Office Leasing Dips 13.6% in Major Indian Cities Even as Rents Surge
Office leasing in Bengaluru, Mumbai, and Delhi-NCR dropped 13.6% in Q3 2026, but prime rents climbed 7.5%. Discover the city-wise trends here.
In a paradoxical shift within the commercial real estate sector, office leasing trends India have shown a decline in volume despite a steady climb in pricing. According to the latest 'Asia-Pacific Research, Office Markets - Q3 2026' report by Knight Frank, office leasing across Bengaluru, Mumbai, and Delhi-NCR dropped by 13.6 per cent year-on-year during the July-September quarter of 2026.
Surprisingly, this dip in activity did not cool down the pricing. Prime office rents across these three hubs rose by an average of 7.5 per cent annually, signaling that while fewer spaces are being leased, the demand for high-quality, premium locations remains intense.
The Numbers: A Quarterly Snapshot
The combined office leasing for the three major metros stood at 7.6 million square feet during the quarter. The report suggests that the market is currently driven by a specific set of players, including Global Capability Centres (GCCs), flexible workspace operators, and various domestic enterprises.
Shishir Baijal, Chairman and Managing Director of Knight Frank India, noted that the growth in rentals is a direct reflection of the premium that businesses are still willing to pay for superior quality and strategic locations.
City-Wise Breakdown: Bengaluru Leads the Charge
The three cities exhibited very different dynamics in terms of rental growth and leasing activity:
Bengaluru: The Growth Powerhouse
- Rental Growth: Bengaluru emerged as the leader with a massive 11.5 per cent annual rental growth. This puts the city in fourth place among 24 Asia-Pacific markets, matching the growth rate of Tokyo.
- Leasing Trends: After a powerhouse performance in the first half of the year, leasing activity moderated. However, GCCs remain the primary drivers, accounting for nearly 50 per cent of the city's leasing demand.
Mumbai: The Volume Surge
- Leasing Activity: In stark contrast to the overall trend, Mumbai saw a 33 per cent year-on-year increase in leasing transactions. In fact, the volume for the first nine months of 2026 has already surpassed the total for the entire year of 2025.
- Rental Growth: Rents in Mumbai increased by 4 per cent.
Delhi-NCR: The High-Cost Hub
- Rental Growth: Delhi-NCR recorded a rental increase of 5.4 per cent, ranking eighth in the Asia-Pacific region.
- Market Position: It remains one of the most expensive markets in the region.
The Cost of Doing Business: Occupancy Expenses
When looking at the annual occupancy costs per square foot, the disparity between the cities becomes evident. Delhi-NCR is the most expensive of the three, ranking as the seventh-most expensive prime office market in the entire Asia-Pacific region at USD 73.11 per square foot.
Mumbai follows closely behind at USD 68.39 per square foot, while Bengaluru remains the most affordable option for businesses at USD 37.16 per square foot.
The Broader Asia-Pacific Context and Future Outlook
The trend in India mirrors a wider regional pattern. Across the Asia-Pacific region, prime office rents grew by 1 per cent quarter-on-quarter, with 16 out of 24 tracked markets showing stable or increasing rents.
Looking forward, Knight Frank anticipates that leasing activity in Bengaluru, Mumbai, and Delhi-NCR will remain largely consistent with the record-breaking levels seen in 2025. According to Shishir Baijal, the ability of prime office spaces to command higher rents is a key indicator of market depth and the changing preferences of modern businesses.