NEW DELHI: According to a report by Cushman & Wakefield, India’s office market vacancy rate has dropped to 13.85% in the January-March quarter of 2026, falling below 14% for the first time since the pandemic. This decline is attributed to robust demand from occupiers and limited new supply.
Vacancy levels decreased by 48 basis points quarter-on-quarter and 191 basis points year-on-year, marking the eleventh consecutive quarter of decline.
The reduction in vacancy was largely due to consistent leasing across various sectors and a decline in new completions, which fell to 8.8 million sq ft in Q1 2026, representing a 43% sequential drop and an 18% annual decrease. The majority of new supply came from Bengaluru, Delhi-NCR, and Chennai, while cities like Pune, Hyderabad, and Kolkata saw no new completions.
Gross leasing volume across the eight major cities reached approximately 22 million sq ft in the quarter, up 13% year-on-year. Mumbai was the standout performer, achieving its highest quarterly leasing at 6.6 million sq ft, primarily driven by renewals. Bengaluru and Hyderabad followed, with 5.13 million sq ft and 3.15 million sq ft, respectively.
Global capability centres (GCCs) continued to significantly influence demand, accounting for nearly 40% of leasing activity at around 8.7 million sq ft, which reflects a 38% annual growth.
In terms of sectors, IT-BPM led demand with a 23% share, followed by BFSI at 21%, flexible workspace operators at 18%, and engineering and manufacturing sectors at 15%, showcasing a diversified occupier landscape.
Net absorption recorded was 11.51 million sq ft, which shows a sequential and annual decline due to slower supply completions and a reduction in new leasing following a strong end to 2025.
As vacancy tightens and Grade A space becomes limited, rental prices have continued to rise. The average rent across India surpassed ₹100 per sq ft per month for the first time, with Hyderabad showing the highest annual growth at approximately 12%, followed closely by Delhi-NCR at 10%.
Major markets such as Bengaluru continue to maintain a vacancy rate of under 8%, with some micro-markets as low as 2%. Meanwhile, Mumbai’s vacancy rate has dropped to around 9%, with prime business districts reporting rates below 3%.
The report suggests that the current mismatch between demand and supply is likely to keep vacancy levels low and rental growth steady, although the anticipated premium supply expected later in 2026 could offer some relief.
