Archive · 1 Dec 2025
Office Demand Thrives as Vacancies Decline
Office spaces in big Indian cities are in high demand.
More companies, especially those from other countries setting up back offices in India, are taking up office spaces.
This has led to more offices being occupied and fewer vacancies.
Rents are going up, especially in cities like Bengaluru.
Companies that own these offices are doing well and expect to fill up even more space soon.
However, there are some worries about how global events and slower growth in the IT sector might affect this demand.
Net absorption of Grade-A office spaces in top six Indian cities reached 36 million square feet in H1FY26, outpacing new supply.
Vacancy levels dropped to 13% by September 2025, with projections of further decline to 12.5-13% by FY26.
Office rentals increased by 6% year-on-year to ₹90/sf at an all-India level, with Bengaluru seeing the highest jump at 9%.
Listed Reits reported high committed occupancies, with Embassy, Brookfield, and Mindspace expecting further increases.
Macroeconomic concerns and sector-specific challenges in IT/ITeS could potentially dampen demand and rental growth.
- Who
- Grade-A office space occupiers, including GCCs, flex-space operators, and BFSI sectors
- What
- Sustained demand for office spaces leading to higher occupancies and lower vacancies
- When
- H2FY26 (October 2025 - March 2026)
- Where
- Top six Indian cities
- Why
- Driven by strong demand from GCCs, flex-space operators, and BFSI sectors, along with conversions of SEZ spaces
Optimistic View
Cautious View
Market Demand
Optimistic View
Strong demand from GCCs, flex-space operators, and BFSI sectors is driving office space absorption.
Cautious View
Macroeconomic concerns and geopolitical tensions could slow decision-making and reduce demand.
Rental Growth
Optimistic View
Increasing occupancies and conversions of SEZ spaces are expected to boost rental growth.
Cautious View
Rentals may stagnate due to macroeconomic uncertainties and sector-specific challenges.
Sector Performance
Optimistic View
IT/ITeS sectors are recovering, contributing to higher office space demand.
Cautious View
Muted revenue growth and tepid hiring in IT/ITeS sectors may limit demand for office spaces.
- Net Absorption (H1FY26)
- 36 million square feet
- New Supply (H1FY26)
- 30.6 million square feet
- Vacancy Level (September 2025)
- 13%
- Projected Net Absorption (FY26)
- 69-70 million square feet
- Projected Vacancy Level (FY26)
- 12.5-13%
- All-India Office Rentals (Sep 2025)
- ₹90/sf
- Embassy Reit Occupancy (Q2FY26)
- 90%
- Brookfield Reit Occupancy (Q2FY26)
- 90%
- Mindspace Reit Occupancy (Q2FY26)
- 93.8%
