The top eight cities have leased over 29.9 million sq ft of office space across in the first quarter of 2026, 6% up from 28.2 million sq ft in Q1 2025, according to a report by Knight Frank India. Bengaluru led the market with 9.2 mn sq ft of leasing, followed by Hyderabad (5.9 mn sq ft), Mumbai (5.6 mn sq ft), and the National Capital Region (4.0 mn sq ft).
Leasing activity remained firmly concentrated in Grade A assets, which accounted for 93% of total transactions, the report said. Meanwhile, Pune (3.1 mn sq ft), Chennai (1.5 mn sq ft), Ahmedabad (0.3 mn sq ft), and Kolkata (0.4 mn sq ft) also contributed to the overall leasing, the data showed.
“Notably, transaction volumes in Mumbai and Hyderabad during the quarter exceeded 50% of their total leasing activity for 2025, underscoring the strength and concentration of demand. The quarter also stood out for the scale of transactions, with four large deals, each exceeding 1.0 mn sq ft, concluded across NCR, Bengaluru, Mumbai and Hyderabad, highlighting sustained occupier confidence and the growing preference for large-format spaces,” the report said.
GCCs anchor demand
The report said that global capability centres (GCCs) continued to dominate leasing activity, accounting for 48% of total absorption at 14.4 mn sq ft, the highest share on record. Bengaluru alone captured 41% of GCC demand, reinforcing its position as the country’s primary hub for global occupiers.
GCC leasing in Q1 2026 was led by Bengaluru at 5.9 mn sq ft, followed by Mumbai with 2.9 mn sq ft and Hyderabad at 2.5 mn sq ft. The National Capital Region recorded 1.3 mn sq ft, while Pune saw 1.0 mn sq ft of GCC leasing. Chennai accounted for 0.7 mn sq ft.
Other segments, such as India-facing businesses (19%), flex operators (17%), and third-party IT services (15%), also contributed. Notably, India-facing businesses recorded the fastest growth, with leasing rising 22% year-on-year, the report said.
Viral Desai, Senior Executive Director, Occupier Strategy and Solutions, Industrial and Logistics, Capital Markets and Tenant, Knight Frank India said, “India’s Office Market continues to be driven by strong occupier demand, Global Capability Centres (GCCs) and India-facing businesses. The strong growth in GCCs and India-facing businesses reflects a structural shift, where India is increasingly being positioned as a core operating market rather than a peripheral one.”
Demand outpaces supply
Knight Frank India said that a total of 14 mn sq ft was delivered across the eight major cities in Q1 2026, reflecting a sharp 154% YoY increase, but still amounting to less than half of the space absorbed during the quarter.
“The persistent gap between supply and demand, evident since 2021, has steadily tightened market conditions. Vacancy levels have compressed from 17.2% in 2021 to a considerably lower 13.9% in Q1 2026,” it said.
Supply crunch spikes office rentals
The report said that supply constraints have fuelled a sustained rental upcycle since 2022. Rental values rose between 2% and 15% year-on-year across cities in Q1 2026. NCR and Kolkata led growth at 15%, while Hyderabad and Chennai saw 8% increases.
Rents in Mumbai and Bengaluru grew at a relatively moderate pace of 6% and 7%, respectively, but both markets, along with NCR, crossed the ₹100 per sq ft average rent threshold for the first time, it said.
Shishir Baijal, international partner, chairman and managing director, Knight Frank India, said, “Office leasing activity remains well distributed across markets, reflecting sustained occupier confidence in India’s growing strategic relevance in an evolving global landscape.”
“The continued expansion of Global Capability Centres (GCCs), alongside the strengthening of institutional-grade supply, reinforces India’s position as a key hub for global occupiers. While near-term uncertainties may influence decision-making timelines, India’s underlying stability and structural growth drivers are expected to sustain leasing momentum and support a positive medium-term outlook for the office market,” he said.
