India’s Office Market Moves Towards a More Balanced Sectoral Mix; BFSI and Flex Spaces Account for 40 percent of Q3 2026 Absorption

New Delhi, Oct 26: India’s office market witnessed a shift in occupier demand across sectors in Q3 2026, signalling a gradual diversification of demand. IT-ITeS remained the largest contributor to the pan-India absorption, although its share declined to 23% from 41% in Q2 2026 and 31% in Q3 2025. In contrast, the share of Banking, Financial Services and Insurance  rose to 20% from 8% in the previous quarter and 15% a year earlier. Flex Spaces/Managed Offices also maintained a significant share of absorption at 20%, marginally lower than 22% in Q2 2026 but substantially higher than 14% in Q3 2025.

Together, BFSI and Flex Spaces/Managed Offices accounted for 40% of the total office absorption in Q3 2026, highlighting their growing contribution to leasing activity. While IT-ITeS continued to lead demand, the rising share of BFSI and flexible workspace operators points to a more diversified occupier base.

Sector-wise Share of Pan-India Absorption

Sectors (% Share of Absorption)	Q3 2026	Q2 2026	Q3 2025
IT-ITeS	23%	41%	31%
BFSI	20%	8%	15%
Flex Spaces/Managed Offices	20%	22%	14%
Others	37%	29%	40%

The changing demand mix was also reflected in city-level absorption trends. BFSI firms accounted for the largest share of absorption in Chennai, Hyderabad and Kolkata, while Flex Spaces/Managed Offices led leasing activity in Pune and the National Capital Region. Bengaluru and Mumbai, meanwhile, continued to be driven primarily by IT-ITeS occupiers.

Robust Absorption and Record Supply Keep India’s Office Market Buoyant in Q3 2026

Pan-India absorption reached 23.7 Mn sq ft in Q3 2026, sustaining leasing momentum despite prevailing global macroeconomic uncertainties and geopolitical headwinds. The absorption increased by 20% over the last year, whereas it remained largely stable compared to the previous quarter. This was the second-highest quarterly absorption on record, highlighting the robust demand for quality grade-A office spaces.

The bull run in absorption was propelled by southern cities (Bengaluru, Chennai, and Hyderabad), which accounted for 60% of the pan-India absorption in Q3 2026. The share has also increased from 54% in Q2 2026 and 50% in the same period a year earlier. In contrast, the combined share of Mumbai and Pune declined to 20% from 25% in the previous quarter, indicating a shift in the geographical distribution of leasing activity towards southern markets.

Shrinivas Rao, FRICS, CEO, Vestian said,

“Leasing activity remained resilient, with office absorption reaching 65 Mn sq ft during January–September 2026. If the current momentum continues, annual absorption is projected to exceed 85 Mn sq ft, supported by the sustained demand from IT-ITeS, Flex Spaces, and BFSI.”

Construction activity also gained momentum in Q3 2026 despite rising construction costs and limited availability of funds. New completions rose to 18.4 Mn sq ft, the highest quarterly supply ever recorded. It increased by 24% compared to the previous quarter and 14% compared to the same period a year earlier. The top three cities (Bengaluru, Hyderabad & Pune) accounted for 84% of the total completions.

Hyderabad recorded the highest-ever new completions of 7.2 Mn sq ft in Q3 2026, rising five-fold from the previous quarter and more than tripling from the same period a year earlier. Pune also recorded 28% quarterly increase in new completions to 3.2 Mn sq ft, while Bengaluru added another 5.0 Mn sq ft despite a 17% decline from the previous quarter. In contrast, supply additions fell sharply by 67% and 40% in Mumbai and NCR, respectively.

Rao further added,

“India’s office market is poised to sustain its growth trajectory, supported by resilient occupier demand, a diversified sectoral mix, and improving occupancy levels. While IT-ITeS continues to anchor leasing activity, the growing contribution of BFSI and Flex Spaces/Managed Offices is broadening the demand base and reshaping the market’s growth dynamics.”