India's commercial real estate market is experiencing a significant divergence: office rents are rising sharply while leasing activity shows signs of moderation. Major cities like Bengaluru, Delhi-NCR, and Mumbai have now seen average monthly office rentals surpass ₹100 per square foot, a first for Bengaluru and Delhi-NCR, according to Knight Frank.
Rents Climb Across Key Metros
In Mumbai, office rents increased by 6% year-on-year, reaching ₹125 per square foot. Delhi-NCR witnessed an even steeper 15% jump, pushing rents to ₹105 per square foot. Bengaluru recorded a 7% increase, with average rents now at ₹100.6 per square foot. Other prominent cities such as Pune, Hyderabad, and Chennai also reported steady rental growth, ranging between 5% and 8%.
This broad-based increase highlights a sustained rental upcycle that has been in effect since 2022, primarily fueled by a limited availability of Grade-A office spaces.
Supply-Demand Imbalance Fuels Price Hikes
A persistent gap between the demand for office space and its supply is the primary driver behind these rising rents. Knight Frank data indicates that office space leasing reached a record 29.9 million square feet in Q1 2026, marking a 6% year-on-year increase. However, new supply during the same quarter stood at just 14 million square feet—less than half of the absorbed space.
This imbalance has led to a tightening of vacancy levels, which have declined from 17.2% in 2021 to 13.9% in early 2026. Developers have increasingly prioritized residential projects over commercial developments, citing faster sales cycles and lower capital intensity, further constraining office supply, particularly in premium micro-markets.
Leasing Activity Cools Off
Despite the rental surge, a parallel trend of slowing leasing activity is emerging in major markets. Data from Cushman & Wakefield shows that net leasing across Delhi-NCR and Mumbai declined significantly by 51% year-on-year to 3.28 million square feet in Q1 2026. Delhi-NCR experienced a sharp 61% drop, while Mumbai saw a 38% decline. Across India's eight major cities, net leasing fell 24% to 11.51 million square feet.
This slowdown is largely attributed to lower fresh supply of quality office spaces rather than a collapse in demand. Limited availability is restricting transaction volumes, even as occupier interest remains robust.
Landlords Maintain Pricing Power
Interestingly, rents have continued their upward trajectory despite weaker leasing numbers. In Delhi-NCR, rentals rose 2–5% quarter-on-quarter and 6–9% annually, with Gurugram's central business district seeing growth up to 15%. Mumbai also recorded a 1.5% sequential increase, reaching ₹171 per square foot in key corridors. This trend suggests that landlords retain significant pricing power due to the scarcity of Grade-A supply and consistent demand from sectors such as Global Capability Centers (GCCs), Banking, Financial Services, and Insurance (BFSI), and technology firms.
The market is currently in a supply-constrained phase rather than a demand slowdown. For occupiers, this means higher rental costs and increased competition. For investors and developers, it signals opportunities to expand office portfolios in high-demand micro-markets. A revival in new office supply will be crucial to sustaining transaction volumes, but until then, rents are expected to remain on an upward trajectory.