India’s Office Market Remains Resilient with 35.7 MSF Leasing in H1 2026 Despite a Cautious Q2: Colliers India

Bengaluru, June 25: Growth momentum of India’s office market has remained intact through the first half of 2026 despite a slower second quarter. H1 2026 recorded 35.7 million sq ft of gross leasing across the top seven cities, a 6% rise compared to the corresponding period in 2025. While Grade A space uptake moderated slightly in Q2 2026 to 17.4 million sq ft following a robust first quarter, the market largely remained resilient, even amid ongoing global trade disruptions and economic uncertainties. In fact, demand for office spaces in India continues to be fueled by expansion of Global Capability Centers  in preferred markets, steady leasing across diverse occupier segments and continued adoption of flexible workspaces. This only underscores the structural strength of the commercial real estate in India driven by cost arbitrage, talent availability and sustained growth in domestic economy.  

During H1 2026, Bengaluru continued to remain India’s top office market, leading space uptake at 10.5 million sq ft, corresponding a 29% share. Hyderabad, with about 7.2 million sq ft of leasing, accounted for about one-fifth of the overall demand in H1 2026. Notably, Hyderabad witnessed 47% annual rise in leasing activity during H1 2026. Meanwhile, Delhi NCR, Mumbai & Chennai each witnessed leasing activity in the range of 4-5 million sq ft during the first half of the year.

However, on a quarterly basis, moderation in office demand during Q2 was particularly evident in markets such as Mumbai & Pune, which saw 25-30% YoY decline in quarterly space uptake as occupiers adopted a more cautious approach.  The share of large deals in Mumbai, declined from around 41% in Q1 2026 to 13% in Q2 2026. Large-sized transaction share in Pune meanwhile dropped from around 63% to 38% during the same period.

“India’s office market remained firm in the second quarter of the year. A strong first quarter in fact acted as a cushion, largely limiting the fallout of ongoing global crisis. Interestingly, Q2 2026 is the ninth consecutive quarter to witness at least 15 million sq ft of Grade A space uptake across the top 7 office markets. This highlights the strong fundamentals of Indian office market, which has successfully traversed through multiple troughs and crests in the last decade. India’s established credibility as the most preferred GCC destination continues to support occupier expansion across most markets. This along with anticipation of stability in West Asia reinforces growth expectations in the second half of the year and could potentially push overall office demand past 70 million sq ft once again in 2026,”said Arpit Mehrotra, Managing Director, Office services, India, Colliers.

Trends in Grade A gross absorption (in million sq feet)

Bengaluru drives almost 40% of the new supply additions in H1 2026 

On the supply side, new supply across the top seven office markets moderated in H1 2026, with developers remaining cautious especially in Q2 2026.  Cushioned by strong completions in the first quarter, Grade A supply touched 22.5 million sq ft in H1 2026, a YoY decline of 9%. Bengaluru, with 8.7 million sq ft of supply additions and 39% share during H1 2026, led new supply followed distantly by Delhi NCR & Mumbai, which had a share of 15-20% each. Interestingly, at 3.6 million sq ft, Mumbai witnessed a substantial 80% rise in new supply during the first half of the year, driven by notable additions in Navi Mumbai, Powai and Thane micro markets.

Trends in Grade A new supply (in million sq feet)

Half yearly flex space demand reaches an all-time high of 8.6 msf led by Bengaluru, Delhi NCR & Hyderabad

Trends in conventional and flex space leasing (in million sq feet)

During H1 2026, leasing in conventional spaces remained resilient at 27.1 million sq ft almost at par with the levels seen in the corresponding period of 2025. With 10.6 million sq ft and 6.0 million sq ft of leasing respectively, Technology sector followed by BFSI firms cumulatively drove over 60% of the conventional space uptake in H1 2026. While demand from Technology sector was largely concentrated in Bengaluru & Hyderabad, Mumbai & Bengaluru continued to anchor BFSI-led demand, together driving nearly two-thirds of the space uptake by the segment.

Leasing by flex space operators witnessed a significant 32% YoY rise, reaching 8.6 million sq ft during the first half of the year. At the city level, Bengaluru & Delhi NCR led flex space uptake with each accounting for 20-25% share during H1 2026. Interestingly, flex space demand in Delhi NCR and Hyderabad more than doubled on an annual basis. The three markets – Bengaluru, Delhi NCR and Hyderabad together contributed nearly two-thirds of the total space uptake by flex operators in H1 2026. Importantly, during Q2 2026 flex space leasing touched 4.6 million sq ft, over 90% higher than the average quarterly flex space demand of last five years, signaling growing adoption of flexible workspaces as a core component of occupier real estate portfolios.

“Bengaluru & Hyderabad have cumulatively accounted for almost half of the office space demand in H1 2026. Both these cities have witnessed strong GCC space uptake across diverse demand segments. Given the established track record of these two cities in attracting MNCs owing to their core strengths – talent availability and cost arbitrage, Bengaluru & Hyderabad are well positioned to support the growing demand for office spaces in India even during challenging periods. Overall, GCCs are likely to account for 40-50% of the Grade A office space uptake in 2026,”said Vimal Nadar, National Director and Head of Research, Colliers India.

Vacancy levels largely remain rangebound across most cities

With developers remaining cautious, office space demand outpaced new supply across most major office markets in Q2 2026. Vacancy levels, however remained rangebound at around 15% at the India level, owing to relocation and churns. Meanwhile, average rentals saw a modest quarterly increase of up to 5% in select high activity micro markets, mirroringthe cautious sentiment prevailing in the Indian office market.