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Despite a slowdown in new completions, office absorption increased by 20 per cent to 21.53 million square feet in Q1 2026 (January-March quarter) compared to the same period last year, highlighting sustained occupier demand amid the West Asia conflict and global macroeconomic challenges, a report showed on Monday. 

This resilient growth was propelled by India’s attractiveness among global occupiers seeking operational efficiency and scalable growth, according to a Vestian report. 

Supportive macroeconomic conditions — including steady GDP growth, controlled inflation, and stable interest rates — provided a conducive environment for businesses to expand across the geographies.

New completions declined by 36 per cent (quarter-on-quarter) to 9.7 million sq ft in Q1. Bengaluru, Hyderabad, and Mumbai cities contributed significantly to this decline as developers adopted a cautious stance amid prevailing uncertainties, according to the report.

The combination of robust absorption and cautious supply resulted in a tightening of vacancy levels across the major office markets. 

The pan-India vacancy improved to 9.5 per cent from 10.8 per cent in the previous quarter, while rentals continued to rise. This trend indicates a shift towards a landlord-driven market, particularly in prime and emerging business districts.

“India’s office market exhibited resilience in the first quarter of 2026, despite global geopolitical challenges. The sustained leasing, particularly driven by GCCs, highlights India’s growing prominence as a strategic hub for global corporations,” said Shrinivas Rao, FRICS, CEO, Vestian.

While supply chain constraints led to a temporary slowdown in new completions, robust absorption has tightened vacancies and driven rental appreciation. 

Looking ahead, rapid GCC expansion, rising demand for sustainable office spaces, and India’s stable macroeconomic environment are expected to drive the next wave of growth in the office sector, Rao mentioned.

Bengaluru continued to lead both leasing and supply, recording 4.91 mn sq ft of absorption and 4.20 mn sq ft of new completions in Q1.

Mumbai continued to be the most expensive office market in India, with average rentals reaching Rs 152.6 per sq ft per month during Q1 2026.

In Delhi-NCR, new completions reached 1.40 mn sq ft in Q1 2026, registering the highest (75 per cent) quarterly growth among the top seven cities, said the report.