India office market Q2 CY’26 reflects a tightening commercial real estate landscape, with office demand continuing to outpace new supply across the country’s leading business hubs.
The CREDAI-CRE Matrix India Office Report Q2 CY’26 provides a data-driven analysis of Grade A office vacancy, rental trends, and leasing activity across India’s major office markets.
The report highlights declining vacancy levels, rising office rents, and a changing demand landscape. Co-working operators have emerged alongside traditional IT companies as the largest occupiers of Grade A office space.
Prepared by CRE Matrix in partnership with CREDAI, the report delivers transparent, data-backed insights to help developers, occupiers, investors, and real estate professionals make informed decisions in India’s commercial office market.
India’s Office Market Shows Tightening Fundamentals
The latest report shows steady improvement in India’s top seven office markets.
The key national indicators are:
- Grade A vacancy: 15.2%, an eight-quarter low
- H1 CY’26 demand: 42.6 MSF against 27.7 MSF of supply
- Demand-to-supply ratio: 1.5x
- Market rent: ₹112.7 psf, versus passing rent of ₹95.3 psf
- Under construction pipeline: 572.3 MSF through CY’31
This steady tightening reflects sustained demand from IT/ITeS, co-working operators, BFSI, and global capability centers (GCCs) expanding their India footprint.
How Did Major Indian Cities Perform in the Office Market?
India’s office market continued to perform strongly in Q2 CY’26, but each city followed a different growth trajectory. While some markets recorded low vacancy and rising rents, others benefited from strong leasing momentum, increasing supply, or the rapid expansion of flexible workspaces.
Here’s how the country’s major office markets performed during the quarter.
Bengaluru
Bengaluru posted India’s lowest vacancy at 9.6%, with passing rent up 6.9% year-on-year. H1 CY’26 demand reached 14.0 MSF against 11.0 MSF of supply, keeping the market firmly landlord-favored. The Outer Ring Road alone drove 65% of demand, anchored by Nvidia’s 7.6 lakh sq ft lease at Bagmane Capital. American Express also leased 139,150 sq ft at ₹116 psf in the same micro-market. Market rent stood at ₹93.7 psf against passing rent of ₹90.9 psf, with 77% of deals in Q2 exceeding 1 lakh sq ft, reflecting strong large-occupier confidence.
Mumbai Metropolitan Region (MMR)
MMR recorded the richest office rents in India, with market rent at ₹167.1 psf against passing rent of ₹146.6 psf. Demand ran at 2.6x supply in H1 CY’26, with 5.9 MSF absorbed against just 2.3 MSF delivered. BFSI drove 38% of demand, led by marquee deals such as JP Morgan’s 271,955 sq ft lease at ₹339 psf and Nomura Services at ₹435 psf. Vacancy has fallen sharply to 11.7%, down from 15.1% two years ago, underscoring MMR’s steady tightening cycle.
Hyderabad
Hyderabad remains India’s loosest major market, with vacancy at 21.2% against a massive 120.1 MSF construction pipeline through CY’31. Only 1.2 MSF was delivered in H1 CY’26, yet demand still rose 11.4% year-on-year to 6.8 MSF. Accenture Solutions signed the quarter’s largest lease nationally at 1.0 million sq ft in Aparna Technopolis, at ₹73 psf. Passing rent climbed 6.2% year-on-year to ₹71.9 psf, while market rent settled at ₹73.8 psf, showing demand remains resilient despite the supply overhang.
Pune
Pune’s vacancy stands at 18.7%, but Q2 CY’26 demand jumped 30.8% quarter-on-quarter, hinting at a possible turning point for the market. H1 CY’26 demand-to-supply ratio reached 1.4x, with 6.9 MSF absorbed against 4.9 MSF of new supply. Welspun Enterprises leased 434,505 sq ft at Radius IT Park, while Accenture took 345,872 sq ft at Phoenix Millennium Towers. Boston Scientific added 130,682 sq ft at Eon West. Co-working led sector demand at 36%, ahead of IT/ITeS at 25%.
Delhi-NCR
Delhi-NCR is the balanced middle market, with a 1.0x demand-to-supply ratio and vacancy easing to 20.6%, down from 23.2% two years earlier. Co-working led demand at 41%, well ahead of traditional IT/ITeS at 26%, confirming flex space as the region’s primary growth driver. Smartworks signed the quarter’s largest deal at 402,200 sq ft in ASF Insignia, while Lenskart Solutions leased 88,343 sq ft at ₹210 psf. Passing rent reached ₹98.3 psf, rising steadily from ₹87.5 psf ten quarters earlier.
Chennai
Chennai’s vacancy fell to just 10.4%, among India’s tightest, with demand running at 1.9x supply in H1 CY’26. Supply itself jumped 35.2% versus H1 CY’25, showing developers are responding actively to sustained absorption. WeWork India Management leased 141,392 sq ft at Embassy Splendid Techzone, while Caterpillar India took 126,073 sq ft and Honeywell Aerospace signed for 114,252 sq ft. Co-working led demand at 38%, ahead of IT/ITeS at 15%, with market rent at ₹75.1 psf.
Ahmedabad
Ahmedabad is India’s smallest office market at 36.6 MSF stock, yet market rent runs 54.4% above passing rent, the widest gap nationally, driven by GIFT City leasing momentum. Passing rent still rose 7.6% year-on-year despite elevated vacancy of 22.0%. TELUS Digital signed for 110,000 sq ft in Regalia GIFT City, while Incuspaze and DevX leased 60,000 sq ft and 55,000 sq ft respectively at Million Minds Tech City. Co-working led demand at 40%, followed by capital goods at 39%, signaling early-stage but fast-accelerating repricing.
Bengaluru and Pune Lead National Demand
Among India’s major office markets, Bengaluru and Pune have emerged as the biggest contributors to national leasing activity. Together, they accounted for 49% of total H1 CY’26 demand and 57% of new supply, cementing their role as India’s primary office growth engines.
Co-Working Demand Nearly Rivals Traditional IT
Co-working continues to reshape India’s office demand base. The report highlights that co-working accounted for 27% of Q2 CY’26 demand, close behind IT/ITeS at 31% and ahead of BFSI at 10%. Flex operators were the largest source of demand in Delhi-NCR (41%), Pune (36%), and Chennai (38%), reflecting occupiers’ preference to hedge against long-term commitments.
MMR Remains India’s Premium Rental Market
While Bengaluru leads on occupancy, MMR continues to command India’s highest rents. The report shows MMR’s market rent reached ₹167.1 psf, supported by a 2.6x demand-to-supply ratio and marquee BFSI leasing activity throughout Q2 CY’26.
Emerging High-Growth Micro-Markets
The report also points to specific corridors driving momentum within larger cities. Bengaluru’s Outer Ring Road and MMR’s Central Mumbai and Western Suburbs continue attracting technology and BFSI occupiers, while Ahmedabad’s GIFT City is emerging as a fast-repricing micro-market off a low base.
Meanwhile, Pune’s 30.8% quarter-on-quarter demand jump signals a localized rebound worth watching as we head into H2 CY’26.
What Does This Mean for India’s Office Market Outlook?
The Q2 CY’26 data show India’s office market entering H2 firmly in landlord territory. While Bengaluru and MMR lead on tightness and rents, cities like Hyderabad and Pune still carry high vacancy that could shape the pace of recovery.
At the same time, the rise of co-working as a near-equal demand driver to IT/ITeS marks a structural shift. As GCCs and flex operators expand their India presence, demand for Grade A office space in key corridors is expected to remain strong through CY’26.
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