Office leasing in India's top 8 cities skids 14.5% in Q2; vacancies hit post-Covid low

New Delhi: Office space leasing has moderated by 14.5% YoY in Q2 2026 with the top eight cities absorbing 11.6 million sq ft, amid an evolving global economic environment, according to Cushman & Wakefield's data.

Net absorption across the top eight cities remained at 23 MSF in H1 2026, moderating by 19.8% YoY.

"While global macroeconomic and geopolitical uncertainties have led occupiers to adopt a more measured approach to decision-making, the underlying demand story remains firmly intact. Organisations continue to make long-term commitments to India, reflecting confidence in the country's talent ecosystem, business environment and long-term growth potential,” said Anshul Jain, Chief Executive – India, SEA, MEA & APAC Office and Retail, Cushman & Wakefield.


GCCs remained the principal growth engine of India's office market, leasing approximately 16.5 million sq ft during H1 2026, accounting for 38% of total leasing activity and marking a robust 38% YoY increase.

The momentum remained strong in Q2 as GCC occupiers transacted nearly 8 MSF, contributing 37% of overall office leasing and reinforcing India's position as a preferred destination for Global Capability Centres.

“Global Capability Centres continue to be at the heart of this momentum, with their expansion increasingly shaping demand across multiple office markets. Over the past couple of years, many developers prioritised residential development amid strong housing demand. However, with office vacancy tightening to post-pandemic lows, rental growth strengthening and demand remaining resilient, we expect commercial development activity to regain greater attention,” Jain said.

The geographic footprint of GCC demand also continued to broaden during H1 2026. Bengaluru, Pune, Delhi NCR and Mumbai together accounted for nearly 80% of total GCC leasing during the first half of the year. While Bengaluru remained the country's largest GCC market with 5.36 MSF of leasing, Pune (3.01 MSF), Delhi NCR (2.37 MSF) and Mumbai (2.23 MSF) also witnessed strong demand.

Hyderabad (1.63 MSF) and Chennai (1.50 MSF) continued to attract healthy GCC activity, highlighting how occupiers are increasingly expanding across multiple markets to access talent, build operational resilience and support long-term growth.

Flexible workspace operators continued to strengthen their portfolio in India’s office market, leasing 8.4 MSF, accounting for one-fifth of total leasing activity in H1-26. This marks a 55% YoY increase and the highest-ever half-yearly volume recorded by the segment.

Bengaluru remained the largest contributor, accounting for nearly 30% of pan-India net absorption, followed by Pune and Hyderabad, contributing 15% each in H1.

"There is an active demand of 80 MSF in the market and with vacancy levels falling to their lowest point since the pandemic, occupiers are increasingly evaluating space requirements well in advance, particularly in markets where availability of quality assets is becoming more constrained,” said Veera Babu, Executive Managing Director, Tenant Representation - India, Cushman & Wakefield.

Supply additions across the top eight cities stood at approximately 21 MSF in H1 2026, reflecting a 10% YoY decline. The supply momentum in Q2 2026 saw a 40% QoQ increase, with new completions reaching 12 MSF. As projects currently awaiting final approvals move toward completion, a healthy pipeline of more than 35 MSF is expected to enter the market during the second half of the year, providing additional options for occupiers amid sustained demand.

“As new supply enters the market over the second half of the year, occupiers will have greater access to quality office stock, which is expected to support stronger absorption across key markets,” Babu said.

Pan-India vacancy declined further to 13.7% in Q2 2026, marking the twelfth consecutive quarter of vacancy compression and lowest vacancy levels recorded post-covid. The decline was driven by a combination of sustained leasing activity and lower-than-anticipated supply additions during the first half of the year, resulting in continued absorption of available vacant stock across key office markets.

Rental growth continued across all major office markets in Q2 2026. Chennai, Mumbai, Hyderabad and Ahmedabad led with rental appreciation of 2-3% QoQ.