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India's office real estate market recorded its lowest vacancy levels since 2020 in the first quarter of 2026. According to the Q1 2026 Office MarketBeat report by Cushman & Wakefield, "office vacancy across the top eight cities averaged 13.85%, declining by ~48 basis points quarter on quarter (QoQ) and ~191 basis points year on year (YoY)."
As per the report, this represented the eleventh consecutive quarter of vacancy compression, taking levels below the 14 per cent threshold for the first time since the pandemic began. The tightening market dynamics were driven by a significant moderation in new completions, which stood at 8.8 million square feet during the quarter. This figure reflected an 18 per cent decline compared to the same period last year, largely due to project delays. While supply was constrained, the report noted that the gross leasing volume across the top eight cities reached approximately 22 million square feet, marking a 13 per cent year-on-year increase and remaining well above the quarterly averages seen over the last three years. Anshul Jain, Chief Executive - India, SEA, MEA & APAC Office and Retail, Cushman & Wakefield, stated, "India's office market has carried forward the momentum of 2025 into the first quarter of this year. Gross leasing volume stood at ~22 MSF in Q1 2026, a 13 per cent increase over the same period last year, reflecting a robust demand across sectors." "Global Capability Centres, accounting for around 40 per cent of take-up, remain a key driver, reinforcing India's role in long-term portfolio strategies. This continued demand is now translating into tighter market conditions, with vacancy levels declining steadily, reflecting a persistent demand-supply imbalance across key markets, particularly in high-quality assets," Jain added. Global Capability Centres anchored the market by leasing 8.7 million square feet during the quarter. From a sectoral perspective, the IT-BPM industry remained the largest contributor at 23 per cent of total leasing, followed by the BFSI sector at 21 per cent and flexible workspace operators at 18 per cent. City-level data highlighted significant tightening in major hubs. Bengaluru continued to operate with a vacancy rate below 8 per cent, while Mumbai moved into a single-digit vacancy phase at approximately 9 per cent. Mumbai also emerged as the standout performer in leasing activity, recording its highest-ever quarterly volume of 6.6 million square feet. "The market has entered 2026 with a clear supply-demand imbalance, where sustained occupier interest continues to outpace the availability of quality office space across key markets. This is reflected in the continued tightening of vacancy levels, particularly in Grade A and A+ assets across core micro-markets," Veera Babu, Executive Managing Director, Tenant Representation - India, Cushman & Wakefield said. "Occupiers are increasingly prioritising asset quality, location efficiency and readiness, with a clear preference for buildings that can support evolving workplace, technology and sustainability requirements. We expect vacancy levels to remain tight, especially in high-quality assets across established business districts," Babu added. Limited availability has also pushed rental growth. Pan-India stock-weighted average rents crossed Rs 100 per square foot per month for the first time in Q1 2026. While approximately 61 million square feet of new supply is expected throughout the remainder of the year, the report suggested that strong pre-commitment trends will likely keep overall vacancy levels stable. (ANI)
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