India's office story stays resilient as demand surges despite global volatility

Bengaluru: India’s office market is reinforcing its resilience amid heightened global uncertainties as the Iran war disrupts energy markets, and oil prices rally intensify inflationary pressures across key economies.

Despite this volatile backdrop, the sector has started 2026 on a strong footing, with demand consistently outpacing supply across the top seven cities, underscoring its structural strength.

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According to Colliers, supply remained healthy at 11.8 million sq ft, up 19% YoY, led by Bengaluru with a dominant 47% share of completions, followed by Delhi NCR at 17%. Chennai and Mumbai each added about 1.5 million sq ft, contributing roughly 13% each to quarterly supply.

“Though global headwinds continue to loom large and can potentially impact completion timelines, demand side outlook for 2026 remains positive at this juncture. The Indian office market will continue to be one of the best performing markets in the APAC region, supported by long-term GCC expansion, diversification of occupier base, strengthening of flex space offerings and growing preference for high-quality assets,” said Arpit Mehrotra, managing director, office services, India, Colliers.

On the demand side, conventional leasing stayed robust at 14.4 million sq ft, with Technology and BFSI occupiers driving nearly two-thirds of total absorption (9.5 million sq ft). BFSI demand was led by Bengaluru and Mumbai, while technology leasing remained concentrated in Bengaluru and Hyderabad, together accounting for over 60% of tech demand.

“Office demand is also expected to remain strong. India’s technology and services industries continue to expand, and the availability of skilled talent remains a major advantage. Even with the rise of technologies like artificial intelligence, the need for human expertise in areas such as software development, data analysis and advanced technology services will remain high,” said M R Jaishankar, executive chairman, Brigade Group.

Large global occupiers continued to anchor this momentum, with key transactions including Commonwealth Bank of Australia leasing 1.1 million sq ft at Manyata Tech Park, Bengaluru (ORR), Uber taking 950,000 sq ft at Meenakshi Eco Park, Hyderabad, and Accenture leasing 600,000 sq ft at Millennium Tower, Pune (Hinjewadi) and Charles Schwab taking 350,000 sq ft at Phoenix Equinox, Hyderabad.

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“Amid global macroeconomic uncertainties, India’s office market continues to stand out due to the strength of its underlying demand drivers. The sustained expansion of Global Capability Centres, coupled with the increasing preference for high-quality office assets and flexible workspaces, is supporting stable occupancy levels and rental growth,” said Amit Shetty, CEO, Embassy REIT.

Flex spaces have also emerged as a key shock absorber in this uncertain global environment, with leasing by operators surging 77% YoY to nearly 4 million sq ft. Delhi NCR and Hyderabad together accounted for over 45% of flex uptake, while cities such as Kolkata and Delhi NCR saw flex operators contribute nearly 40% of overall leasing activity. In Hyderabad, Chennai and Pune, flex spaces accounted for about one-fourth of quarterly demand, reflecting a clear shift towards agility and cost optimisation.

“GCCs and large enterprises are not choosing flex for convenience alone. They are choosing enterprise managed offices for speed to market, design quality, and the flexibility to scale without long-term capital commitment. The flex market is maturing. What comes next belongs to operators built exclusively for enterprise,” said Kunal Mehra, President and Co-CEO, Table Space.

Strong leasing momentum continued to compress vacancies, which declined by nearly 90 basis points YoY to 15.3%. Four of the seven major markets recorded vacancy reductions exceeding 100 basis points, while office rentals rose by around 6% YoY, indicating tightening market conditions.

Overall leasing across the top seven cities reached 18.3 million sq ft in Q1 2026, up 15% YoY, supported by a diversified occupier base and sustained expansion of Global Capability Centres (GCCs), which accounted for nearly half of total demand. Bengaluru and Hyderabad together drove 8.7 million sq ft, or nearly half of overall leasing, while Mumbai, Pune, Delhi NCR and Chennai recorded steady absorption in the 2–3 million sq ft range.

Other cities like Hyderabad and Pune saw demand more-than-double annually, highlighting the deepening of office demand beyond traditional markets.