News: Office Leasing Up 6% to 29.9 Mn Sq Ft in Q1 2026-07-04-2026

Office space leasing in India’s top eight cities crossed 29.9 million sq ft in the first quarter of 2026, a 6% increase over 28.2 million sq ft in Q1 2025, according to a Knight Frank India report.

Bengaluru led with 9.2 mn sq ft, followed by Hyderabad (5.9 mn sq ft), Mumbai (5.6 mn sq ft) and the National Capital Region (4.0 mn sq ft). Pune accounted for 3.1 mn sq ft, Chennai 1.5 mn sq ft, Kolkata 0.4 mn sq ft and Ahmedabad 0.3 mn sq ft. Grade A assets made up 93% of transactions.

The report noted that volumes in Mumbai and Hyderabad in the quarter exceeded 50% of their total leasing for 2025. Four deals of more than 1.0 mn sq ft each were concluded across NCR, Bengaluru, Mumbai and Hyderabad.

Global capability centres (GCCs) accounted for 48% of absorption at 14.4 mn sq ft, the highest share on record, and Bengaluru alone took 41% of that demand. GCC leasing stood at 5.9 mn sq ft in Bengaluru, 2.9 mn sq ft in Mumbai, 2.5 mn sq ft in Hyderabad, 1.3 mn sq ft in NCR, 1.0 mn sq ft in Pune and 0.7 mn sq ft in Chennai. India-facing businesses contributed 19% and grew fastest, with leasing up 22% year-on-year. Flex operators accounted for 17% and third-party IT services 15%.

Viral Desai, Senior Executive Director, Occupier Strategy and Solutions, Industrial and Logistics, Capital Markets and Tenant, Knight Frank India, said the growth in GCCs and India-facing businesses reflects a structural shift in which India is being treated as a core operating market and not a peripheral one.

New completions totalled 14 mn sq ft, up 154% YoY, yet less than half the space absorbed. The report said the demand-supply gap seen since 2021 has tightened the market, with vacancy falling from 17.2% in 2021 to 13.9% in Q1 2026.

Constrained supply has kept rents rising since 2022. Rental values rose 2% to 15% year-on-year across cities. NCR and Kolkata led at 15%, and Hyderabad and Chennai saw 8%. Mumbai and Bengaluru grew 6% and 7% respectively, and these two markets and NCR crossed an average rent of Rs 100 per sq ft for the first time.

Shishir Baijal, international partner, chairman and managing director, Knight Frank India, said leasing remains well distributed across markets. Near-term uncertainties may affect decision timelines, he said, but India’s stability and structural growth drivers should sustain momentum and a positive medium-term outlook.