The Indian office real estate market recorded a net absorption of 42.9 million sq ft in the first nine months of 2026, up 2% Y-o-Y from 42 million sq ft in the corresponding period of 2025, finds latest data by Anarock Research & Advisory. Interestingly, occupier demand composition is witnessing a shift, with the share of coworking and BFSI growing steadily.

While overall absorption remained stable, coworking and banking, financial services and insurance (BFSI) increased their share of leasing, with these two segments accounting for 47% of total office demand in 9M 2026, up from 41% a year earlier.

Peush Jain, Managing Director – Commercial Leasing & Advisory, ANAROCK Group, says, “Coworking has overtaken IT/ITeS office space demand – at 26%, it now commands the highest overall leasing share in 9M 2026, followed closely by IT/ITeS with a 25% share and BFSI with 21%.”

New office completions in the top 7 cities increased 5% y-o-y to 41.1 million sq ft in 9M 2026 from 39.21 million sq ft in 9M 2025.

“Bengaluru saw the highest new office supply in this period – about 12.35 Mn sq ft in 9M 2026 against 10.41 Mn sq ft in same period last year, denoting a 19% y-o-y rise. NCR and Pune new office supply dropped 25% and 36%, respectively in the period,” says Jain.

While IT/ITeS remains a significant contributor, the broader sectoral mix is helping diversify demand. Declining vacancy and rising rentals indicate that office markets continue to attract occupiers, though performance remains uneven across cities.

Going forward, this momentum’s sustainability will depend on continued leasing activity, the pace of new supply, and how efficiently individual markets absorb additional office space. While Bengaluru and Hyderabad remain important growth drivers, the performance of other cities will depend on how demand keeps pace with available and upcoming supply.

“Interestingly, pan-India office vacancy rate declined by 105 basis points to 15.15% in 9M 2026 from 16.2% last year, and average office rentals rose 8% to INR 97 per sq. ft. per month from INR 90,” says Peush Jain. “These trends point to the office market’s continuing resilience, even as demand growth varies across cities and occupier segments.”

Coworking & BFSI ramp up their share of office demand

The fact that coworking emerged as the largest occupier segment in 9M 2026 with a 26% share of office demand (from 23% in 9M 2025) is significant – it highlights the growing importance of flexible workspace formats as businesses seek greater flexibility in their real estate commitments and workplace strategies.

With BFSI accounting for a 21% share – a meaningful rise from 18% a year earlier – reinforces this segment’s position as a key source of office demand alongside technology-led occupiers.

While IT/ITeS accounted for a 25% of total demand, down from 29% in 9M 2025, the sector remained second-best contributor to office leasing.

Manufacturing and industrial occupiers increased their share marginally to 15% from 14%, while consultancy businesses saw their share fall to 6% from 8%. Ecommerce remained unchanged at 4%, while miscellaneous sectors accounted for 3%, compared to 4% a year earlier.

Hyderabad & Bengaluru lead absorption growth

Hyderabad and Bengaluru were the strongest growth markets in 9M 2026, recording increases in both net absorption and new office completions.

Hyderabad’s net absorption rose 54% YoY to 8.8 million sq ft in 9M 2026 from 5.7 million sq. ft. a year ago, while new completions increased 63% to 9.6 million sq ft this year from 5.9 million sq ft. The city also recorded the highest rental growth among the top 7 cities, with average office rentals rising 12% to INR 77 per sq ft per month. Its vacancy rate declined from 26.5% to 24%, although it remained the highest among the major cities.

Bengaluru retained its position as the largest office market by net absorption, recording 11.92 million sq ft, up 20% from 9.95 million sq ft in 9M 2025. New completions rose 19% to 12.35 million sq ft. Average rentals increased 9% to INR 109 per sq. ft. per month, while vacancy declined from 12.2% to 11%.

MMR recorded largely stable absorption at 6.65 million sq ft, compared with 6.6 million sq ft a year earlier. Completions increased 21% to 4.1 million sq ft. The market continued to command the highest average rentals at INR 156 per sq ft per month, up 8% Y-o-Y, while vacancy declined from 14.9% to 13.3%.

Absorption moderates in NCR, Pune & Chennai

NCR recorded net absorption of 7.32 million sq. ft., down 11% y-o-y from 8.2 million sq. ft in 9M 2025. New completions declined 25% to 5.05 million sq. ft. from 6.7 million sq. ft. Despite the moderation in leasing activity, average rentals increased 10% to INR 98 per sq. ft. per month. Vacancy fell from 22% to 20.6%, though NCR continued to have the highest vacancy rate after Hyderabad.

Pune saw net absorption decline 36% to 3.95 million sq. ft. from 6.2 million sq. ft., while new completions also fell 36% to 5.9 million sq. ft. Average rentals rose 6% to INR 91 per sq. ft. per month, and vacancy edged down from 11.85% to 11.6%.

Chennai saw absorption decline by 21% to 3.56 million sq. ft., even as new completions increased 9% to 3.8 million sq. ft. Average rentals rose 6% to INR 83 per sq. ft. per month, while vacancy remained relatively stable at 8.75%, compared with 8.9% in 9M 2025.

Kolkata recorded absorption of 0.7 million sq. ft., down 18% YoY, while completions rose to 0.3 million sq. ft from 0.1 million sq. ft. a year ago. Average rentals increased 6% to INR 66 per sq. ft. per month, and vacancy declined from 17.8% to 16.8%.

Falling Vacancy, Rising Rentals

The pan-India office vacancy rate declined to 15.15% in 9M 2026 from 16.2% a year earlier. All seven cities recorded lower vacancy, indicating an improvement in overall occupancy conditions despite differences in absorption and supply additions.

Chennai reported the lowest vacancy at 8.75%, followed by Bengaluru at 11% and Pune at 11.6%. Hyderabad’s vacancy declined by 250 basis points to 24%, while NCR recorded a reduction of 140 basis points to 20.6%.

Average office rentals increased across all seven cities. Hyderabad led with 12% growth, followed by NCR at 10%, Bengaluru at 9% and MMR at 8%. Chennai, Pune and Kolkata each recorded rental increases of 6%. At INR 156 per sq. ft. per month, MMR remained the most expensive office market, while Kolkata recorded the lowest average rental at INR 66 per sq. ft. per month.