Mumbai: India’s Grade A office market continued its strong growth trajectory in 2025 and Q1 2026, with record leasing activity across the top seven cities, while mid-tier and secondary office assets faced rising vacancy pressures and weakening occupier demand.
According to data released by ANAROCK Group, net absorption of Grade A office spaces across the top seven cities reached 58.2 million sq. ft. in 2025, marking a 17% year-on-year growth and the strongest annual performance recorded by the market so far.
Mumbai, Bengaluru, Hyderabad, Chennai, NCR, Pune and Kolkata remained the key commercial office hubs, with southern cities driving much of the momentum. Bengaluru, Hyderabad and Chennai together accounted for nearly half of India’s total Grade A office absorption during the year.
Peush Jain said, “India’s Grade A office market had its best year on record in 2025. According to ANAROCK Research, net leasing across the top 7 cities accelerated to 58.2 Mn sq. ft. registering 17% YoY growth.
This broad-based momentum sustained throughout all four quarters on the back of companies’ expansion, GCC scaling and an improving leasing environment.”
He added, “The demand anchor was the southern markets, which absorbed a combined 29.35 Mn sq. ft. in Bengaluru, Hyderabad and Chennai. These markets accounted for half of India’s total net office absorption in 2025.
Bengaluru remains the top contributor with 14.95 Mn sq. ft. – a 26% national share – but is now witnessing moderating growth at 1% YoY. Hyderabad followed with 8.5 Mn sq. ft. – +14% YoY – and Chennai with 5.9 Mn sq. ft., or +18% YoY.”
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Q1 2026 Maintains Strong Grade A Office Momentum
The Grade A office segment maintained its growth momentum in Q1 2026, with total net office absorption rising 5% annually from 12.9 million sq. ft. in Q1 2025 to nearly 13.5 million sq. ft. in Q1 2026.
Southern cities continued to outperform the rest of the country. Bengaluru recorded a 67% annual jump in net absorption to 4.77 million sq. ft., while Hyderabad saw a 64% increase to 2.95 million sq. ft. Chennai registered 50% growth at 1.05 million sq. ft.
Meanwhile, MMR, NCR and Pune witnessed declines in net office absorption during the quarter.
GCCs Strengthen Their Hold on India’s Grade A Office Market
Global Capability Centres (GCCs) continued to emerge as the dominant occupiers in the Grade A office market.
GCCs contributed 41% of total gross leasing activity in 2025, compared to 36% in 2024. Their share further increased to 47% in Q1 2026, accounting for nearly 21.12 million sq. ft. of gross leasing across the top seven cities.
According to ANAROCK, Bengaluru alone contributed 40% of total GCC leasing activity during Q1 2026.
Peush Jain said, “In Delhi-NCR alone, MNCs leased almost 51 lakh sq. ft. till early 2025 over two years – exclusively to establish up GCC campuses.”
He further noted that mid-tier office properties are increasingly losing occupier preference where Grade A office alternatives are available within the same micro-market.
Vacancy Levels Decline in Grade A Office Assets
Vacancy rates in the Grade A office market continued to improve across major cities.
Overall Grade A office vacancy across the top seven cities declined from 16.5% in 2024 to 16.1% in 2025 and further to 15.5% in Q1 2026.
Chennai emerged as the strongest-performing market with vacancy levels at just 8.9%, the city’s lowest level since 2019. Hyderabad, despite recording the highest vacancy level among major cities at 24.7%, still saw improvement due to sustained absorption levels.
In contrast, older and secondary-grade office buildings continued to struggle. Vacancy in mid-tier office assets remained elevated between 20% and 25%, with limited signs of recovery as occupiers increasingly shifted toward premium commercial developments.
The report highlighted that companies moving into Grade A office spaces rarely return to mid-tier assets, resulting in structural vacancy increases for older office buildings whenever new Grade A supply enters the market.
Rising Rentals Reinforce Preference for Grade A Office Spaces
Average rentals in Grade A office properties continued to rise as occupiers showed willingness to pay premium pricing for higher-quality infrastructure and services.
Average monthly Grade A office rentals increased by 6% in 2025 to ₹92 per sq. ft., while Q1 2026 rentals further rose to ₹93 per sq. ft.
Bengaluru recorded the highest rental growth among all cities, with rentals increasing 9% in 2025 and another 11% growth in Q1 2026 over the previous quarter.
The report noted that Grade A office rentals remain up to 20% higher than mid-tier properties due to several factors, including:
- Preference from GCCs, MNCs and institutional occupiers
- Availability of F&B, wellness, retail and smart building infrastructure
- Compliance with LEED and IGBC certifications
- Better power reliability and IT infrastructure for 24/7 operations
- Developers Continue Betting on Grade A Office Supply
Developers added nearly 52 million sq. ft. of new Grade A office supply across the top seven cities in 2025, registering 8% annual growth.
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Southern cities accounted for 52% of the total new supply. Bengaluru added around 14 million sq. ft., while Chennai recorded a 72% year-on-year increase in new supply. Pune emerged as the fastest-growing market with 103% annual growth in office completions.
Hyderabad, however, witnessed a 31% decline in new supply as developers adopted a more cautious phased delivery approach.
In Q1 2026, total new office completions declined 18% annually from approximately 10.53 million sq. ft. to 8.60 million sq. ft. ANAROCK attributed part of the slowdown to the ongoing geopolitical uncertainties in West Asia and their broader impact on global markets.
Outlook for India’s Grade A Office Market
According to the report, India is expected to house 2,200 to 2,300 GCCs worth USD 100-110 billion by 2030, with the majority expected to operate out of Grade A office developments.
Peush Jain said, “The GCC boom will be an almost totally Grade A story – India is expected to have 2,200-2,300 GCCs worth USD 100-110 billion by 2030.”
He added, “For investors, rental growth and vacancy compression in Grade A assets indicate durable pricing power.
The way ahead for mid-tier owners is to selectively upgrade to Grade A or focus on specialised occupier sectors such as domestic SMEs and flex operators, where the competition for Grade A space is less intense.”
