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Bengaluru has emerged as the top-performing city in India's commercial office real estate market, with vacancy rates dropping to a 10-year low due to heightened leasing activity. According to ICRA, the city holds the largest share of Grade A office stock among the top six metros, reflecting strong demand from sectors like Global Capability Centres (GCCs), BFSI, flex-space operators, and domestic IT-BPM firms. Other key markets like Chennai, Delhi-NCR, Hyderabad, MMR, and Pune are also projected to witness stable or improving vacancy levels through FY2026.
Bengaluru has taken the lead in India's commercial office sector, as record-breaking leasing activity has brought vacancy levels in the city to their lowest in a decade. This was revealed in a recent report by the Investment Information and Credit Rating Agency (ICRA), which highlighted the city's dominant position in terms of both demand and office space absorption. Advertisement
As of the end of June, the total Grade A office stock across India's top six cities reached approximately 1,030 million square feet (msf). Bengaluru accounted for the largest chunk, commanding a 26% share, followed by Delhi-NCR at 19%, and the Mumbai Metropolitan Region (MMR) with 18%, as per ICRA's press note issued late last week.
The IT capital is projected to see further tightening in office space availability, with vacancy rates expected to dip from the current 9.8% to between 9.0% and 9.5% by FY2026, signaling a sustained demand trajectory.
In other major metros, Chennai is anticipated to maintain a steady vacancy rate between 9.0% and 9.5%, aided by the addition of around 5 msf of new office space. Meanwhile, Delhi-NCR is expected to see modest improvement, with vacancy expected to ease from 22.4% to between 21.5% and 22%, accompanied by 12 msf of upcoming supply.
Hyderabad's vacancy levels are likely to hold stable between 17.5% and 18%, despite the addition of a sizeable 15.5 msf of new inventory. MMR and Pune are also on track to witness a fall in vacancy rates, thanks to healthy leasing demand and continued net absorption across both established and emerging micro-markets.
Abhishek Lahoti, Assistant Vice President and Sector Head of Corporate Ratings at ICRA, noted that this positive trend is expected to persist through March 2026. He attributed the robust leasing momentum to consistent interest from Global Capability Centres, Banking, Financial Services and Insurance players, co-working and flex-space providers, and India's own IT-BPM sector.
The total projected new supply for FY2026 is estimated to be around 63-64 msf, reflecting strong developer confidence and sustained occupier interest across cities.
This comes against a broader backdrop where India's commercial office segment has seen recovery and resilience post-pandemic, with companies recalibrating their workspace strategies and expanding in tech-focused cities like Bengaluru and Hyderabad.
Source PTI
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