India’s office property market recorded 42.9 million sq ft of net absorption in the first nine months of 2026, up 2% from 42 million sq ft during the corresponding period last year, according to ANAROCK Research & Advisory.

The headline figure points to relatively stable office demand, but the bigger change is in who is occupying the space. Coworking operators have overtaken information technology and IT-enabled services (IT/ITeS) companies to become the largest occupier segment, while banking, financial services and insurance (BFSI) companies have also increased their share of leasing.

At the same time, falling vacancy levels and rising office rentals suggest that occupancy conditions are improving across the country’s seven major office markets, although leasing activity remains uneven across cities.

Coworking Becomes India’s Largest Office Occupier

Coworking operators accounted for 26% of total office demand in the first nine months of 2026, up from 23% in the same period last year. IT/ITeS companies accounted for 25%, down from 29%, while BFSI companies increased their share from 18% to 21%.

Together, coworking and BFSI accounted for 47% of office demand, compared with 41% a year earlier.

The rise of coworking is significant because these operators lease office space and offer it to businesses through flexible arrangements, including shared offices, managed workspaces and private offices.

Instead of committing to a conventional office lease for a large space over several years, companies can use coworking facilities to accommodate employees, expand teams or establish offices with greater flexibility.

Peush Jain, Managing Director – Commercial Leasing & Advisory at ANAROCK Group, said coworking had overtaken IT/ITeS demand, securing the largest share of office leasing in the first nine months of 2026.

The trend also points to a changing office market in which demand is increasingly spread across flexible workspace providers, financial services companies and traditional corporate occupiers.

Bengaluru Leads Office Absorption; Hyderabad Records Fastest Growth

Bengaluru remained the largest office market by net absorption, recording 11.92 million sq ft in 9M 2026, a 20% increase from 9.95 million sq ft a year earlier.

Hyderabad recorded the strongest annual growth among the seven markets, with absorption rising 54% to 8.8 million sq ft from 5.7 million sq ft.

The Mumbai Metropolitan Region, or MMR, recorded broadly stable absorption of 6.65 million sq ft, compared with 6.6 million sq ft in the corresponding period last year.

Office absorption across India’s top seven cities

The figures reveal a divided market. Bengaluru and Hyderabad are driving much of the growth, while Pune, Chennai, NCR and Kolkata recorded lower absorption than a year ago.

For office developers, this means demand needs to be assessed at the city level rather than assuming that growth in the national market will translate into stronger leasing across every location.

New Office Supply Rises 5% to 41.1 Million Sq Ft

Fresh office supply across the seven major markets increased 5% year-on-year to approximately 41.1 million sq ft in the first nine months of 2026, compared with 39.21 million sq ft in the same period last year.

Bengaluru recorded the highest new supply at 12.35 million sq ft, up 19% from 10.41 million sq ft. Hyderabad followed with 9.6 million sq ft, representing a 63% increase from 5.9 million sq ft.

MMR added 4.1 million sq ft of new office space, up 21% from 3.4 million sq ft a year earlier.

New office completions by city

Hyderabad’s combination of rising absorption and sharply higher new supply indicates that developers are adding office space amid growing occupier demand. However, the increase in supply also means the market will need continued leasing activity to absorb the additional inventory.

In contrast, NCR and Pune recorded declines in new completions, potentially limiting the amount of fresh space entering those markets during the period.

Office Vacancy Falls to 15.15% Across Major Markets

The overall office vacancy rate across the seven cities declined to 15.15% in 9M 2026 from 16.20% in the corresponding period last year.

A lower vacancy rate means a smaller proportion of the available office stock remains unoccupied. The decline suggests that, at the national level, leasing activity and occupancy have improved relative to the available supply.

All seven markets recorded lower vacancy rates, although the extent of improvement varied.

Chennai recorded the lowest vacancy rate at 8.75%, followed by Bengaluru at 11%. Hyderabad, despite its strong leasing growth, continued to have the highest vacancy rate at 24%, followed by NCR at 20.6%.

This distinction is important: strong leasing growth does not necessarily mean a market has little vacant space. Hyderabad’s figures suggest that demand is improving, but a substantial amount of existing office stock remains unoccupied.

Office Rentals Rise 8%; Mumbai Remains the Most Expensive Market

Average monthly office rentals across the seven markets rose 8% to ₹97 per sq ft in 9M 2026, from ₹90 per sq ft a year earlier.

Hyderabad recorded the fastest rental growth at 12%, followed by NCR at 10%, Bengaluru at 9% and MMR at 8%.

Average monthly office rentals

MMR remained the costliest office market, with average rentals of ₹156 per sq ft per month. Kolkata was the least expensive among the seven markets, at ₹66 per sq ft per month.

The increase in rentals alongside falling vacancy suggests that landlords have gained some pricing strength. However, the figures are market averages and do not mean every office building or micro-market has experienced the same rental increase.

For businesses looking to lease offices, rising rents could increase occupancy costs, making location choices, space utilisation and lease flexibility more important.

What the Numbers Mean for India’s Office Market

The first nine months of 2026 show that India’s office market is growing modestly in overall absorption, while undergoing a more pronounced change in the composition of demand.

Coworking operators have emerged as the largest occupier segment, BFSI companies have increased their share, and IT/ITeS has lost some ground while remaining a major source of leasing.

Bengaluru continues to lead in total absorption, while Hyderabad is registering the fastest growth. MMR remains the most expensive market, even as its leasing activity stays broadly stable.

Falling vacancy and rising rentals provide further signs of improving market conditions. Nevertheless, the divergence between cities highlights the importance of matching new office supply with actual occupier demand.

The sustainability of this trend will depend on whether leasing activity continues to absorb newly completed space, particularly in markets where supply is expanding rapidly. For developers, landlords and corporate occupiers, the national growth figure is encouraging, but individual city conditions remain critical to investment and leasing decisions.

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