India's office market pauses after record run as leasing dips 2% in H1 2026; here's why

India's office leasing activity slowed in the first half of 2026, ending a record run as global economic uncertainty prompted companies to adopt a more cautious approach to expansion despite continued demand from global capability centres (GCCs).According to Knight Frank India, gross office leasing across the country's eight largest office markets stood at 48 million square feet during January-June 2026, down 2 per cent from the record levels seen a year earlier, reported ANI. The consultant attributed the moderation to a combination of geopolitical tensions, global trade disruptions, evolving workplace strategies driven by artificial intelligence, and uncertainty across major international office markets.The decline came even as other property consultants painted a more optimistic picture. Earlier this month, CBRE reported a record 45.5 million sq ft of gross leasing during the first half of the year, while Cushman & Wakefield estimated the figure at 43 million sq ft. Colliers India also reported a 6 per cent increase in leasing to 35.7 million sq ft across the top seven cities. Industry experts have attributed these variations to differences in the methodology used by consultants to calculate leasing activity.Global headwinds slow expansion plansThe report stated that the softer leasing numbers reflect a temporary moderation in occupier decision-making rather than a structural weakness in India's commercial real estate market.Leasing activity declined in Bengaluru, Delhi-NCR, Chennai and Kolkata during the first six months of the year, while Mumbai, Pune and Hyderabad registered growth. Ahmedabad's leasing remained broadly unchanged.Despite the overall decline, vacancy levels continued to tighten in several markets, helping rental values rise between 3 per cent and 13 per cent across seven cities. Mumbai was the only major office market where rents remained unchanged during the period.GCCs continue to drive demandGlobal capability centres remained the biggest growth engine for India's office market, accounting for a record 43 per cent of total leasing during the first half of 2026.GCCs leased 20.6 million sq ft of office space between January and June, up from 19.1 million sq ft in the corresponding period last year. Demand from flexible workspace operators also remained strong, with co-working companies taking up 11.4 million sq ft compared with 10.8 million sq ft a year earlier.Office leasing is widely tracked as an indicator of corporate expansion and employment generation. While the latest data points to a moderation in activity after last year's record performance, sustained demand from GCCs and flexible workspace operators suggests the market continues to be supported by long-term structural drivers even as companies navigate an uncertain global environment.Ready to Make a Smarter Property Decision? Build Your Legacy with TOI Homes.