Office leasing across India’s eight largest cities declined in the second quarter of 2026, but strong demand from Global Capability Centers (GCCs) continued to support the market, helping vacancy fall to its lowest level since the pandemic.
According to new market data, office leasing totaled 11.6 million square feet in Q2, down 14.5% from a year earlier. Even with slower leasing activity, vacancy dropped to 13.7% as existing office space continued to be absorbed, according to The Economic Times.
GCCs Continue to Drive Demand
Global Capability Centers remained the market’s biggest growth driver during the first half of the year.
GCCs leased 16.5 million square feet during the first six months of 2026, a 38% increase from the same period last year. Nearly 8 million square feet was leased in the second quarter alone, with Bengaluru, Pune, Delhi NCR, and Mumbai leading activity.
The continued expansion of multinational companies’ technology, engineering, and business operations has helped support demand for high-quality office space despite softer overall leasing volumes.
Rents Continue to Rise
Office rents continued climbing in several major markets, highlighting ongoing demand for premium space.
Chennai, Mumbai, Hyderabad, and Ahmedabad each recorded quarter-over-quarter rental growth of between 2% and 3%, while flexible workspace operators leased 8.4 million square feet during the first half of the year—a 55% increase from a year earlier.
The data suggests companies remain willing to pay for well-located, Grade A offices even as leasing decisions take longer amid global economic uncertainty.
Market Shows Signs of Resilience
Although leasing activity slowed compared with last year, falling vacancy and rising rents point to a market that remains relatively healthy.
Demand from GCCs and flexible workspace providers continues to offset softer activity from other occupier groups, helping landlords maintain pricing power. Market performance in the coming quarters will likely depend on whether those sectors continue expanding as businesses navigate economic uncertainty.
