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India's commercial real estate market is expected to remain strong, supported by continued expansion of Global Capability Centres (GCCs), limited new office supply and rising demand for institutional-grade workspaces, according to the latest report by Equirus.
The brokerage said favourable demand-supply conditions are likely to support office space absorption and rental growth, with companies increasingly moving to Grade A and green-certified campuses. India's top seven cities recorded net office absorption of 27.4 million sq ft in the first half (H1) of 2026, up 2 per cent year-on-year (YoY). This was higher than the 22.2 million sq ft of new office completions, which fell 10 per cent YoY. The gap between demand and new supply helped bring average office vacancy down to a multi-year low of 15 per cent. GCCs continued to be the biggest driver of office demand, accounting for a record 45 per cent of gross office leasing in H1 2026. GCC leasing rose 22 per cent YoY to 19.2 million sq ft. Bengaluru led GCC demand, accounting for 7.6 million sq ft, or 39 per cent of the total GCC leasing across the country. The report said GCC expansion is also spreading beyond technology to sectors such as engineering, manufacturing and banking, financial services and insurance (BFSI). Overall office leasing also remained strong. Gross office leasing reached 24.6 million sq ft in the second quarter (Q2) of 2026, while H1 absorption touched a record 45.5 million sq ft across the leading cities. The report attributed the strong demand to the expansion of multinational companies' capability centres and the rapid growth of flexible workspace operators. Office rents also increased with rising demand. Average rents rose 9 per cent YoY to Rs 96 per sq ft per month. Southern cities accounted for 58 per cent of the total office take-up. Bengaluru recorded office absorption of 8.3 million sq ft, up 26 per cent YoY, while Hyderabad recorded 5.2 million sq ft, an increase of 24 per cent. Sustainability is also becoming increasingly important in the office market. Green-certified buildings accounted for 76 per cent of new office completions and 73 per cent of leasing activity. This indicates that ESG certification is increasingly becoming a basic requirement for companies rather than just a premium feature. The retail and logistics sectors also continued to perform well. Grade A malls recorded leasing of 4.1 million sq ft in H1 2026, against new completions of only 0.9 million sq ft. Warehousing and industrial leasing increased 16 per cent YoY to 22 million sq ft, supported by demand from third-party logistics (3PL), e-commerce and manufacturing companies. (ANI)
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