Bengaluru continued to lead India's office market in both leasing and supply during the first quarter of 2026, even as the sector navigated global geopolitical uncertainties. According to a report by Vestian, the city recorded 4.91 million sq ft of absorption and 4.20 million sq ft of new completions.

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GCCs Emerge as Primary Growth Engine

This performance anchored a broader national trend, with Global Capability Centres (GCCs) emerging as the primary growth engine, accounting for 11.5 million sq ft of leasing, approximately 53 per cent of the total market absorption.

The Indian office market demonstrated notable resilience despite the ongoing West Asia crisis and macroeconomic challenges. Total office absorption across the top seven cities reached 21.53 million sq ft in Q1 2026, representing a 20 per cent increase compared to the same period last year. This growth was largely supported by steady GDP expansion, controlled inflation, and stable interest rates, which provided a conducive environment for corporate expansion.

Shrinivas Rao, CEO of Vestian, said, "India's office market exhibited resilience in the first quarter of 2026 despite global geopolitical challenges. Sustained leasing activity, particularly driven by GCCs, highlights India's growing prominence as a strategic hub for global corporations."

New Completions Decline Amid Developer Caution

While leasing remained strong, construction activity saw a significant slowdown. New completions declined by 36 per cent quarter-on-quarter to 9.7 million sq ft, marking the lowest level recorded in the past four quarters. Bengaluru, Hyderabad, and Mumbai contributed significantly to this decline as developers adopted a cautious stance. In Hyderabad, new completions contracted sharply by 95 per cent, falling to 0.3 million sq ft from 6.0 million sq ft in the previous quarter.

"While supply chain constraints led to a temporary slowdown in new completions, robust absorption has tightened vacancies and driven rental appreciation. Looking ahead, rapid GCC expansion, rising demand for sustainable office spaces, and India's stable macroeconomic environment are expected to drive the next wave of growth in the office sector," Rao added.

Deep-Tech and Next-Gen GCCs to Shape Future Demand

The report noted that the next phase of demand will be shaped by deep-tech evolution and next-generation GCC models, including mid-market and nano GCCs focusing on artificial intelligence and niche research and development.

City-Specific Highlights and Market Dynamics

Currently, leasing activity remains concentrated in key markets, with Bengaluru, Pune, and Hyderabad collectively accounting for 78 per cent of total GCC absorption in Q1 2026. Pune recorded its highest-ever quarterly absorption at 3.92 million sq ft, while Hyderabad saw rentals appreciate by 5.3 per cent year-on-year--the highest growth among major cities. Mumbai maintained its position as the most expensive office market, with average rentals reaching Rs 152.6 per sq ft per month.

This combination of robust demand and cautious supply resulted in pan-India vacancy levels improving to 9.5 per cent from 10.8 per cent in the previous quarter. (ANI)