India office market records highest-ever quarterly leasing despite global headwinds

India’s office property market recorded its strongest-ever quarterly performance in the March quarter, with leasing activity hitting a new peak despite ongoing geopolitical tensions and global uncertainty, underscoring the country’s growing strategic importance as a global business and operations hub.

Office leasing touched 29.9 million sq ft across the top eight cities during the quarter, marking a 6% increase over the previous high recorded in the March quarter of 2025, showed data from Knight Frank India.

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Activity remained firmly skewed towards Grade A assets, which accounted for 93% of total transactions, reflecting occupiers’ continued preference for high-quality, compliant workspaces.

“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,” Shishir Baijal, International Partner, CMD, Knight Frank India.

According to him, near-term uncertainties may delay decisions, but India’s structural strengths are expected to sustain leasing momentum and support a positive medium-term outlook for the office market.

“The momentum we are seeing is clearly structural rather than cyclical. Occupiers today are far more decisive about quality, scale, and long-term commitments, which is reshaping how office assets are designed and delivered. This is pushing developers to rethink product, capital strategy, and execution. Going ahead, the gap between institutional-grade assets and the rest of the market is likely to widen further,” said Niranjan Hiranandani, Chairman of realty developers’ body NAREDCO.

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Bengaluru led leasing volumes with 9.2 million sq ft, followed by Hyderabad at 5.9 million sq ft and Mumbai at 5.6 million sq ft. Both Mumbai and Hyderabad recorded their respective highest-ever quarterly absorption.

The National Capital Region (NCR) saw leasing of 4 million sq ft, indicating a more balanced spread of demand across markets, while Pune and Chennai reported relatively lower volumes during the period.

Global Capability Centres (GCCs) continued to anchor demand, accounting for 14.4 million sq ft or 48% of total leasing, the highest share on record. Bengaluru remained the preferred hub for GCCs, capturing a significant portion of this demand, while Mumbai and Hyderabad also saw strong traction.

Among other occupier segments, India-facing businesses leased 5.8 million sq ft, registering a 22% on-year increase, the highest growth among all segments. Flexible office space operators and third-party IT firms contributed 17% and 15% of leasing, respectively.

On the supply side, developers delivered 14 million sq ft during the quarter, reflecting a sharp 154% on-year increase. However, completions remained significantly below absorption levels, highlighting a persistent demand-supply mismatch. This gap, evident over the past few years, has continued to tighten vacancy levels, which declined to 13.9% from 17.2% in 2021, indicating increasingly constrained market conditions.

The quarter also saw a rise in large-format transactions, with four deals exceeding 1 million sq ft across key markets, including NCR, Bengaluru, Mumbai and Hyderabad. This trend highlights sustained occupier confidence and a growing preference for scale, consolidation, and long-term commitments.

Tight supply conditions have supported a continued rental upcycle across major office markets. Office rents rose between 2% and 15% year-on-year across cities in the March quarter, with NCR and Kolkata leading gains at 15% each. Hyderabad and Chennai recorded rental increases of 8%, while Mumbai and Bengaluru saw growth of 6% and 7%, respectively, even as both markets continued to command premium rentals.

According to industry experts, the combination of strong occupier demand, particularly from GCCs and India-facing businesses, along with India’s improving position in global corporate strategies, is expected to sustain leasing momentum over the medium term, despite near-term global uncertainties.