flex Spaces and Tech Drive Office Demand

For the second consecutive quarter, flexible workspace operators emerged as the largest occupier segment, accounting for 26.6% of total leasing in Q4 2025—their highest-ever quarterly share.

This was followed by:

• IT/ITeS (21.2%)
• Manufacturing/Industrial (16.1%)
• BFSI (13.7%)

For the full year 2025, technology firms remained the largest occupiers with a 25.8% share, while flex operators followed closely at 21.5%. Manufacturing and BFSI contributed nearly equal shares at 15.4% and 15.2%, respectively.

Bengaluru Leads, But Growth Is Broad-Based

India’s top office markets—Bengaluru, Hyderabad, Mumbai, and Pune—all recorded their best-ever annual leasing volumes in 2025, highlighting the depth and resilience of demand.

• Bengaluru retained its leadership position with a 29% share of total leasing
• Delhi NCR followed with 20.9%
• Mumbai and Hyderabad each accounted for 14%

This broad-based performance also signals demand dispersion, as occupiers increasingly diversify beyond traditional core markets.

GCCs Strengthen India’s Position as ‘Office to the World’

A key driver of this historic performance was the surge in Global Capability Centers (GCCs).
In 2025, GCCs accounted for a commanding 37.7% of total leasing, absorbing a record 31 million sq ft—the highest ever for this segment.

“The convergence of record GCC expansion, flex space growth, and strong deal pipelines positions India’s office market to potentially cross 100 million sq ft of leasing within the next two years,” said Rahul Arora, Head – Office Leasing & Retail Services, JLL India.

Domestic occupier activity was also robust, driven primarily by Indian flex operators, who leased nearly 18 million sq ft, their best performance to date.

Net Absorption Touches an All-Time High

India’s office market didn’t just lease more—it also occupied more space than ever before.

• Net absorption in 2025 reached a record 57.0 million sq ft, up 14.1% year-on-year
• Q4 2025 alone contributed 17.1 million sq ft, the highest quarterly absorption of the year

Bengaluru led net absorption with a 37.2% share in Q4, followed by Hyderabad (15.7%) and Delhi NCR (14.0%).

“With nearly 200 new GCCs entering India over the past two years and GCCs now accounting for almost 50% of active space demand, the growth runway remains strong,” said Dr Samantak Das, Chief Economist, JLL India.

Vacancy Falls to a Five-Year Low

Strong absorption levels have pushed Pan-India office vacancy down to 15.2%, the lowest in five years, declining by 50 basis points quarter-on-quarter.

• Mumbai and Delhi NCR are witnessing their lowest vacancy levels in nearly 15 years
• Bengaluru’s vacancy is at a four-year low
• Core business districts across cities are seeing tight, single-digit vacancy levels

This tightening is creating space constraints for large occupiers, reinforcing expectations of further expansion and pre-commitments.

Outlook: 2026 Poised for Another Strong Year

JLL expects India’s office market to maintain its growth momentum in 2026, supported by:

• Continued GCC expansion
• Strong tech and R&D ecosystems
• Manufacturing push driven by policy initiatives
• A deep and skilled talent pool

With sustained demand and limited vacancies, India is now firmly entrenched as a global center for innovation, operations, and corporate expansion, setting the stage for potentially crossing the 100 million sq ft leasing milestone in the near future.

Also Read: India Rising: Managed Office Spaces Gain Ground Across Tier I, II and III Cities

The post India’s Office Market Hits Record Highs in 2025 with 83.3 Million Sq Ft Leasing appeared first on Square Feat India.