Whalesbook
The Great Divide
India's office market is undergoing a significant split, with Grade A spaces seeing record leasing volumes driven by demand for premium, sustainable buildings. This contrasts sharply with mid-tier and older properties, which are struggling to attract tenants.
Southern Strength
Net leasing across India's top seven cities hit 58.2 million sq. ft. in 2025, a strong 17% increase from the previous year, according to Anarock Research. Southern cities like Bengaluru, Hyderabad, and Chennai were the main drivers of this demand, accounting for nearly half of all space taken up. Bengaluru alone saw 14.95 million sq. ft. leased, with Hyderabad and Chennai also showing solid annual growth.
GCCs Drive Demand
Global Capability Centers (GCCs) are becoming key players in this market trend. GCCs accounted for 41% of all Grade A office leases in 2025, rising to 47% by the first quarter of 2026. This demand is especially noticeable in areas like Delhi-NCR, where multinational companies have secured large office spaces for their operations.
Vacancy Dynamics
Vacancy rates for Grade A offices in the top seven cities fell to 16.1% in 2025 and dropped further to 15.5% by early 2026. Chennai saw its lowest vacancy rate since 2019, at just 8.8%. Older and secondary-grade buildings, however, face significantly higher vacancies, often between 20% and 25%, as companies actively choose higher-quality spaces.
Rental Premiums and New Supply
Grade A offices now command rental premiums of up to 20% compared to mid-tier properties. Average monthly rents for Grade A spaces grew 6% in 2025 to ₹92 per sq. ft., and nudged up to ₹93 per sq. ft. in early 2026. Bengaluru saw particularly strong rental increases, with rents rising 11% from the previous quarter in Q1 2026. Developers brought 52 million sq. ft. of new Grade A office space to market in 2025, with southern cities making up more than half of this new supply.