India office leasing stays near record at 48 million sq. ft in H1 as GCCs power demand: Knight Frank

India’s commercial office market remained resilient in the first half of 2026, with leasing activity holding close to record levels despite global economic uncertainty, as Global Capability Centres (GCCs) emerged as the biggest demand driver, according to a report by Knight Frank India released on Thursday.

Office transactions across eight major cities stood at 48 million sq. ft (mn sq. ft) during January-June 2026, just 2% lower than the all-time high recorded in the corresponding period last year, making it the second-best half-year performance on record.

The report said new office completions rose 35% year-on-year to 27.1 mn sq. ft, taking India’s total office stock beyond 1.05 billion sq. ft. However, leasing continued to outpace fresh supply, pushing the national vacancy level down to 14.6% and supporting rental growth across all major markets.

Global Capability Centres dominate demand

GCCs accounted for 20.6 mn sq. ft, or 43% of total office leasing, the highest share ever recorded in a half-year period. Leasing by GCCs grew 8% year-on-year, underscoring India's growing role as a global hub for technology, engineering, financial services and healthcare operations.

Bengaluru remained the country’s largest office market, recording 14.1 mn sq. ft of leasing activity, with over 40% of GCC demand concentrated in the city. Mumbai emerged as the strongest performer, posting its highest-ever half-year leasing volume of 7.3 mn sq ft, up 33% year-on-year, while Pune and Hyderabad each registered 29% growth.

"India’s office market has once again demonstrated its structural resilience by sustaining near-record leasing volumes despite one of the most uncertain global business environments in recent years," said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

He added that the continued expansion of GCCs, strong domestic economic fundamentals and India’s growing strategic importance in global corporate supply chains had reinforced occupier confidence.

Flexible workspaces continued to gain traction, accounting for 11.4 mn sq. ft, or 24% of total office leasing, up from 21% a year ago. The growth was driven by enterprises increasingly adopting hybrid workplace strategies combining conventional offices with managed and co-working spaces.

Meanwhile, leasing by India-facing businesses rose 9% year-on-year to 9.5 mn sq. ft, reflecting improving confidence in the domestic economy. In contrast, demand from third-party IT services firms fell sharply to 6.4 mn sq. ft from 10.9 mn sq. ft a year ago as companies continued workforce optimisation and adjusted to AI-led changes in technology spending.

Rental values increased across all eight office markets, led by the National Capital Region with a 13% year-on-year rise, followed by Bengaluru (8%), Hyderabad (7%) and Chennai (7%), highlighting sustained occupier demand despite an uncertain global backdrop.