India Commercial Real Estate: India office market remains resilient as demand stays ahead of new supply
India’s commercial real estate market is expected to remain strong, supported by the continued expansion of Global Capability Centres (GCCs), limited new office supply and growing demand for institutional-grade workspaces, according to a report by Equirus.The brokerage said favourable demand-supply conditions are likely to support office space absorption and rental growth, as companies increasingly shift towards 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 of 2026, up 2% year-on-year, according to the report.New office completions, meanwhile, stood at 22.2 million sq ft, down 10% from a year earlier.The gap between demand and new supply helped bring the average office vacancy rate down to a multi-year low of 15%.
GCCs account for record share of office leasing
GCCs remained the biggest driver of office demand, accounting for a record 45% of gross office leasing in H1 2026.GCC leasing rose 22% year-on-year to 19.2 million sq ft, with Bengaluru emerging as the largest market. The city accounted for 7.6 million sq ft, or 39% of total GCC leasing across the country.The report said GCC expansion is spreading beyond the technology sector into areas such as engineering, manufacturing and banking, financial services and insurance.Overall office leasing also remained robust. Gross office leasing reached 24.6 million sq ft in the second quarter of 2026, while H1 absorption touched a record 45.5 million sq ft across leading cities.The report attributed the demand to the expansion of multinational companies’ capability centres and the growth of flexible workspace operators.
Rents rise as demand remains firm
Average office rents rose 9% year-on-year to Rs 96 per sq ft per month, according to the report.Southern cities accounted for 58% of total office take-up. Bengaluru recorded office absorption of 8.3 million sq ft, up 26% year-on-year, while Hyderabad recorded 5.2 million sq ft, an increase of 24%.Sustainability is also becoming increasingly important in the office market. Green-certified buildings accounted for 76% of new office completions and 73% of leasing activity in H1 2026, indicating that ESG certification is increasingly becoming a basic requirement for companies.
Retail and warehousing demand also holds up
The retail and logistics segments also continued to perform strongly.Grade A malls recorded leasing of 4.1 million sq ft in H1 2026, compared with new completions of only 0.9 million sq ft.Warehousing and industrial leasing rose 16% year-on-year to 22 million sq ft, supported by demand from third-party logistics providers, e-commerce companies and manufacturers.According to the Equirus report, the combination of limited new office supply and sustained demand, particularly from GCCs, is expected to support India’s commercial real estate market.
