New Delhi, April 15 (NationPress) In the first quarter of 2026, the average office vacancy rate across India’s eight major cities has dropped to 13.85 percent, marking a significant decline below the 14 percent threshold for the first time since the pandemic. This drop is attributed to sustained demand from occupiers and a notable reduction in new supply, according to a report released on Wednesday.

The analysis from Cushman & Wakefield, a leading commercial real estate services firm, indicated that the vacancy rate decreased by approximately 48 basis points compared to the previous quarter and 191 basis points year-on-year in Q1 2026. This also represents the eleventh consecutive quarter of declining vacancy rates.

New office completions in the top eight cities were recorded at 8.8 million square feet (MSF), reflecting a 43 percent decrease quarter-on-quarter and an 18 percent decline year-on-year, primarily due to project completion delays, as noted in the report.

Significantly, major contributors to new supply included Bengaluru (35 percent), Delhi NCR (25 percent), and Chennai (18 percent), while cities like Pune, Hyderabad, and Kolkata saw no new completions. This scenario has led to a quicker absorption of the available vacant office space in several well-established locations.

The net absorption recorded was 11.51 MSF in Q1 2026, representing a 28 percent decrease quarter-on-quarter and a 24 percent decline year-on-year. This moderation can be linked to a slowdown in new leasing activities following a strong finish to 2025, coupled with reduced supply completions that limited the fulfillment of pre-committed demand this quarter.

“The gross leasing volume reached approximately 22 MSF in Q1 2026, indicating a 13 percent increase from the same period last year, which reflects robust demand across various sectors,” stated Anshul Jain, Chief Executive for India, SEA, MEA & APAC Office and Retail at Cushman & Wakefield.

Global Capability Centres, which accounted for around 40 percent of the total uptake, continue to be a significant driver, reinforcing India's importance in long-term portfolio strategies, Jain added.

The firm anticipates that approximately 61 MSF of new supply will enter the market in 2026, predominantly comprising premium Grade A+ properties, which is expected to ease vacancy rates. However, strong absorption and pre-commitment trends are likely to keep the overall vacancy rate relatively stable, even as rental momentum remains positive, Jain mentioned.

Bengaluru has maintained a vacancy rate of sub-8 percent (7.81 percent) in Q1 2026, with some micro-markets showing vacancy levels as low as 2 percent.

Mumbai has also transitioned to a single-digit vacancy rate at approximately 9 percent, with prime business districts reporting rates below 3 percent. Other cities in the top eight, including Chennai, Pune, and Kolkata, have also experienced a reduction in vacancy rates during the quarter.

aar/pk