India’s office market recorded its highest-ever quarterly absorption of 23.9 million sq ft in Q2 2026, as demand continued to outpace new supply, according to Vestian Research. The demand-supply gap widened to 9 million sq ft during the quarter, contributing to a 105-basis-point improvement in vacancy levels and rental growth of 3% to 9% over the previous year.
Construction activity also recovered during the quarter, with new office completions rising 53% quarter-on-quarter to 14.9 million sq ft. The widening gap between demand and supply is expected to support further vacancy reductions and rental appreciation across India’s major commercial hubs.
Bengaluru Leads Office Absorption
Bengaluru, NCR and Hyderabad accounted for approximately 63% of total office absorption in Q2 2026. Bengaluru retained its position as India’s leading office market, contributing 6.4 million sq ft, or 27% of pan-India absorption. The city’s Outer Ring Road (ORR) accounted for 76% of its leasing activity.
NCR emerged as the second-largest office market with 4.5 million sq ft of absorption, while Hyderabad recorded 4.2 million sq ft. Pune reported the highest year-on-year growth among the top seven cities, with absorption increasing 178% to 3.8 million sq ft.
Chennai recorded 2.3 million sq ft of absorption, followed by Mumbai at 2.1 million sq ft. Kolkata recorded 0.5 million sq ft, although leasing activity more than doubled compared with the previous quarter.
Bengaluru, Pune, Mumbai and NCR Drive New Supply
The recovery in construction activity was led by Bengaluru, Pune, Mumbai and NCR, which together contributed nearly 85% of total new completions during the quarter. Bengaluru alone accounted for 40% of pan-India supply additions, reflecting continued developer focus on established office markets.
Among the seven major cities, new completions stood at 6 million sq ft in Bengaluru, 2.5 million sq ft in Pune, 2.2 million sq ft in Mumbai and 2 million sq ft in NCR.
IT-ITeS Remains the Largest Occupier Segment
IT-ITeS continued to dominate office demand, accounting for 41% of total absorption during the quarter. Managed offices, coworking and flexible spaces followed with a 22% share, highlighting continued demand for agile workplace solutions.
Flexible workspace operators ranked among the top two occupier segments across all major cities and emerged as the largest occupier category in NCR. BFSI accounted for 8% of total leasing, supported by continued expansion among financial institutions.
Global Capability Centres (GCCs) remained a major driver of office demand. GCCs leased 12.5 million sq ft during Q2 2026, representing 52% of total absorption. Bengaluru, Hyderabad and Pune together accounted for 72% of GCC-led absorption.
The continued expansion of GCCs, along with increasing demand for sustainable workplaces, also supported the growth of green-certified office buildings. Such buildings accounted for 87% of total leasing during the quarter, up from 85% in Q1 2026.
Demand-Supply Gap Supports Rental Growth
Vacancy levels improved across all seven major office markets. NCR and Kolkata recorded the sharpest quarter-on-quarter declines, with vacancy falling by 189 basis points in each market.
Rental values also recorded marginal appreciation across major office markets. With the demand-supply gap continuing to widen, vacancy levels could improve further and rentals may see additional growth, according to the report.
“India’s office market continued its growth momentum in Q2 2026 on the back of strong occupier demand. To cater to the rising demand, developers ramped up construction activities across the major cities, resulting in significant supply additions and new project launches in Q2 2026. The continued expansion of Global Capability Centres (GCCs), along with sustained demand from technology companies and managed office and flexible workspace operators, is expected to keep the office market buoyant in the future as well,” said Shrinivas Rao, FRICS, CEO, Vestian.
City-wise Market Trends
In Chennai, technology and flexible workspace occupiers continued to drive leasing activity, while the city maintained one of the lowest vacancy rates among the top seven markets at 3.4%.
Hyderabad’s PBD-West accounted for 96% of the city’s absorption, while GCCs contributed 21% to pan-India GCC absorption.
Mumbai recorded its lowest quarterly absorption in the past 12 quarters at 2.1 million sq ft, with BFSI accounting for 36% of the city’s leasing activity.
In Kolkata, PBD accounted for 96% of total absorption. In Pune, strong demand from technology companies and GCCs supported the highest year-on-year growth in absorption among the top seven cities.
Within NCR, Gurugram contributed 67% of total absorption, driven by strong demand from flexible workspace operators.
