The Indian commercial real estate market posted robust figures in the first quarter of 2026, with office leasing activity marking a significant 10 per cent year-on-year (YoY) jump. Total absorption reached 21.6 million sq ft, securing the title for the strongest leasing performance recorded in the last five years.
Savills India's Q1 report paints a picture of strong institutional confidence. This surging demand was supported by a simultaneous decline in overall supply, which fell by 28 per cent YoY to 7.9 million sq ft. Consequently, the overall vacancy rate softened to 13.9 per cent during the quarter.
Market Resilience Driven by Corporate Demand
Industry analysts note that India’s office sector is entering 2026 on a strong footing despite global economic headwinds. The sustained demand is attributed primarily to the resilience of key sectors and the continuous growth of Global Capability Centres (GCCs).The technology industry was the most dominant driver, commanding a substantial 32 per cent share of the total leasing activity. This was closely followed by flexible workspaces, which captured 22 per cent, with the Banking, Financial, and Services (BFSI) sector contributing an additional 12 per cent.
Furthermore, the market activity was heavily underpinned by large-scale transactions. Deals of 100,000 sq ft or more were critical, contributing a significant 52 per cent to overall transactions throughout the period.
Regional Hotspots Lead Commercial Real Estate Recovery
Performance was highly varied across major metropolitan areas, showcasing localized strength. Bengaluru maintained its status as the premier office market, recording 6 million sq ft of leasing activity. This represents a robust increase of 25 per cent year-on-year, fueled primarily by IT-BPM operators.Hyderabad emerged as one of the strongest regional performers, boasting a notable 39 per cent YoY rise. Its gross absorption stood at 4.3 million sq ft, powered by large transactions and considerable demand from GCC occupiers.
Meanwhile, Pune also saw healthy expansion, with leasing activity increasing 20 per cent YoY to 3 million sq ft. Delhi-NCR recorded a steady gross absorption of 3.6 million sq ft in Q1 2026.
Supply Dynamics and Metropolitan Variations
Geographically, the major consumption centers were Bengaluru and Delhi-NCR, which together accounted for approximately 5 million sq ft of new completions. This ratio represented nearly two-thirds of the total supply added across India during the quarter.The report highlighted contrasting trends in major metros. While Hyderabad demonstrated sharp growth, Mumbai saw its gross absorption fall by 15 per cent year-on-year to 2.8 million sq ft. This slowdown in Mumbai was attributed to occupiers delaying their expansion plans.
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