The milestone marks a 10.2% year-on-year increase and surpasses the quarterly run-rate seen through 2025, signalling that India’s commercial real estate cycle is being driven less by cyclical recovery and more by long-term shifts in global occupier strategy.
At the heart of this momentum is the rising dominance of GCCs, which accounted for 45.5% of total leasing activity in the quarter, followed by flex operators at 25.9% and the BFSI sector at 20%. Technology firms remained the single-largest demand driver with a 29.1% share, reflecting sustained global investment in digital and AI-led capabilities anchored in India.
GCC-led demand signals structural shift
Leasing by GCCs surged 43% year-on-year to 9.8 million sq. ft., highlighting how multinational corporations are increasingly using India not just for back-office functions, but as strategic hubs for innovation, product development, and digital engineering.
Global firms continued to dominate overall occupier activity, accounting for 57% of leasing, while domestic demand was largely driven by flex operators, which made up 57.8% of domestic space take-up.
This shift is also visible in sectoral trends, with BFSI recording its highest-ever quarterly leasing volumes, supported by large pre-commitments and expansion by global financial institutions.
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Bengaluru retains leadership, Mumbai sees sharp surge
At a city level, Bengaluru remained the country’s top office market, accounting for 24.8% of total leasing activity in Q1 2026. The city’s dominance was underpinned by strong GCC demand, which contributed a striking 70% of its total leasing volumes—the highest share in two years.
Bengaluru also led in net absorption, with 4.9 million sq. ft., marking a 52% year-on-year increase and accounting for 36% of India’s total absorption. A significant portion of this came from the conversion of pre-committed spaces in newly completed projects.
Mumbai emerged as the fastest-growing major market, with leasing volumes rising 55.4% year-on-year to 4.2 million sq. ft., translating into a 19.5% share of national activity. GCCs played a central role here as well, accounting for 46.3% of leasing in the city. Mumbai also saw net absorption grow 18.1% to 1.6 million sq. ft., alongside vacancy levels dropping to multi-year lows.
Hyderabad strengthens position; Pune steady
Hyderabad continued its strong run, clocking 3.6 million sq. ft. of leasing—a 25.1% annual increase—with a 16.8% share of total activity. GCCs contributed 42.9% of leasing in the city, reinforcing its position as a preferred destination for global occupiers. Net absorption rose 41.9% to 3.1 million sq. ft., driven by sustained demand and project completions.
Pune recorded a stable performance, with leasing volumes largely flat at 3.1 million sq. ft., giving it a 14.5% share. However, the city stood out for its strong flex-led demand, with flexible workspace operators accounting for a dominant 54.8% of leasing activity, reflecting a growing preference for agile office strategies.
Delhi NCR lags; Chennai sees moderation
In contrast, Delhi NCR saw leasing decline 27.7% year-on-year to 3.0 million sq. ft., with its share at 14.2%. Net absorption dropped sharply by 59.9%, making it the only major market to record a decline in both leasing and absorption metrics. That said, flex operators remained the largest occupier segment in the region, accounting for 32.9% of leasing.
Chennai also witnessed a marginal slowdown, with leasing declining 10.7% to 1.7 million sq. ft., though net absorption remained stable at around 1.0 million sq. ft.
Smaller markets such as Kolkata saw modest growth, with leasing rising 19% to 0.5 million sq. ft., even as vacancy levels tightened significantly.
Record absorption, tightening vacancies signal strength
India’s net absorption rose to a record 13.7 million sq. ft. in Q1, up 7% year-on-year, indicating sustained occupier expansion and healthy demand conversion.
At the same time, pan-India vacancy declined to 14.7%, a five-year low, supported by strong absorption and relatively muted new supply. Core micro-markets across cities are now witnessing single-digit vacancy levels, pointing to tightening supply conditions, particularly in Grade A assets.
Outlook: Multi-year expansion backed by structural tailwinds
The outlook for India’s office market remains robust, supported by a combination of strong deal pipelines, rising GCC penetration, and continued expansion by flex operators.
Nearly 200 new GCCs were set up between 2024 and 2025, and current trends suggest that India could approach the 100 million sq. ft. annual leasing milestone within the next two years.
With global firms increasingly leveraging India for AI, data science, and advanced engineering capabilities, the country’s office market is evolving beyond its traditional cost advantage into a strategic innovation hub, setting the stage for sustained, multi-year growth despite global economic uncertainties.
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