India office leasing Q3 2026 reached 23.7 million square feet, increasing 20 per cent year-on-year as banking and financial services firms and flexible workspace operators strengthened their share of demand, according to a Vestian report released on Monday.
Office absorption remained largely stable compared with the previous quarter, despite global economic uncertainties and geopolitical challenges. The quarter recorded the second-highest office absorption on record, reflecting continued demand for Grade-A office space across major cities.
BFSI and flex spaces account for 40% of office leasing
The banking, financial services and insurance (BFSI) sector accounted for 20 per cent of total office absorption in Q3 2026. Its share rose from 8 per cent in Q2 2026 and 15 per cent in the year-ago quarter.
Flexible workspace operators and managed office providers contributed another 20 per cent of leasing activity. Their share was slightly lower than the 22 per cent recorded in Q2 2026 but higher than 14 per cent in Q3 2025.
Together, BFSI and flexible workspace operators accounted for 40 per cent of office absorption during the quarter, highlighting a shift in occupier demand.
IT-ITeS share declines to 23%
The IT and IT-enabled services (IT-ITeS) sector remained the largest individual contributor to office leasing. However, its share declined to 23 per cent in Q3 2026, compared with 41 per cent in the previous quarter and 31 per cent a year earlier.
The changing sector mix indicates that office demand is becoming more diversified, with financial services and flexible workspace operators accounting for a larger proportion of leasing activity.
Southern cities account for 60% of absorption
Bengaluru, Chennai and Hyderabad together accounted for 60 per cent of India’s office absorption in Q3 2026. Their combined share increased from 54 per cent in Q2 2026 and 50 per cent in Q3 2025.
In contrast, Mumbai and Pune together contributed 20 per cent of total absorption, down from 25 per cent in the previous quarter.
Demand patterns also varied across cities. BFSI companies emerged as the largest occupier segment in Chennai, Hyderabad and Kolkata. Flexible workspace operators led leasing activity in Pune and the National Capital Region (NCR).
Bengaluru and Mumbai continued to draw most of their office demand from IT-ITeS companies, according to Vestian.
Annual office absorption may exceed 85 million sq ft
Vestian CEO Shrinivas Rao said office absorption reached 65 million square feet between January and September 2026.
The report projected that full-year absorption could exceed 85 million square feet if the current momentum continues. Sustained demand from IT-ITeS companies, flexible workspace providers and BFSI firms is expected to support leasing activity.
The Q3 figures indicate continued demand for commercial office space, alongside a changing distribution of occupiers across sectors and cities.
