India's office market recorded 35.7 million sq ft of gross leasing across the top seven cities in the first half of 2026, a 6% increase compared to the same period in 2025, according to a report by Colliers. Despite this growth, the overall market remains cautious, with Grade A space uptake moderating in the second quarter.
Q2 2026 Leasing Activity and Supply Dynamics
In Q2 2026 (April-June), Grade A space uptake stood at 17.4 million sq ft, down from a robust first quarter. However, demand exceeded new supply as developers adopted a cautious approach to adding inventory. Vacancy levels remained rangebound at approximately 15% at the national level, influenced by relocations and churn.
The report highlighted that demand for office spaces continues to be supported by the expansion of Global Capability Centers (GCCs) in preferred markets, steady leasing across diverse occupier segments, and the continued adoption of flexible workspaces.
Regional Performance: Bengaluru and Hyderabad Lead
During H1 2026, Bengaluru led the office space market, driving space uptake of 10.5 million sq ft, accounting for a 29% share. Hyderabad recorded around 7.2 million sq ft of leasing activity, contributing nearly one-fifth of total demand and registering a 47% year-on-year rise in leasing.
Delhi NCR, Mumbai, and Chennai each recorded leasing activity of 4-5 million sq ft in H1. However, Q2 saw a sharp moderation in demand, with Mumbai and Pune witnessing a 25-30% year-on-year decline in space uptake as occupiers turned cautious.
Large Deals Decline in Mumbai and Pune
The share of large deals (100,000 sq ft and above) in Mumbai declined from around 41% in Q1 2026 to 13% in Q2 2026. In Pune, the share of large-sized transactions dropped from about 63% to 38% during the same period.
Flex Space Leasing Surges
In Q2 2026, flex space leasing touched 4.6 million sq ft, over 90% higher than the average quarterly flex space demand of the last five years. This signals growing adoption of flexible workspaces as a core component of occupier real estate portfolios, according to the report.
Rental Trends and Market Outlook
Office rents increased slightly, up to 5%, in select active micro markets, but the overall market remains cautious. The report noted that despite a slower second quarter, India's office market growth has remained intact through the first half of 2026, driven by resilient demand and strategic occupier decisions.
