According to Vestian Research, new office completions across India fell drastically by 36% quarter-on-quarter to 9.7 million sq ft in Q1 2026—the lowest level seen in the past four quarters. The decline was led by major cities such as Bengaluru, Hyderabad, and Mumbai, where developers slowed down project deliveries due to supply chain disruptions and geopolitical concerns.

Hyderabad saw the steepest fall, with new completions plunging by a staggering 95%—from 6.0 million sq ft in Q4 2025 to just 0.3 million sq ft in Q1 2026. Mumbai and Bengaluru also reported notable declines in new supply on a quarterly basis, reflecting a broader trend of cautious project execution.

However, in stark contrast to the supply slowdown, office leasing activity remained robust. Total absorption rose 20% year-on-year to 21.53 million sq ft in Q1 2026, indicating sustained demand from occupiers despite global macroeconomic challenges.

This resilience has been largely driven by India’s growing appeal as a global business hub. Companies—especially Global Capability Centres (GCCs)—continue to expand operations in India due to cost efficiency, talent availability, and scalability. Stable macroeconomic factors such as steady GDP growth, controlled inflation, and relatively stable interest rates have further supported business expansion.

City-wise, Bengaluru continued to dominate the office market, recording 4.91 million sq ft of leasing activity, followed by Pune at 3.92 million sq ft—its highest-ever quarterly absorption. Hyderabad also showed strong demand with a 47% year-on-year growth in leasing.

Mumbai, despite a slight dip in absorption, retained its position as India’s most expensive office market, with rentals touching ₹152.6 per sq ft per month during the quarter.

The imbalance between strong demand and slowing supply has started tightening vacancy levels across major cities. Pan-India vacancy rates dropped to 9.5% from 10.8% in the previous quarter. As a result, rental values have continued to rise, especially in prime office locations, signaling a shift toward a landlord-driven market.

Industry experts believe this trend could continue in the near term. While supply constraints may persist due to global uncertainties, demand is expected to remain strong, fueled by rapid GCC expansion and increasing preference for sustainable and high-quality office spaces.

Looking ahead, India’s office real estate market appears poised for long-term growth, even as short-term supply-side challenges continue to shape the sector’s dynamics.

Also Read: Affordable Housing Crisis: Will Budget 2025-26 Turn the Tide?

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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

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