Knight Frank India has reported a record-breaking performance in India’s office market, with leasing volumes touching an all-time high of 29.9 million sq ft in the first quarter of 2026 across eight major cities. This represents a 6% increase over the previous peak observed in Q1 2025, marking a notable milestone despite a quarter characterised by heightened geopolitical tensions.

Driven by strong demand from Global Capability Centres (GCCs) and India-facing businesses, the surge comes despite global uncertainties, underscoring India’s growing strategic importance for occupiers. With demand significantly outpacing new supply, vacancy levels have tightened and rental growth has strengthened, signalling a resilient and supply-constrained office market.

Leasing activity remained firmly concentrated in Grade A assets, which accounted for 93% of total transactions. While Bengaluru remained the largest office leasing market with 9.2 mn sq ft, strong performances by Hyderabad (5.9 mn sq ft), Mumbai (5.6 mn sq ft) and National Capital Region (NCR) (4.0 mn sq ft), made leasing activity more equitable. GCC’s continued their dominance as the largest end user group leasing 14.4 mn sq ft of office space in Q1 2026.

The demand continues to outpace the office completions as developer focus remained skewed toward residential projects. A total of 14.0 mn sq ft was delivered across the eight major cities in Q1 2026, reflecting a sharp 154% YoY increase, but still amounting to less than half of the space absorbed during the quarter. The persistent gap between supply and demand, evident since 2021, has steadily tightened market conditions. Vacancy levels have compressed from 17.2% in 2021 to a considerably lower 13.9% in Q1 2026.

Leasing activity was more evenly distributed across the eight major markets, indicating a distinctly more balanced expansion in the office market. Mumbai and Hyderabad recorded historic quarterly highs of 5.6 mn sq ft and 5.9 mn sq ft, respectively, in Q1 2026. Notably, transaction volumes in both cities during the quarter exceeded 50% of their total leasing activity for 2025, underscoring the strength and concentration of demand. The quarter also stood out for the scale of transactions, with four large deals, each exceeding 1.0 mn sq ft, concluded across NCR, Bengaluru, Mumbai and Hyderabad, highlighting sustained occupier confidence and the growing preference for large-format spaces.

Shishir Baijal, International Partner, Chairman & Managing Director, Knight Frank India said, “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. While near-term uncertainties may influence decision-making timelines, India’s underlying stability and structural growth drivers are expected to sustain leasing momentum and support a positive medium-term outlook for the Office Market.”

GCCs Cement India’s Strategic Role

India’s tryst with Global Capability Centres (GCC) continued with the segment recording another strong quarter of leasing activity in Q1 2026, reinforcing trends observed in 2025. With 14.4 mn sq ft transacted, GCCs accounted for 48% of total leasing during the quarter, marking the highest share as well as absolute absorption on record. Bengaluru remained the preferred market, capturing 41% of GCC demand. Among other occupier segments, India-facing businesses, third-party IT services, and Flex operators accounted for 19%, 15%, and 17% of total leasing, respectively. India-Facing recorded the strongest growth, with the 5.8 mn sq ft leased, reflecting a 22% YoY increase, the highest among all end-use categories as despite global challenges, India’s economic fundamentals continue to remain robust

Viral Desai, International Partner, Senior Executive Director Occupier Strategy & Solutions, Industrial & Logistics, Capital Markets and Tenant, Knight Frank India said, “India’s Office Market continues to be driven by strong occupier demand, Global Capability Centres (GCCs) and India-facing businesses. The strong growth in GCCs and India-facing businesses reflects a structural shift, where India is increasingly being positioned as a core operating market rather than a peripheral one. As India emerges as a preferred destination for GCCs, occupiers are expanding and upgrading into Grade A spaces to support talent, efficiency and ESG priorities. With demand outpacing supply, leasing momentum is expected to remain resilient.”

Supply Crunch Fuels Rental Growth

The supply constraints across key markets have supported sustained rental upcycle since early 2022, with landlords gaining greater pricing power even as several global office markets face headwinds. Rental growth remained positive in Q1 2026, ranging between 2% and 15% YoY across cities. NCR and Kolkata led the gains at 15% YoY each, while Hyderabad and Chennai recorded increases of 8% YoY. Rent levels in Mumbai and Bengaluru saw comparatively moderate growth of 6% and 7% YoY, respectively. Notably, NCR and Bengaluru breached an average rent of INR 100 per sq ft for the first time.